WORLD TRADE  
ORGANIZATION  WT/TPR/M/199 
24 July 2008 
 (08-3583) 
Trade Policy Review Body 
21 and 23 May 2008  
 
 
 
TRADE POLICY REVIEW 
 
CHINA 
 
Minutes of Meeting  
 
Chairperson:  H.E. Mr. Yonov Frederick Agah (Nigeria)  
 
   Page 
 
I.
 INTRODUCTORY REMARKS BY THE CHAIRPERSON 3  
II. OPENING STATEMENT BY THE REPRESENTATIVE OF CHINA 4  
III. STATEMENT BY THE DISCUSSANT 9  
IV. STATEMENTS BY MEMBERS 11  
V. REPLIES BY THE REPRESENTATIVE OF CHINA AND ADDITIONAL 
COMMENTS 25  
VI. CONCLUDING REMARKS BY THE CHAIRPERSON 32  
  
 
Note:   Advance written questions by WTO Me mbers and the replies provided by China are 
reproduced in document WT/TPR/M/199/Ad d.1 and will be available online at 
http://www.wto.org/english/tr atop_e/tpr_e/tp_rep_e.htm. WT/TPR/M/199 
 Page 3 
 
 
 I. INTRODUCTORY REMARKS BY THE CHAIRPERSON 
1. The second Trade Policy Review of China was held on 21 and 23 May 2008.  The 
Chairperson (H.E. Mr. Yonov Frederick Agah) we lcomed the Chinese delegation, led by Ms. Qiu 
Hong (Assistant Minister, Ministry of Commerce), an d which included H.E. Mr. Sun Zhenyu, as well 
as the discussant H.E. Mr. Muhamad Noor Yacob (Malaysia).  As usual, the discussant would speak 
in his personal capacity and not as a country representative.  In accordance with established 
procedures, the discussant had provided in advance outlines of the main issues he intended to raise 
(document WT/TPR/D/174). 
2. The Chairperson recalled the purpose of Trade Po licy Reviews and the main elements of the 
meeting’s procedures.  The report by China was contained in document WT/TPR/G/199 and that of 
the WTO Secretariat in WT/TPR/S/199.  As indicat ed in WT/TPR/6/Rev.1, the Member under review 
should provide written answers, by the beginning of  the review meeting, to questions submitted at 
least two weeks before the meeting.  Questions posed  subsequently should be answered, to the extent 
possible, before the start of the second session of th e meeting.  Questions left unanswered at the end 
of the second session should be answered in writing no later than one month after the meeting.  The 
following delegations had submitted qu estions in writing at least two weeks in advance of the meeting 
and these had been transmitted to the Chinese delegati on:  Brazil;  Mexico;  Switzerland;  Colombia;  
Republic of Korea;  Australia;  Argentina;  Hong K ong, China;  United States;  Philippines;  Japan;  
Canada;  European Communities;  Chile;  and Tu rkey.  Copies of these questions and of China's 
answers were available in the meeting room.  Written questions by India;  Chinese Taipei;  
Costa Rica;  Pakistan; and Honduras, submitted af ter the two-week deadline, had also been 
transmitted to the delegation of China, and copies,  along with the answers, were available in the 
meeting room.  All advance questions and res ponses were reproduced in WT/TPR/M/199/Add.1. 
3. The Chairperson noted that continued trade liber alization and structural reforms in China had 
played a significant role in achieving real GDP grow th rates in excess of 10% over the past 4 years, 
rising per-capita income, and poverty reduction.  At the same time, WTO Members had played an 
important role in making such growth possible by  keeping their markets open to China's exports.  
China had also continued to be one of the largest recipients of inward FDI and had become a large 
provider of outward FDI, reflecting its increasing integration into the global economy.  The Chairperson also noted that structural reforms, in cluding those of state-owned enterprises and certain 
sectors that had introduced market mechanisms to ensure a more efficient allocation of resources.  
China had continued to make its trade policy regime  more transparent.  Nevertheless, a number of 
challenges emerged, including the imbalance in th e sources of growth in the economy, which was 
mainly driven by exports and investment rather than by consumption, and the widening gap between 
savings and investment, which was reflected in Ch ina's growing current account surplus;  income 
inequality had also risen and growth might have ex acerbated environmental problems.  It would seem 
that China's increased use of expor t measures was at least partly dir ected at these challenges.  It was 
clear to the Chairperson that China was committed to the multilateral trading system and had strongly 
supported the Doha Development Agenda;  it ha d also been intensifying its pursuit of 
bilateral/regional free trade agreements.  The Re port by China explained that China believed these 
agreements could play a supplemen tary role to the multilateral trading system;  the Chairperson 
believed that Members would be interested in lear ning more about China's views in this regard. WT/TPR/M/199 
Page 4  
 
 II. OPENING STATEMENT BY THE REPRESENTATIVE OF CHINA 
4. The representative of China
, Ms. Qiu Hong, stated that the Trade Policy Review Mechanism 
(TPRM) could help ensure the transparency of Me mbers' trade policies, promote the implementation 
of multilateral rules and increase the credibility of  the multilateral trading system.  Since China's 
accession to the WTO, it had maintained steady and rapid economic growth, with an improved system 
of market economy.  China had entered a new st age of developing a more open economy.  During 
2006 and 2007, the first two years of China's implementation of the 11th Five-Year Development 
Programme, its economy had conti nued to maintain steady and rapi d growth, with its GDP reaching 
Y 20.94 trillion and Y 24.66 trillion, registering a year-on-year increase of 10.7% and 11.4%, 
respectively.     
5. The standard of living in China had improve d significantly:  11.84 million urban jobs had 
been created in 2006 and 12.04 million in 2007, an d urban per capita annual disposable income had 
reached Y 11,759 and Y 13,786, respectively;  rural per capita annual net income had risen to Y 3,587 
and Y 4,140, respectively.  The number of peopl e living in poverty had been reduced each year. 
6. Over the past few years, faced with problem s such as overheated growth in fixed asset 
investment, excessive supplies of money and credit, excessively large trade surplus, and weakness in 
agriculture, the Government had adjusted financia l and monetary policies as needed, improved its 
industrial and land policies, and adjusted the econom ic structure so as to realize steady and rapid 
economic growth. 
7. The Government regarded agriculture as th e foundation of the economy and placed great 
importance in increasing grain production and rural in comes.  China had elim inated the agricultural 
tax, livestock tax, and tax on special agricultural products throughout China, reducing the burden on 
farmers by an average of Y 133.5 billion per year.  Investment in agriculture and rural areas had been 
greatly increased.  Safe drinking water had been  provided to an additional 97.48 million rural 
residents.  A system for the prevention and control of major animal diseases had been set up.  These 
measures had brought historical changes to rura l China.  Agricultural development played an 
important role in ensuring the overall stability a nd development of China's economy and society. 
8. China gave high priority to conserving resources  and protecting the environment.  A general 
work plan for saving energy and reducing emissions ha d been introduced;  a system of targets for this 
work, a monitoring system, a system for assessing work performance and a system of accountability 
for reaching the targets had been put in place.  A state plan to address climate change had been  
promulgated.  A large number of backward produc tion facilities had been shut down in accordance 
with the law.  In 2007, there was a 3.27% year-on- year drop in energy consumption per unit of GDP, 
and for the first time in recent years, a reduction in both chemical oxygen demand and total emissions 
of sulphur dioxide, which were down 3.14% and 4.66% from the previous year, respectively.  
9. China also followed a master strategy for regi onal development. Continued progress had been  
made in the large-scale development of the wester n China.  China had implemented a strategy of 
rejuvenating the old industrial bases, such as those in northeast China, and these were showing new 
signs of vitality. These major measures promoted mo re balanced development of regional economies. 
10.  China vigorously promoted reform of the banking, fiscal, and taxation systems.  The 
Industrial and Commercial Bank of China, the Bank of China, the China Construction Bank, and the 
Bank of Communications had been turned into stoc kholding companies and listed on stock markets.  
This had brought about significant improvement in the quality of their assets and profitability.  Key 
state-owned insurance firms had been reorganized and gone public, promoti ng rapid development of 
the insurance industry.  China had reformed the Re nminbi (RMB) exchange ra te regime to gradually 
make the exchange rate more flexible.  WT/TPR/M/199 
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 11. The market system had been intensified.  Th e modernization of commodity distribution had 
been accelerated.  Significant achievements had been ma de in the effort to rectify order in the markets 
for land and mineral resources and improve the qualit y of products and the safety of food and drugs. 
Protection of intellectual property rights had been  strengthened.  China had cracked down severely on 
violations of the law, such as the production and sale of counterfeit goods, pyramid schemes, 
commercial fraud, piracy, and infringement of others' rights. 
12. Funding for rural compulsory education was fully provided by the government budget.  The 
150 million students receiving compulsory educatio n in rural areas were exempt from tuition and 
miscellaneous fees, and were supplied with free te xtbooks.  Living allowances were provided to the 
7.8 million students from poor families who stayed in school dormitories. 
13. There had been continued improvement in th e basic old-age insurance system for urban 
workers, with the number of participating workers exceeding 200 million in 2007.  The trial of basic 
medical insurance for urban residents had been launc hed in 88 cities.  Further improvement had been 
made in the new system of rural cooperative medi cal care, which now cove red 86% of all counties 
and 730 million rural residents in China.  
14. Efforts had been made to increase the incomes of  urban and rural residents, especially low-
income persons;  the minimum wage had been incre ased.  There had been a general increase in family 
assets.  Upgrading of consumer spending had proceede d at a faster pace, and there had been a large 
increase in the number of family-owned cars and ra pid spread in the use of cell phones, computers, 
and internet services.  The number of people goi ng on vacations had increased several fold, and 
encouraging progress had been made in improving c onditions in shantytowns, and many more public 
services had been made available to urban and rural residents. 
15. Although China's economy had maintained steady and rapid development in the past two 
years, the Chinese government was also clearly awar e that there were still many problems affecting 
China's economic development.  
16. China had experienced overheated growth in  fixed-asset investment, excessive supplies of 
money and credit, and imbalance in its internati onal payments in recent years.  Long-standing 
structural problems and the extensive pattern of grow th remained serious problems.  There was a lack 
of balance between investment and consumption, with the investment rate still running too high. 
China's capacity for independent innovation was still weak and the price paid for economic growth in 
terms of resource consumption and environmental pressure was too great.  Agriculture, the foundation 
of the economy, remained weak.  The difficulty of  maintaining steady agricultural development and 
keeping the incomes of farmers increasing had gr own, and the growing development gap between 
urban and rural areas and between regions had not been checked. 
17. More work needed to be done to resolve probl ems affecting the vital interests of the Chinese 
people. The price hikes and increasing inflationary pr essures were the biggest concern of the people;  
these had a great impact, especially on the lives of th e low-income sector of the population.  Prices of 
primary commodities on the international market had risen considerably in recent years, which put 
upward pressure on domestic prices.  
18. Uncertainties in both the international econo mic environment and potential risks had 
increased.  There was greater risk in international financial markets.  Grain prices were rising and prices for petroleum and other primary products rema ined high in the international market.  Trade 
protectionism was on the rise, and trade frictions had increased.  The effect of certain political factors 
in the international arena on world economic tren ds could not be overlooked.  All of these could 
adversely affect China's economic development. WT/TPR/M/199 
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 19. Since China's accession to WTO, foreign trade had continued to develop rapidly.  Meanwhile, 
its trade regime had become more open and transpar ent and its economic relati ons with other parts of 
the world had moved further, based on the principle of mutual benefit and wi n-win outlook.  In 2006 
and 2007, China's merchandise trade was at US$1.7 trillion and US$2.1 trillion, respectively, an 
average annual increase of 23.6%.  In terms of trad e in services, in 2006, China's services imports and 
exports amounted to US$1.75 billion, an increase of 22.1%  over the previous year.  In the first half of 
2007, the total value of China's services imports and exports was US$4.2 billion, an annual increase 
of 33.1%.  In contrast to merchandise trade, Chin a's trade in services was of a smaller scale and had 
long been in deficit. 
20. As its foreign trade develope d rapidly, China encountered some associated problems. The 
most striking were the "irrational" trade composition and great trade imbalances.  In order to mitigate 
the abnormality caused by "irrational" trade compos ition, the Government had adopted a number of 
measures to change the mode of trade development.   China had reduced or removed import duties on  
354 products;  and automatic import licensing for 883 categories of products had been cancelled.  The 
China Export Commodities Fair had been renamed th e China Import and Export Fair, with a special 
exhibition area devoted to imports.  China had al so promoted the transformation and upgrading of 
processing trade, and actively explored the developmen t of trade in services.  As a result, the growth 
of China's trade surplus had narrowed remarkably. 
21. The Government had continued to carry out th e reform of the RMB exchange rate regime 
since it was inaugurated in July, 2005, giving full play to the role of market demand and supply, and enhancing the exchange rate flexib ility.  From July 2005 to the end of 2007, the RMB had appreciated 
by 13.3% against the U.S. dollar,  and 14.06% against the Japanese yen.  The RMB appreciation had 
accelerated since 2008. The Government would continue to push forward the reform of the RMB exchange rate regime. 
22. China remained a major destination for FDI;  it had also become important in terms of  
outward direct investment.  In 2006, FDI inflow s in China reached US$69.5 billion, making it the 
fourth largest FDI destination in the world, and the largest FDI destination among developing 
countries.  FDI in China in 2006 accounted for 6.72% of global FDI flows.  In 2007, FDI in China amounted to US$78.3 billion, slightly above the figure for 2006.  China's overseas direct investment had grown rapidly in recent years to US$16.13 b illion in 2006 and US$18.72 billion in 2007.  This 
momentum was expected to be sustained. 
23. Since its previous Review, China had con tinued to promote trade and investment 
liberalization and facilitation on the multilateral, regi onal, and bilateral fronts.   In 2006 and 2007, 
China had further lowered tariffs, reduced non-ta riff barriers, opened the services industry, and 
enhanced trade policy transparency.  In 2006-07, China had reduced the tariff rate on 187 items in 
accordance with its accession commitments.  Chin a's overall tariff level had been reduced from 
15.3%, at the time of its accession to the WTO, to 9. 8% on 1 January 2008;  the average tariff rate on 
industrial products had been cut from 14.8% to 8. 95%, and the rate on agricultural products from 
23.2% to 15.2% during the same period;  100% of  China's tariffs were bound.  China's bound tariff 
rates were virtually the same as its applied MFN ra tes.  On 1 January 2006, in accordance with its 
accession commitments, China eliminated tariff quotas on ten items, including soya oil, palm oil, and 
rapeseed oil. 
24. Since its previous Review, China had establis hed a set of new rules and regulations to 
promote further opening up of its service sectors, including construction services, architectural and 
engineering services, commercial franchise, refined oil and crude oil distribution, foreign-funded 
banks, trust and financial leasing companies, and insurance licences .  These laws and regulations 
incorporated measures of autonomous liberalization,  demonstrating China's positive stance towards 
opening up its trade in services.  WT/TPR/M/199 
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 25. The Government had consistently  held that the multilateral trading system, represented by the 
WTO, played an important and irreplaceable ro le in maintaining world economic stability and 
promoting global trade liberalization.  In the si x years since China's accession to the WTO, the 
Government had been participating actively in the activities of various WTO bodies, including the 
dispute settlement process, and had been playing a constructive role in the Doha Round negotiations.  
China had submitted, either individually or in co-spo nsorship with other Members, a large number of 
proposals on agriculture, NAMA, services, ru les on anti-dumping and countervailing, trade 
facilitation, etc.  The Government believed that un der the mandate of placing development at the heart 
of the Round, more attention should be paid to the interests of developing Members throughout the 
DDA negotiations.  The negotiations on specific i ssues should take into full consideration the 
development level and capacity of developing Member s, and enable them to gain tangible benefits 
through special and differential treatment. 
26. China believed that, while the multilateral trading system remained the priority, regional trade 
arrangements established on the basis of openness and mu tual benefit could play a supplementary role 
to the multilateral trading system.  These arra ngements could not, and should not, replace the 
multilateral trading system.  Guided by this prin ciple, China had conducted negotiations on bilateral 
and regional trade arrangements w ith a number of trading partners .  To date, 12 regional trade 
arrangements involving 29 countries a nd regions had been either signed by China or were still in the 
process of negotiation.  China would notify WTO the results of these negotiations in due course. 
27. In the area of foreign economic relationships , China had upheld the principle of mutual 
benefits and a win-win outlook.  To enable least de veloped countries (LDCs) to better participate in 
and benefit from economic globalization, apart from providing assistance to infrastructure 
development, China also attached great importance to helping recipient countries strengthen capacity 
for economic development, especially to improving  the trade-related capacity.  To date, a large 
number of officials and management and techni cal personnel from recipient countries had attended 
training and research activities in China.  China fu lly supported and participated in the WTO Aid for 
Trade initiative.  In February 2008, the Governme nt had pledged a donation to WTO, for the first 
time, to support other developing Me mbers and enhance their capability to participate in international 
trade.  The Government had also promoted the building of trade-related production capability in the 
recipient countries through increased direct investme nt.  To promote LDCs' exports to China, the 
Government had granted duty-free treatment to 41 l east developed countries, by the end of 2007, for 
most of the products they were able to export;  this accounted for 97.9% of their total export volume 
to China in 2007.  The structure of China's impor ts from the LDCs was basically in line with their 
export trade structure. 
28. The Government of China would continue to ta ke effective measures to maintain stable and 
relatively rapid economic growth to make conti nuous contributions to the world economy.  The 
Government would continue to im plement a prudent fiscal policy and use government revenue surplus 
wisely.  Tightened monetary policy would be implemented to control the excessive increases in 
money supply and credit.  China would give rationally play to the leveraging role of interest rates, 
improve the RMB exchange rate formulation mech anism, and enhance the flexibility of the RMB 
exchange rate.  China would also explore the ch annels and ways for the utilization of foreign 
exchange reserves and take comprehensive measu res to improve its balance of payments.  
29. The Government would also take more measures to prevent the overall price level from rising 
rapidly.  China would expand production, especially the production of basic necessities such as grain, 
vegetable oil, and meat as well as other commoditi es in short supply.  It would speed up improvement 
of the reserve system, and improve methods for adjusting reserves and import and export volumes. 
30. China would continue to boost domestic demand,  adjust the balance of investment and 
consumption, and promote the shift from the patte rn of economic growth that relied mainly on WT/TPR/M/199 
Page 8  
 
 investment and exports to one that relied on a bala nced combination of consumption, investment and 
exports.  China would also increase efforts to conserve energy, reduce emissions, protect the 
environment, and ensure product quality and safety. 
31. China would promote balanced development am ong its regions.  It would extensively 
promote the large-scale development of the western region of China and continue to protect natural 
forests, prevent and control desertification, and reve rse and prevent the development of stony deserts.  
China would give more support to ethnic minority areas, border areas, and poor areas to help them develop. 
32. China would continue to promote independent innovation as the central link in efforts to 
change the pattern of development.  It would also  implement the intellectual property rights strategy 
and expand scientific and technological  cooperation with other countries. 
33. The snow and ice storms in early February  and the recent earthquake had caused heavy 
economic losses to China and brought great difficu lties to its people.  The Government would 
continue to do a good job in post-disaster reconstr uction and minimize the impact of the disasters.  
34. China could not achieve economic development without a good international environment 
and the understanding and support of other countri es and regions.  China's economic development 
provided a strong impetus to the world economy.   
35. Maintaining open trade and combatting protecti onism were the common responsibility of all 
WTO Members.  The Chinese Government would work with other Members to strengthen the multilateral trading system and promote a bala nced and healthy development of economic 
globalization.  WT/TPR/M/199 
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 III. STATEMENT BY THE DISCUSSANT 
36. The discussant  noted that China's GDP grew by 10.6% during the first quarter of 2008;  GDP 
growth was 11.1% for the first quarter of 2007 a nd 11.4% for the year 2007.  Consumption had 
overtaken investments and exports as the leading contributor of economic growth.  The sources of growth for 2007 were:  consumption, 4.4%;  investment, 4.3%;  exports, 2.7%.  
37. These figures might suggest that the Governme nt's measures to reduce investment growth, 
particularly lower end, high energy consumption and "less environment friendly" investments, had 
been having an impact.  He was interested to know the Government's view on whether the recent 
increase in the contribution of consumption to GD P growth was cyclical or likely to be more 
permanent.  The CPI rose by 8% during the first quarter of 2008, up from 2.7% for the corresponding 
period in 2007;  food prices rose by 21% during th e same period.  These developments relating to 
GDP growth and inflation were taking place agains t the backdrop of China's monetary policy which 
had been aimed at mopping up excess liquidity, and reducing credit growth and investment:  the 
policy had managed to cool economic growth but price stability had not been achieved.  
38. On 19 May 2008, the RMB traded at 7.0025 per U.S. dollar, which represented an 
appreciation of some 18% over three years.  Give n that this should make imported goods cheaper, the 
discussant wondered what the inflation rate would be had the RMB not appreciated, or by less.  The RMB had stalled against the U.S. dollar in recent weeks.   The discussant requested indications of 
China's strategies to address inflation;  inflati on was a situation where "too much money was chasing 
after too few goods", and the question was whether currently it was too much money or too few 
goods.  If the focus of attention was on one side whereas the problem was more on the other, there 
was risk, for example, of causing the economy to slow down further without an abatement in the 
inflation statistics.  The discussant asked whether Ch ina would explore the possibility of reforming its 
exchange rate regime away a "cra wling peg" in order to allow for greater flexibility in its monetary 
policy.  When foreign exchange reserves were at  US$1,682 trillion (as of end-March 2008), anyone 
would want to proceed with some caution. 
39. At a more macro level, with China's rapid gr owth, income inequality had widened, especially 
between urban and rural residents.  The discussa nt was interested to know how the authorities 
intended to address this issue, together with the phenomenon of rising food prices.  
40. China remained a strong supporter of the multila teral trading system.  According to the 
Government report, China placed the multilateral tradi ng system at the top of its trade policy agenda. 
This was in consonant with its active particip ation in the DDA negotiations.  Apart from being a 
respondent in nine disputes, China had also become a complainant in one dispute in the WTO since 
2006.  Like many other Members, China had en tered into a number of free-trade agreements. 
According to the Government report, China regarded  bilateral and regional free trade arrangements as 
"a necessary supplement to multilateral trade liberalization". 
41. While the average MFN tariff had remained unc hanged at 9.7%, non-tariff barriers had been 
reduced, including the number of lines subject to automatic import licensing and tariff-rate quotas, 
and measures to increase the alignment of China' s national standards to international norms. 
42. At the domestic level, several new trade-re lated laws had been adopted, including the 
Property Law, Enterprise Income Tax Law, An ti-Monopoly Law and Law on Enterprise Bankruptcy.  
These laws contributed towards a more rule-based  predictable business environment, which was 
particularly important  for  foreign investors.  China had been moving recently towards establishing a 
more level playing field for domestic and foreign investors. WT/TPR/M/199 
Page 10  
 
 43. Chinese law enforcement agencies had carried out campaigns to crackdown on infringement 
of intellectual property rights.  However, questions  remained on sufficiency of fines and criminal 
penalties to deter IPR violations.  The discussant asked China to indicate the measures to address 
these concerns.  This was important to help achieve  "pro-innovation" economic development, referred 
to in the Government report. 
44. The contribution of agriculture to China's GDP had declined from 11.8% in 2006 to less than 
8% at present.  One major concern in respect of agriculture was that productivity was only about one 
fifth of that for the rest of the economy.  Given th e rural-urban income gap as well as the rising food 
prices, China's authorities would no doubt have cons idered ways to bridge the productivity gap.  The 
discussant asked China to elucidate some of the me asures in place as well as those being considered 
for the future. 
45. Manufacturing had seen some over-investment and excess capacity, for example, in the 
automotive industry, and electronics and electrical appliances.  This was thought to be linked to incentives and various forms of assistance accorded to this sector but not to agriculture or services.  
The discussant asked whether changes to Government policy were being contemplated in this regard.  
46. The services sector was still subject to a high degr ee of state control, although reforms had 
continued.  Given the State Council "Opinion" that accelerated development of the services sector was 
an important way to promote rationalization of th e country's economic structure, the discussant was 
interested to know what the plans would be  for future reform of the services sector.   WT/TPR/M/199 
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 IV. STATEMENTS BY MEMBERS 
47. Many Members noted that their bilateral trad e and investment ties with China had been 
strengthened over the recent period.   
48. Members commended China's rapid growth sin ce its previous Review, which had been 
supported mainly by exports and investment.  Memb ers noted that China's "open-door policy" as well 
as its participation in the multilateral trading sy stem had promoted rapi d economic growth and 
encouraged the development of a market economy:   China had become the world's third largest 
recipient of foreign direct investment, which had promoted the transfer of technology and associated technical know-how.  The continued growth ha d generated employment, improved the living 
standards and social security, and reduced poverty.   Nonetheless, some Members hoped that China 
would take further appropriate meas ures to address the issues caused by its rapid development and 
competition, such as widening income gaps betw een urban and rural population and imbalances in 
economic growth, which had depende d more on exports and investment  than consumption, and the 
much higher productivity in manufacturing than in ag riculture and services, as well as environmental 
problems.     
49. Members appreciated continuing reforms and step s China had taken to gradually  open up its 
market and increasingly integrate itself to the world trading system.  They appreciated China's active 
role at the WTO, including its strong support for th e Doha Development Agenda  and its participation 
as a developing Member.  Members appreciated efforts China had made to fulfil its WTO commitments.  Many noted that China, as the wo rld's third largest economy and trader, was now a 
mature member of the World Trade Organization, deriving full benefit from its membership and with 
full responsibility for its obligations.  Members noted the increasingly important role China was 
expected to play in the multilateral trading system.   
50. Many Members welcomed China's measures to enhance transparency.  Nonetheless, they 
considered that some aspects of its trade regime  remained complex and opaque.  Members encouraged 
China to take further steps to improve transparency .  Some Members considered that foreign investors 
had not had the opportunity to present their views on given areas in the drafting procedures of laws 
and regulations, nor had they been provided sufficient time and information to prepare for the implementation of new laws. 
51. Many Members welcomed China's submission of  its initial offer to join the Agreement on 
Government Procurement. 
52. Some Members regretted the late circulation of  the Government report and hoped that China 
could explain the delay.  
53. Members looked forward to receiving any out standing replies to their advance written 
questions. 
54. The representative of Brazil
 stated that China's growth and development provided a key 
contribution to the growth of international trade;   this was especially relevant under the current 
situation of reduced rates of growth in the deve loped economies.  He was concerned about Brazil's 
growing trade deficit with China, as well as imbalanc es in the composition of trade.  The rapid growth 
of certain Chinese exports affected labour-intensive sectors in Brazil, leading to growing protectionist pressures.  This situation should be addressed th rough a combination of short-term relief and 
long-term promotion of balanced bilateral trade. 
55. Tariffs and non-tariff measures had been redu ced progressively both unilaterally and in 
accordance with China's WTO co mmitments.  China had also taken steps to simplify its WT/TPR/M/199 
Page 12  
 
 administration of other border measures, such as standards, sanitary and phytosanitary measures and 
contingency measures.  However, only 32% of  standards in 2005 were based on international 
standards.  Although the average MFN tariff on agriculture fell from 23.2% in 2001 to 14.5% in 2007, the complexity of the SPS regime and inspection pro cedures affected predictability and trade flows.  
He was equally concerned with the use of import lic ences to regulate specific imports and to influence 
prices.  
56. The representative of Mexico
 asked for more information on the Chinese Government's 
measures to address problems such as:  promotion of consumption;  the disparity between urban income and rural income;  environmental problems;   and the lack of development in the capital 
market.  Recent inflationary pressure and the rapid growth in international reserves were clear signals 
of the need for China to accelerate currency revaluation with respect to other Members' currencies.  
This would reduce the pressure felt by other countries to revalue their currencies with respect to the 
U.S. dollar, and contribute to a greater balance in in ternational trade and reduce protectionist trends.   
57. There had been some growth in China's use of the WTO dispute settlement mechanism, and 
there was a need for additional e fforts to increase transparency in  the legislative frameworks and 
reform of trade-related laws.  Further efforts were  required by China to improve these aspects of trade 
policy;  this would facilitate the conclusion of b ilateral trade agreements and help to reduce the 
growing number of trade disputes within the WTO, where China was participating more and more as 
a defendant.  The recent bilateral investment ag reement signed between Mexico and China would 
enable them to facilitate their reciprocal investments.   
58. The Chinese Government was paying greater attention to services, for example, financial 
services, which would help increase productivity, gr owth of the economy, and generation of more 
jobs.  He welcomed China's efforts to liberali ze services and promote effective competition, which 
was lacking due to the high degree of state control.   
59. Most agricultural taxes had been eliminated  in 2006, and there had been an increase in 
financial support to farmers.  Howe ver, these efforts had not been sufficient, in view of the growing 
disparity between average growth in rural and urban areas.  Fewer distortions and greater trade were 
needed to solve the current food crisis.    
60. China was the world's second largest emitter of greenhouse gas, and there was need to avoid 
further environmental harm in this sector.  Th ere was a possibility of permitting greater competition 
and reducing pollution in the energy sector.   
61. On manufacturing, Mexico was particularly co ncerned about incentives and other types of aid 
that continued to be granted on leather footwear , textile, electronic and electric products, steel, and 
chemical industries.  Such incen tives needed to be reviewed by th e Chinese Government to ensure 
their compatibility with China's WTO commitments. 
62. The representative of Switzerland
 stated that a survey carried out by the Swiss Embassy in 
Beijing showed that over half of the Swiss compan ies located in China regarded its overall business 
climate as positive, but there remained many restric tions and a complicated regulatory environment. 
63. He congratulated the Chinese authorities for th eir efforts to enforce administrative and 
judicial decisions to strengthen the legal framework  for intellectual property rights (IPRs).  However, 
there remained concern about the lack of appr opriate infrastructure and sufficient manpower to 
guarantee enforcement of these decisions.  Furthe rmore, the current legal framework for the 
protection of geographical indications (GIs) in China created some confusion among producers and 
consumers and raised several questions.  He was interested in knowing what measures China intended 
to take in order to fully comply with its obliga tions under the TRIPS Agreement, how a new law on  WT/TPR/M/199 
 Page 13 
 
 
 GIs was to fit into the existing system of GI protec tion, and what measures would be taken in order to 
avoid possible conflicts between the GI registrations and the new law. 
64. He was concerned that tariff rates were incr eased for a number of products, sometimes quite 
significantly, and wished to know China's reasoni ng behind such increases.  Switzerland considered 
that the imposition of consumption (or excise)  tax on certain goods, including luxury watches, 
contradicted the progress made in tari ff reduction and quota elimination.  
65. Switzerland appreciated the way China had ta ken into account the experiences of other 
Members to ensure consistency of national le gislation with the Agreement on Government 
Procurement.  He requested more information on how the national Procurement Law was applied at 
the local level. 
66. He requested a copy of the revised version of the Implementing Regulation of the Law on 
Import and Export Commodity Inspection, which en tered into force on 1 December 2005.  He hoped, 
that these measures would not contradict China's commitments towards an open economy.   
67. The representative of Colombia  noted Colombia's interest in  balancing its growing trade 
deficit with China:  Colombian exports to China we re hardly diversified, and its exports, especially 
sugar, suffered from restrictions.  On the other hand, Colombian imports of Chinese goods, many of 
which were subsidized, were  fairly diversified.   
68. The representative of the Republic of Korea  appreciated China's efforts to improve 
intellectual property rights enforcement and hoped to see further measures in this regard.  Services 
liberalization had been slow and most services sectors were still subject to a high degree of state control.  In order to boost grow th and improve its econom ic efficiency, China would gain from further 
openness in telecommunication, distribution, constr uction, and financial services.  Korea hoped China 
that would improve its initial offers in these ar eas in the ongoing services negotiations.  China's 
application for accession to the GPA, made in 20 07, was within the timeframe specified during 
China's first Trade Policy Review.  Nonetheless, Korea was disappointed with the initial offer in 
terms of, inter alia :  the proposed high threshold levels;  the very limited c overage of goods and 
services;  and the lack of coverage of entities at Annex 2 and Annex 3.   
69. The representative of Australia
 welcomed the programme of reforms that was raising 
hundreds of millions of Chinese citizens out of poverty and assisting the development of China's 
western provinces.  He welcomed China's progressive economic and trade liberalization, which had enabled it to make a valued contribution to the mu ltilateral trading system;  he encouraged China to 
translate the liberalization into WTO commitments.  Australia was negotiating a bilateral free-trade 
agreement with China, a single undertaking cove ring goods, agriculture, services and investment, and 
containing provisions intended to be  comprehensive, ambitious, libera lizing, and in compliance with 
WTO disciplines. 
70. While China's economic reforms had facilitated progressively easier access to its markets, 
significant regulatory and other barriers remained;  th ey continued to hinder foreign goods exporters, 
service suppliers, and investors.  As China pursued th e next stage of its economic expansion, it would 
need to eliminate the bureaucratic and informal barr iers that hindered trade and foreign investment.  
He encouraged China to continue its reforms in re gulatory predictability and transparency in services, 
with a view to achieving a high degree of regulatory efficiency and certainty.  Australia was concerned about the tariff and non-tariff barriers that China imposed on agricultural products, which 
impeded trade and imposed significant costs on Chinese consumers.  Australia was also concerned 
about China's imposition of interim export duties on many tariff lines. WT/TPR/M/199 
Page 14  
 
 71. The representative of Argentina
 stated that more competition in services and further 
integration of agriculture into the international ma rket were two areas where the Government's efforts 
could promote harmonious social development and gr eater poverty reduction, particularly in rural 
areas.   
72. The representative of Hong Kong, China  noted that China had bound all its tariff lines at 
ad valorem  rates;  the applied MFN tariff rates were ve ry close to the bound rates, thus imparting a 
high degree of predictability to the tariff regime.  He looked forward to the continuation of the trend 
of liberalization in keeping with China's developmen t needs.  There had been continuous efforts to 
align China's national standards with international norms;  such efforts would greatly facilitate the 
flow of international trade. He welcomed continui ng efforts to update patent and trade mark law to 
enhance legal protection, as well as increased em phasis on law enforcement and public education on 
the importance of the protection of intellectual property rights.    
73. China had been liberalizing its services sectors cl osely in line with its commitments under the 
GATS.  Given the growing importance of services trade in terms of its increasing contribution to 
China's GDP and employment, he believed that conti nued liberalization, particularly in financial and 
telecommunications services, would be of substa ntial importance to China's further economic 
development.   
74. He welcomed that the number of anti-dumping investigations initiate d and final measures 
taken by China had been on a declining trend dur ing the period under review.  He encouraged all 
WTO Members, as a matter of principle, to continue  to exercise caution with respect to the use of 
trade remedies against possible a buses.  He was pleased to note th at China had submitted its initial 
offer to join the WTO Agreement on Governme nt Procurement in December 2007, and looked 
forward to its early accession to the Agreement.  China's sustained economic growth, especially after 
its WTO accession, presented to the world an exempl ary case for the benefits of integration into the 
multilateral trading system.   
75. The representative of the United States  stated that the United States agreed with the 
Secretariat that while China had, by and large, c ontinued to liberalize gradually its trade and related 
measures, these were still used as instruments of industrial policy, characterized mainly by direct 
intervention in the economy.  Such government inte rvention appeared to be a reflection of China's 
historic transition from a centrally planned econom y to a free-market economy governed by rule of 
law.  It was critical that China' s leadership should not retreat from the substantial progress made to 
date in reforming its economy.   
76. China's already complex export regime had beco me considerably more restrictive.  While 
China offered various rationales, export restricti ons, particularly on raw materials, were causing 
significant distortions to international trade.  As  the Secretariat's Report explained, these tended to 
discourage exports and increase the domestic supply of the products concerned, thus lowering their 
domestic prices than otherwise;  they possibly assisted downstream processing of these products, 
without necessarily helping to improve the environment.  
77. The Steel Policy issued in July 2005, under which the State managed major aspects of China's 
steel industry, remained in effect.  China conti nued to heavily subsidize a wide range of domestic 
industries, and to pursue unique national standa rds in a number of high technology sectors where 
international standards already existed.  China was also creating an increasingly restrictive investment 
regime.  The Government's continued efforts to intervene in the economy were a cause of great 
concern.  There was also evidence that those efforts might not be achieving the intended objectives, as 
the Secretariat's Report noted.     WT/TPR/M/199 
 Page 15 
 
 
 78. Enforcement of intellectual property rights remained weak, and infringement remained 
widespread in China.  The numerous actions undertaken by the Chinese authorities to improve 
enforcement had not significantly reduced infringement levels.   
79. The services sector continued to be characteri zed by state involvement, and there were still 
significant restrictions on foreign investment and pr ivate-sector activities in several of the individual 
sectors including banking, insurance, securities, asset  management, and telecommunications services.  
The United States urged China to address these areas as a matter of priority in its revised services 
offer in the DDA. 
80. With regard to sanitary and phytosanitary measures, China had not fully embraced 
international standards, science-based rulemaking and advance notification.  However, China had 
made a commitment to make improvements in this area.  
81. The United States and China had continued to use the U.S.-China Joint Commission on 
Commerce and Trade to seek pragmatic resolutions to pressing trade issues, and had created new dialogues like the U.S.-China Strategic Economic Dialogue.    
82. The representative of Singapore, on behalf of ASEAN members
, stated that China's 
expansionary fiscal policy, coupled with the reorga nization of state-ownership, prudent capital market 
measures, widespread legal and transparency refo rms, and investment incentives had propelled China 
to become one of the world's top FDI destinati ons.  Recent deregulation guidelines should serve to 
attract even more foreign investment, as they aimed to equalize access for foreign and domestic investors.  She was convinced that the goals of the 11
th Five Year Plan to double GDP per capita in 
2010 relative to 2000 and to build a harmonious soci ety via a people-oriented approach to economic 
development were well within reach.  She supported China's global strategy of achieving a "mutually 
beneficial win-for-all" through fair a nd balanced economic globalization.    
83. ASEAN members appreciated that China had re duced its 100% bound tariffs in line with its 
WTO accession protocol;  99.4% of lines were ad valorem , providing exporters with a predictable and 
transparent trading environment.  Continued sy nchronization of MFN and interim duty rates would 
enhance trade even further.  In addition, China had eliminated various non-tariff measures, including 
import quotas, licences, and tendering by 1 Janua ry 2005, and liberalized trading rights on 
1 July 2004, six months ahead of schedule.  
84. China had introduced major liberalizing reforms in  agriculture by reducing state intervention, 
border measures, and tariffs, and had converted  import quotas into TRQs.  Nevertheless some 
challenges remained, such as centre and sub-national regulations, standards, and procedures affecting 
imports.  ASEAN encouraged China to  facilitate trade in all aspects. 
85. ASEAN commended China on its GATS commitments  covering 9 of the 12 large sectors. 
ASEAN also noted that China was turning its attention to services in ongoing structural reform 
efforts.  Noteworthy progress could be seen especia lly in the financial services sector, including 
banking.  Developments in these sectors could improve productivity and growth. 
86. The ASEAN-China Free Trade Area had been established under the Framework Agreement 
on Comprehensive Economic Cooperation between Ch ina and ASEAN.  The Agreement on Trade in 
Goods and an Agreement on the Dispute Settleme nt Mechanism for the Framework Agreement 
entered into force in January 2005, while the Agre ement on Trade in Services entered into force in 
July 2007.  China was also a member of the ASEAN +3 framework of cooperation under which high 
level meetings were held annually;  the most recent was in November 2007. WT/TPR/M/199 
Page 16  
 
 87. The representative of Japan
 appreciated recent progress in IPR protection in China.  The legal 
framework had been strengthened, and so had en forcement, as illustrated by the number of IPR 
violation cases dealt with by the criminal court.  Nonetheless, IPR right holders were still suffering 
strongly from counterfeits and pirate d goods in China.  One reason might be that illegal traders dealt 
with IPR infringing goods in more sophisticated ways.  Japan urged China to take measures to 
strengthen IPR protection, including more effective cr iminal proceedings to deter IPR violations.    
88. China had made relatively broad commitments upon its accession to the WTO as a 
developing country.  Japan's particular interests la y in financial services, including statutory insurance 
and A-shares.  Japan was also in terested in computer-related services, telecommunications services, 
construction services, distribution services, and audi o visual services.  Japan wished to see more 
transparency in China's domestic regulations, smoother administrative procedures, and steady 
implementation of its commitments.  In particular, Ja pan was interested in seeing relevant legislation 
being operated consistent with the WTO rules.  
89. Japan had some concerns in light of the Anti-dumping Agreement, with respect to 
investigations and decisions taken by the Chinese aut hority.  In some cases the lack of transparency 
obstructed due processes for investigated enterprises.  For this reason, Japan paid attention to the 
investigations and decisions by the Chinese author ities.  Japan was also concerned about China's 
export duties and export licensing systems on vari ous non-ferrous metals including rare earths. 
90. The representative of Canada  stated that as China's economy expanded, it was essential that 
the country continued to refine the tools of stat e planning and intervention.  Achieving China's 
development objectives would depend on its ability to  establish a modern regulatory framework and 
implement its development goals systematica lly, through regulatory agencies, state-owned 
corporations, and the private sector.  China's new Anti-Monopoly Law reflected a move towards 
adopting a modern and transparent competition law and Canada was pleased by this step.  China 
should ensure that its regulatory institutions ha d the authority, capacity, and independence necessary 
to meet the challenges of a modern economy under a framework of transparency and accountability.  
Canada was concerned that China had not yet achie ved the balance of non-discrimination between its 
state-controlled economy, its private sector, and the participation of foreign players.     
91. When the China Iron and Steel Industry Developm ent Policy (Steel Policy) was released, in 
2005, Canada, Mexico and the United St ates had agreed with the goal of an efficient, competitive, and 
rational steel industry envisaged, but had misgivings  regarding the implementation of the initiative to 
the extent that it dictated industry outcomes and invo lved the Government in decisions that should be 
made by the marketplace.  While there had been a number of developments in both the global and 
Chinese steel sectors since then, the three Government s continued to have fundamental concerns with 
the Chinese Government's use of policies, practices,  and programmes to influence, if not manage, 
market outcomes.   
92. Canada had concerns about the provision of  financial information services in China, a 
concern that had also been raised by other Member s in the 2007 transitional review of China in the 
Committee on Trade in Financial Services.  Chin a's services commitments at accession had been 
recognized for their breadth and significance.  As it looked to accelerate its reform of service 
industries, China needed to ensure  that service sector commitments, particularly those relating to 
national treatment, independent regulation, and comm ercial presence, were resolutely respected.   
93. In tourism, China had granted approved destina tion status (ADS) to other Members in recent 
years.  However, Canadian suppliers continue d to be barred from offering services to Chinese group 
tours in the absence of ADS.  Canada was one of the first WTO Members to request approved destination status, but remained to  be listed, as the necessary negotiati ons on the Canadian application 
had not resumed.  She looked forward to China's cl arification on how this issue could be resolved.    WT/TPR/M/199 
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 94. China's elimination of tariff rate quotas on vegetable oils was a positive step toward 
addressing its shortage in edible oils;  on the othe r hand, the re-introduction of price controls on 
commodities like grains as a response to food price in flation could sustain the shortage by providing 
little incentive for Chinese producers to increase supply.  The elimination of the tariff disparity 
between competing substitute oilseeds would result in a fairer and more competitive market in China. 
Minimizing unnecessary trade-distorting barriers to imports would improve choice for Chinese 
consumers;  more could be done to reduce barrier s, for example, on agriculture and food products 
such as beef.  Canada encouraged China to follo w a science-based approach to regulatory measures, 
taking into account existing standards recognized internationally.    
95. Canada applauded China's continuous efforts to improve its framework for protection of 
intellectual property.  However, further progr ess was required to meet the requirements of 
international agreements.  A strong domestic environment for intellectual property would be 
indispensable as China sought to stimulate domestic  research and development, encouraged brand 
name development, and fostered high technology companies and industries.  
96. In order to ensure continued economic succes s and to stimulate domestic innovation, China 
should ensure that the business environment was open  to foreign investment and provided effective 
protection of intellectual property rights;  this required well functioning ma rket-driven mechanisms. 
China's focus on classifying, evaluating, and direc ting foreign investment in virtually all sectors 
appeared to be a remnant of the early stages of th e reform and opening up policy.  China should seek 
to further liberalize its investment regime and ensu re that investment-related decisions were taken by 
commercial entities under a transparen t and rules-based framework.   
97. The representative of Chile  stated that China's real GDP growth in excess of 10% per year 
had resulted in not only fewer poor people in China,  but better living with better and cheaper products 
of mass consumption for the world's consumers.  The recently signed agreement between Chile and 
China on services was in line with the GATS and co mplemented the agreement on goods, which was 
already in force, and would provide a new legislativ e framework to regulate bilateral trade relations in 
services.  Since signing the FTA with China just over  a year previously, Chilean exports to China had 
grown 100%, and there had been a 40% increase in imports from China.    
98. Bilateral relations had been successful from a tr ade point of view but had also been extended 
to other areas.  In 2007, the two countries signed the Memorandum of Understanding on the 
Environment, and the first China-Latin America Bu siness Summit had been held in Santiago, Chile. 
99. The representative of the European Communities  stated that the Chinese Government had 
recognized the importance of meeting macroeconom ic challenges, of forward-looking fiscal, 
monetary, and structural policies, boosting consumpti on, and reducing inequalities.  One of the main 
challenges would be balancing social, environmen tal, and economic devel opments.  Developing 
further domestic consumpti on would not only benefit Chinese citizen s, but also help to redress global 
trade imbalances;  a gradual move towards a more flex ible exchange rate would also contribute to this 
endeavour.  He encouraged China to implement ef ficient social and employment policies to fight 
poverty while profiting from the fruits of internationa l trade.  He asked about steps China was taking 
to ensure that labour standards and minimum levels of social protection were being fostered in order 
to achieve long-term sustainable growth.  
100. He noted that constructive engagement to so lve frictions between the EC and China was 
illustrated by the first meeting of the "EU- China High Level Economic and Trade Dialogue 
Mechanism" in Beijing in April 2008.  
101. China had to demonstrate that its market  was open and that it provided fair, non-
discriminatory access in line with its WTO commitment s;  this was not just China's obligation but was WT/TPR/M/199 
Page 18  
 
 also in its own interest.  China had made effo rts to comply with its WTO obligations, pursuing 
substantial reform programmes, in both its trade an d investment regimes.  Nonetheless, China had not 
yet embraced the key WTO principles of non-discrim ination and national treatment, nor had it fully 
institutionalized and enforced market mechanisms  or made its trade regime predictable and 
transparent.  Despite various bold reforms, the le vel of state interference in the economy was still 
noticeable, distorting market functioning. 
102. While the EC welcomed the positive developmen ts of disconnecting regulators and economic 
operators in some areas, such as the postal sector, there were signs of stagnation or regression in other areas, such as air transport and computer reservation systems.  In addition, there was growing government intervention in terms of price control, or  so-called '"guidance", in some areas.  In this 
context, energy prices were being distorted, resu lting in distorted input costs for upstream production, 
such as steel and aluminium.  State interventi on in oil prices, which were 15-20% lower than 
international prices, provoked huge losses to refining companies, and were partially compensated through a subsidization scheme provide d only to state-owned enterprises.  
103. The financial system still relied on government -guided credit, catalogues, and lending quotas. 
Such administrative interference was hindering the smooth-functioning of the capital markets, 
resulting in inefficiencies, and distorted the price a nd hence the allocation of capital.  When applied in 
export credit, it was difficult to see how this could be fully compatible with the WTO Agreement on 
Subsidies and Countervailing Measures.  He noted  a grey zone where public money ended and 
company decisions started, when a Chinese company could secure a US$10 billion export credit line.  
104. The EC was concerned about a growing te ndency for the Government to use export 
restrictions, quotas, taxes, differentiations in VAT refunds, and continuo us and unpredictable 
adjustments of VAT rebates, which all led to distor ted markets of raw materials.  China continued to 
select strategic industries to protect them from comp etition and foreign investme nt, and foster national 
champions and discriminate against foreign-invested enterprises.  The EC wish ed to learn the basis on 
which these industries were selected and to what extent these policies fulfilled the principle of 
national treatment;  and how long a country should be able to nurture the domestic industry, or claim 
to protect an infant industry, when that industry (such as steel and shipbuilding) was already one of the world's leading producers or exporters.  
105. The best way to encourage technology transfer, based on voluntary company decisions, was 
to create an environment that encouraged such tr ansfer through stepping up efforts on IPR protection, 
as well as a transparent and non-discriminatory inv estment regime.  In this context, the EC had 
serious concerns regarding China's restrictive sy stem for importing and exporting technology, with 
catalogues of restricted and prohibited imports a nd exports.  The underlying  reasons for applying 
these restrictions were often unclear. 
106. The EC acknowledged and commended China's effo rts in building up a comprehensive legal 
system for protecting intellectual property rights (IPRs).  However, those efforts had not significantly 
reduced infringement.  Further efforts were needed to improve enforcement of IPRs and safeguarding 
the legitimate interest of right holders were need ed.  He asked China to implement a system where 
patent rights were fully respected and protection wa s not undermined by a flood of models registered 
hastily in China without prior examination. 
107. The emergence of "home-grown" mandatory na tional standards appeared to be geared 
towards building a Chinese-owned standard portfo lio, protecting Chinese industry and excluding 
leading technologies of foreign origin.  The EC urge d China to adopt a more transparent system of 
integrating international standards in  the Chinese standardization system.  WT/TPR/M/199 
 Page 19 
 
 
 108. The EC welcomed China's efforts to enhan ce government transparency.  However, much 
remained to be done to make doing business in Chin a simpler and more predictable.  The EC urged 
China to step up efforts to be more forthcoming vi s-à-vis the stakeholders when drafting regulations 
and standards.  Restricting voting rights in standardization committees to domestic companies could not be in China's interest.  Excluding foreign compan ies with legitimate inter est, even companies that 
employed many workers in China and were importa nt contributors to fiscal revenues and technology 
transfer, was not justified and was discriminatory.     
109. The EC appreciated China's submission of its  application for accession to the Agreement on 
Government Procurement (GPA) and the initial offe r.  The EC looked forward to further fruitful 
cooperation to both the reform of China's procur ement system and the development of an offer 
comparable to that of the other GPA parties. 
110. The representative of Turkey
 noted that China's total trade in goods accounted for 13% of 
global trade in 2006;  this was impressive when c onsidering that China's share in the world trade had 
been less than 1% until the end of 1970s.  He encour aged China to sustain liberal investment policies 
in the upcoming years.  Further compliance with th e WTO commitments could be the way to  increase 
FDI inflows into China while creating more empl oyment opportunities for Chinese workforce.  The 
stronger fiscal position due to revenue increases and the sustained decrease in the fiscal deficit were 
positive developments.  
111. Due to economic reforms, especially accession to the WTO, trade barriers including tariffs, 
import and export prohibitions, licen sing requirements, and other restrictions had been reduced 
considerably.  Turkey encouraged China to conti nue on this path.  He noted the complex SPS and 
export regime, the latter had become considerably more  restrictive with the application of a variety of 
measures, such as export taxes, export prohibitions , licensing, and quotas.  Although there had been 
considerable improvement in encouraging private sector initiatives, the large number of state-owned 
enterprises in China posed a challe nge for the free market economy.  Despite some steps to strengthen 
the IPR protection, there remained abuses in the ar eas of trade marks, including the registration of 
trade marks.  He urged China to continue its e fforts to enhance IPR protection and strengthen its 
enforcement.   
112. The Multi-dimensional Trade and Economic Partne rship Strategy put into practice between 
Turkey and China in 2006 was aimed at improving bila teral trade in a more balanced and sustainable 
way, economic cooperation had also  been developed, especially in investment, construction, and 
tourism.     
113. The representative of India  stated that China's growth was a remarkable testament of how a 
developing country could lift itself out of poverty.  The trade gap between India and China had been 
widening;  China enjoyed a surplu s of almost US$10 billion.  The growing deficit needed to be 
addressed to sustain the rapidly growing bilateral trade relations.  A possible RTA had also been 
examined:  studies in this regard were at an advanced stage.   
114. The representative of Chinese Taipei  encouraged China to purs ue a more transparent and 
predictable trade regime, particularly in respect of :  the lack of opportunities for Members to comment 
on new laws, regulations, and other measures pert aining to trade in goods and services;  China's 
foreign investment policy;  export prohibitions;  and restrictions on foreign-based financial, tourism, 
and legal services providers. 
115. As China became one of the major players in the multilateral trading system, it inevitably also 
faced growing challenges.  In this context, while  China's success in creating a vigorous economy was 
to be admired, China might increase its efforts in areas such as environment protection, competition, 
and labour rights. WT/TPR/M/199 
Page 20  
 
 116. The representative of Costa Rica
 recognized China's efforts towards gradual liberalization and 
its commitment to the multilateral trading system.  The WTO had been strengthened since China's 
accession in 2001.  
117. China had given signs of spectacular growth ra tes over recent years.  GDP growth rates of 
more than 10% had also meant a rapid increase in per capita GDP and had helped to reduce 
unemployment and poverty in the country.  He commended this achievement.  Costa Rica also 
appreciated China's efforts to enact  reforms, especially in increasing the level of transparency with 
trade-related policies, practices, and measures, and encouraged China to continue along this road.  
118. Costa Rica wished to deepen bilateral rela tionship with China and had recently sent a 
delegation to Beijing for the purpose of initiating st udies for a bilateral trading agreement.   
119. The representative of Pakistan  noted that China's domestic po licy reforms continued to build 
on previous reforms, and ensured the exceptional growth  of more than 10% year after year.  The most 
noteworthy aspect of recent reforms was the em phasis on transforming the economic development 
policies to make them pro-innovative, resource-sa ving, and environment-fri endly.  The 2006-2007 
Comprehensive Work Plan for Energy Savings and Emission Reduction was one such example. 
Already total emissions of a major pollutant w as slowing down and there was a reduction in energy 
consumption per unit of GDP.  
120. One of the problems noted in the previous TPR was that certain sections of the society had 
not been able to share the economic boom.  While the number of poor being lifted out of poverty each 
year had been commendable, the establishment of a credible social security system, including an 
increase in the subsistence allowance, would ensure th at no section of the society was left out of the 
rising prosperity for long.  The Rural Medicare system, which now covered almost 90% of 
population, was a major achievement.   
121. Implementation of the Real Right Law on 1 October 2007 was another milestone:  it had 
made clear, for the first time, that the real right of  the state, collective, individual or any other right 
holders should be protected by law and not in fringed by any organization or individual.   
122. Other noteworthy reforms had been undertaken  in the capital markets, financial sector, 
foreign exchange, taxation policy, and protection of intellectual property rights.  While some 
Members had reservations on the pace of some of the se reforms, Pakistan felt that these reforms were 
a showcase for the rest of the world to follow, and ensured that China could continue on its path of 
increasing openness to trade, and greater reliance on markets.  
123. The growth in the Chinese economy had lifted a v ast majority of its population out of poverty 
and had also been a blessing for the rest of the wo rld.  Through expansion of trade and making foreign 
direct investment in other developing countries,  poverty rates were being decreased in other 
developing countries.   
124. Pakistan and China had already implemented an FTA, providing mutual duty-free market 
access on an agreed list of products. Negotiations on free trade in services were also in the final stage.  
In addition, a framework agreement, signed by the two countries, also explored new ways to link the 
West China development strategy to Pakistan's national development plan by revitalizing the 
silk-route.   
125. The representative of Honduras  noted that China was one of th e main recipient of FDI, and 
was a large source of foreign investment abroad.  Thus, China had produced a large transfer of 
technology and established more modern production processes through new management techniques 
and increasing the skills of its workforce.  Honduras also congratulated China on its stable financial  WT/TPR/M/199 
 Page 21 
 
 
 situation, which in general was manifested in th e reduction of the fiscal deficit, public debt, and 
unemployment.  
126. He commended China on its measures to make its trade regime more transparent, by  
introducing, for example, the Regulation on Open G overnment Information, which had entered into 
force on 1 May 2008;  establishing the National Office for the Prevention of Corruption;  and by 
adopting new legislation on intellectual property, the company tax, the anti-monopoly law, and the 
law on bankruptcy.   
127. On customs issues, Honduras was interested to  know how long it took to register importers 
and exporters, whether the register had been computer ized, which institutions were part of the system, 
and in what cases a certificate of origin was requi red as part of customs formalities.  It was also 
interested to know what the "manual on processing" consisted of, and whether there was a fee for the 
electronic or manual treatment of customs declar ations.  He enquired about the customs clearance 
time for goods, whether such information was publishe d on Internet and, if not, where it could be 
obtained.  
128. The representative of Cuba  stated that an increase of protectionism in certain Members had 
converged in major barriers to Chinese exports and had caused losses and additional production costs.  
He was concerned that certain comments and questions by Members involved judgements and 
questions about the economic structure, the political, le gal, and social structure of China;  these were 
not within the competence of th e WTO because they were not include d under the obligations in the 
WTO Agreements and went beyond the undertakings required by Members.  Some comments referred 
essentially to issues exclusively concerning domestic re gulations or the principles of international law 
and of national sovereignty.  Some positions presented by Members implied double standards;  they 
massively subsidized agriculture and distorted intern ational trade, did not comply with all obligations 
of notifications to the  WTO, and did not use discipline in respect of others nor the ruling of the dispute settlement.   
129. In November 2006 in Beijing, 48 African count ries attended the Summit of the China-Africa 
Cooperation Forum and the Third Ministerial Conf erence.  China announced eight new measures for 
China-Africa cooperation, including duty-free access to the Chinese market and programmes for debt 
relief for LDCs in Africa.  Cuba ha d offered support to these countries.   
130. The representative of Côte d'Ivoire, on behalf of the African group
 welcomed the generosity 
of China's cooperation policy for competitive financ ial conditions.  Trade between China and African 
countries had grown rapidly.  Nonetheless, he asked if  China intended to chan ge the structure of its 
trade with Africa, which was based on imports of raw materials against exports of Chinese 
manufactured goods and products towards Africa.  The current pattern of bilateral trade could 
contribute to Africa's de-industrialization.   
131. The economic attractiveness of China in terms of productive investment had been recognized 
and established thanks to the quality and abundance of the workforce;  its major potential as an 
internal market consumer; and the stability of the in stitutions and the currency.  He requested China's 
views on the question of under-evaluation of its cu rrency, which gave it an advantage on export 
competitiveness;  he asked how China intended to accen tuate the opening of the financial and banking 
sector to foreign competition and to liberalize income flows, particularly in terms of currency control 
and exchange control;  and he asked about the le gal framework for fair competition between Chinese 
investors and foreign investors in the face of existing restrictions on investment.   
132. African countries had considerable expectations in the multi-sectoral cooperation with China;  
in terms of input in the development process of A frica and individual African countries, he wondered WT/TPR/M/199 
Page 22  
 
 whether substantive changes were to be made to  the structure of Chinese imports and whether the 
two parties could properly balance the bilateral trade.  
133. The representative of Benin
 noted China's major efforts to construct an open and dynamic 
economy;  there had been reforms particularly in  monetary, budgetary, tax, and energy sectors.  
Investment in human and physical capital was am ong the major factors to promote economic growth 
and development.  He appreciated China's continue d support for developing countries, particularly the 
LDCs, thus contributing to ensuring their developmen t and to combat poverty throughout the world.    
134. The representative of Venezuela  noted that the economic growth in the past few years had 
resulted in increases in savings, investment, and Chin a's participation in international trade in goods 
and services;  unemployment had been reduced a nd per capita GDP had grown.  There was a 247% 
increase in bilateral trade between Venezuela and China between 2004 and 2006, and a number of 
bilateral agreements had been signed.    
135. The representative of Uruguay  noted the systemic importance of the TPR of China and, in 
general, its active participation in the multilatera l trading system.  After seven years of mutual 
learning, in which China had reaffirmed its commi tment to the principles, norms, and disciplines of 
the WTO, the multilateral trading system had been st rengthened.  The social results were encouraging 
and showed that an open trading system with rules could offer major benefits for developing 
countries.  Since the previous TPR of China, its growing presence in intern ational trade had begun to 
be seen in bilateral and regional free-trade agreem ents.  In the past 20 years, Uruguay and China had 
signed many agreements, protocol s, and understandings, including in the sanitary and phytosanitary 
field.  He was concerned about Uruguay's bilate ral trade deficit with China, and hoped that 
discriminatory treatment against some of Uruguay's export items in China would be eliminated;  for 
example, washed tops, and coned wool, a basic e xport item for Uruguay was subject to discrimination 
in internal tax compared with unwashed wool and tops.   
136. The representative of Barbados  stated that China continued to demonstrate its firm 
commitment to multilateralism and to the stability it  could help to provide to the global system, 
through measures that sought to rebalance its patte rn of economic growth, a nd by adopting prudential 
fiscal and monetary policies to promote a macr oeconomic outlook that continued along a positive 
growth trajectory.  To this end, she wished Chin a every success in the achievement of its Eleventh 
Five Year Plan.  She commended China's support for advancing the devel opmental interests for 
developing countries, including small, vulnerable economies (SVEs).  
137. The representative of Norway  stated that China had made and continued to make great efforts 
to develop the economy for the benefit of the w hole population.  He commended focus on rural and 
regional development including c ontinued investments in infrastructure and its upkeep, increasing 
education, health and social benefits, even above the average annual growth in tax income. 
Countering the widening social and economic dispari ties was of the essence, and was apparently high 
on China's political agenda. 
138. The emphasis on "scientific development" with  a focus on balanced development and quality 
growth, rather than growth in quantity, was also an important step in the direction of placing environmental concerns and efficient energy cons umption as one of the major priority areas of the 
broader economic policy.  This highlighted the importance of using the right incentives in order to optimize the targeted results of the various polic ies.  There had been little development regarding 
pricing since China's previous Review:  correct market-oriented pricing that included externalities 
should be enforced systematically and more rapidly for a wide variety of goods and inputs, including 
energy.    WT/TPR/M/199 
 Page 23 
 
 
 139. Norway urged greater emphasis on eliminating expo rt rebates, for the reasons elaborated in 
the Secretariat's report.  While welcoming China's a pplication to join the GPA, he was interested in 
how utilities, such as electricity, bus, railway, airports , ports, post, water, and sewage were treated in 
public procurement rules in China.  He asked about  further measures being planned to strengthen the 
implementation of the rights of IPR holders and to  ensure transparency in policy processes and all 
IPR-related legal and administrative procedures both for domestic and foreign users and stakeholders. 
The Chinese system of customs and imports for seaf ood continued to be very complex;  different 
points of entry used different sets of rules and documentation requirements.   
140. The representative of Nigeria  stated that structural reforms in China had led to the 
introduction of market mechanisms that had ensured more efficient allocation of resources.  He hoped 
that the bilateral and regional trade agreements China had negotiated or was negotiating would not 
diminish its commitment to the multilateral trading system.  As stated in the Government report, 
multilateral trade negotiations in the WTO should ensure an outcome benefiting all Members, 
particularly the developing countries.   
141. The representative of Ecuador  stated that China and Equator, both developing countries,  
through the G-20, supported the binding process for the reduction of domestic support, for the 
elimination of subsidies, and for the consolidatio n of a real access to markets in the agricultural 
sector, among others. 
142. He hoped that his concerns with regards to  massive imports of certain Chinese products, 
including textiles, ceramic and crockery, which mi ght cause damage to Ecuador's national production, 
could be resolved through direct negotiations and pr actical solutions.  He asked China for more details 
about the VAT levied on Ecuador's exports of agricultural products but not on China's domestic 
products.   
143. The representative of the De mocratic Republic of Congo  stated that China had assisted 
beneficiary countries in areas like agriculture , education and culture, public health, 
telecommunications, electricity, energy, transport, and infrastructure.  China had cancelled public 
debts.  As regards South-South cooperation, the Chinese aid had been sincere and uninterested.  As a 
developing country that was achieving its own asc ension to economic development, China was trying 
to support other developing countries, such as those on the African con tinent and the LDCs, by 
strengthening the developing capac ity, which some called a new Chinese colonization.  China gave 
tariff-free treatment to certain goods coming from th e LDCs.  In November 2006, China had decided 
to create a Chinese-African development fund to support Chinese enterprises and to encourage them 
to invest in Africa;  it had also decided to open th e Chinese market further to African countries, and to 
increase the number of products benefiting from zer o customs tariff coming from the LDCs in the 
African continent with diploma tic relations with China.   
144. The Democratic Republic of Congo was waiti ng for new trade-talks partners.  Western 
mining concession companies in the country had not concerned themselves with infrastructure.  The 
Democratic Republic of Congo had recently signed i nvestment agreements with China in exchange 
for infrastructure, such as roads, motorways, hospitals, schools, and sports facilities.  China was the 
finest example of a country that managed to overcome problems, such as foreign domination, humiliation, internal domestic conflicts, economic under-development, political dependence and 
instability.  China was a source of fascination, as well as worry;  its emergence caused the Democratic 
Republic of Congo to ask questions.   
145. The representative of Mali
 appreciated China's cooperation in economy and trade areas.  Its 
industrial structure owed a great deal to the aid granted by China, which was itself a developing 
country.  China had properly measured the developm ent needs and had worked carefully with and on 
them.  He welcomed the possibility of China's par ticipation in other framewo rks for cooperation, such WT/TPR/M/199 
Page 24  
 
 as the Africa-China Forum.  As an LDC, Mali welcomed the measures taken by the Chinese 
authorities to grant it duty-free, quota-free market a ccess.  In Aid for Trade, he welcomed China's 
commitment to development of infrastructure, wh ich was a condition for LDCs to insert themselves 
into the world trading system.  In this regard, he supported the statement of Côte d'Ivoire, speaking on 
behalf of the African Group. 
146. The representative of Macao, China
 noted that China was a strong supporter of the 
multilateral trading system, and that continued trade lib eralization had remained an integral part of  
China's long-standing structural reform strategy upon its accession.  China had undertaken a wide 
range of liberalization commitments;  she applau ded the firm stance that China had shown in 
implementing its WTO obligations, and believed th e country's economy would benefit from continued 
liberalization in both goods and services sectors.   
147. The representative of New Zealand  stated that New Zealand had signed an FTA with China 
on 7 April 2008, and hoped that this would take effect on 1 October 2008, following completion of 
the relevant parliamentary processes.  The FTA met the criteria each country set of being comprehensive, ambitious, and high quality;  it cove red goods, services, and investment.  As part of 
the FTA process, side instruments on labour and envi ronment cooperation were also concluded.  He 
noted that the SPS regime in China had room for further improvement.   
148. The representative of Singapore
 stated that while China's commitments in the goods schedule 
were significant and commendable, one area of  concern was the high number of anti-dumping 
investigations taken up by the Chinese Government .  Although there was a significant drop in the 
number of investigations in 2006, there was a significant increase in 2007;  the majority (27 out of 
39 cases in 2007) concerned chemicals and chemical  products.  Singapore was one of the six WTO 
Members whose exports were being investigated by  the Chinese authorities.  She was concerned with 
the increasing number of anti-dumping initiations and impositions of definitive measures by China. 
149. The representative of Angola  noted with satisfaction China's macroeconomic performance, 
which had enabled China to become one of top expor ters in the world, and reforms undertaken in land 
legislation, financial services, and intellectual prope rty rights.  He congratulated China on the high 
level of foreign reserves.  China was a model of  a successful economy and played a major role in 
international trade.  For the Africans, China re presented a development example to follow;  its 
investment on infrastructure in Africa helped to im prove intra-connectivity within Africa.  China's 
investment in Africa over the past two decades had surpassed official development aid from various traditional institutions.  China's accession to the WT O had enabled African countries to have access to 
the preferential market for their exports of manufactures.   
150. The representative of Oman
 stated that China's positive economic growth had helped in 
alleviating poverty and decreasi ng unemployment.  China had also made progress in its source of 
economic growth:  from relying on exports a nd investment, its approach now coordinated 
consumption, investment, and exports as an integrat ed force for growth.  She noted with appreciation 
China's support for development issues and issues of concern to recently acceded Members.  China 
and Gulf Cooperation Council countries were in the process of negotiating a free-trade agreement.     WT/TPR/M/199 
 Page 25 
 
 
 V. REPLIES BY THE REPRESENTATIVE OF CHINA AND ADDITIONAL 
COMMENTS 
151. The representative of China  thanked Members for their active engagement and interest in 
China's economic and trade policy developments over the past two years.  She appreciated Members' 
support of China's pursuit of further reforms and efforts to play a positive and constructive role in the 
multilateral trading system.  
152. She stated that the Chinese Government had taken steps to address the imbalances in the 
Chinese economy;  these included promoting grow th led by domestic demand.  In 2007, the 
contribution of consumption to GDP growth was higher than that of investment. To address 
imbalances in the balance of payments, Chin a had reduced or removed import duties on over 
300 products, while abolishing the automatic impo rt licensing requirement for 800 categories.  
Inflation and rising food prices, which were partly caused by international speculation, was an area of 
concern.  The primary task of China's macroec onomic policy in 2008 was to prevent overheating of 
the economy, and to keep structural price increases from developing into serious inflation.  In this 
regard, the Government would monitor food pric es and stocks, and expand production of basic 
commodities such as grain, meat, and vegetable oil.   Additionally, the Government would crackdown 
on illegal activities such as hoarding for speculative purposes and forming supply cartels to drive up 
prices.   
153. The RMB exchange rate was a "managed floa t" based on conditions of market supply and 
demand, primarily with reference to a basket of  currencies and the management of the exchange 
following suit.  The enhanced flexibility of the excha nge rate could be judged by the movement of the 
exchange rate in both directions and the appreciat ion of the real effective exchange rate and the 
nominal effective exchange rate.   
154. China encouraged imports of finished products and actively encouraged enterprises to invest 
in Africa so as to enhance their capacity to supply the international market.  In addition, China had 
granted duty-free treatment to 41 LDCs;  such tr eatment covered 98% of their exports to China. 
155. China had taken a number of measures to address  the problem of income inequality;  these 
included raising the ratio of remuneration in the initial distribution of income, and providing support 
to low-income groups through a mechanism of re gular wage increases and increasing pensions for 
retirees.  Narrowing the income gap was a long-term goal.   
156. China had never pursued the strategy of maintain ing a trade surplus:  the imbalance was to do 
largely with global economic development.  Chin a had taken a number of measures to address this 
problem by stimulating domestic demand and consumption through incentives to increase rural 
consumption, and policy measures to increase imports and investment abroad had also been implemented.   
157. On the issue of transparency , China had honoured its accession commitments and allowed for 
a certain period of comment between promulgation and entry into force of all laws and regulations.  
The Chinese Government also published all trade -related laws and regula tions in the Foreign 
Economic and Trade Gazette.  Any issues pertaining to  the laws could be ques tioned through the legal 
section of the State Council.  In addition, pub lic opinion and comment was solicited during the 
drafting of the legislation.  
158. With regard to administration of its trade regime, China had undertaken, in its accession 
protocol, that provisions of the WTO Agreement and China's WTO commitments would apply to 
entire customs territory of China, and the central government would ensure th at its laws, regulations, WT/TPR/M/199 
Page 26  
 
 rules and other measures, including those issued by local governments, were compatible with its 
WTO commitments. 
159. China had also made adjustments to its  foreign investment policy, including, inter alia, the 
unification of the income tax rate for domestic and foreign enterprises, restricting and prohibiting the 
processing trade of certain products, adjusting the export VAT, and revising the Industrial Catalogue 
for the Guidance of Foreign Investment .  China encouraged foreign investment in high-tech and new 
technology industries, modern service industries, high-end manufacturing sectors, infrastructure and environmental protection.  In addition, China encour aged investment in central and western China.  
160. With respect to customs procedures raised by  Honduras, China had answered these questions 
in its replies to other Members' questions. 
161. She explained that China maintained export r estrictions, export tax rebates and export taxes 
for environmental reasons and industrial restructuring.   The restrictions were not only export related;  
China also maintains strict restrictions on domest ic production and consump tion of high polluting and 
energy-intensive products. 
162. On anti-dumping, she stated that approximately 20% of global anti-dumping measures 
targeted chemicals.  Also  the chemical industries of developing  Members started later than those of 
developed Members and thus were not as competiti ve and were susceptible to the impact of low 
priced foreign products.  However, since the beginning of 2007, China's anti-dumping cases had 
declined sharply. 
163. Government procurement was governed by the Government Procurement Law, which 
required the State Council to determine and publis h the centralized procurement catalogue for 
government procurement items that came under the central budget. 
164. With regard to standards, she stated that, under the 11
th Five-Year Development Plan, China 
would align 85% of its standards w ith international norms.  China w ould also strengthen international 
cooperation in this area. 
165. On industrial policies, energy consumption was th e foremost standard to be considered when  
formulating industry market access standards.  Ma rket access standards for non-resource and energy 
saving as well as non-environment-friendly projects in the restricted catalogue were much higher than those in the encouraging catalogue. 
166. China had been constantly strengthening its IP R protection and enforcement in the past few 
years.  Under the Annual Action Plan for China's IPR Protection 2008, the Government would revise 
and formulate 25 IPR-related laws  and regulations and launch 16 special nationwide campaigns on 
IPR protection. 
167. On the services, China had formulated the Opin ions of the State Council on Accelerating the 
Development of the Services Sector and the implementing measures.  In tandem, the 11
th Five-Year 
Plan also set specific goals for the developmen t of the services sector.  China would implement 
measures to ensure that the goals were met. 
168. On the issue of the approved destination st atus (ADS) regime, China's policies were 
consistent with its WTO commitments;  the measure did not restrict consumption abroad by Chinese 
nationals.  ADS agreements needed to be concluded via bilateral negotiations.  However, even in the 
absence of an agreement, Chinese nationals could travel  and consume abroad on an individual basis.     WT/TPR/M/199 
 Page 27 
 
 
 169. The discussant  welcomed China's keenness to participat e in the TPR.  He drew attention to 
the large productivity gap between China and other countries in the same league.  He stated that 
improving productivity would provide China with an opportunity to sustain its level of growth and 
address imbalances in the economy.  He gave an example that food prices could be brought down 
through productivity gains in agriculture.  The di scussant held the view that productivity gains in 
agriculture would result in rising ru ral incomes, which in turn would result in the higher propensity to 
consume in lower income groups, resulting in the continuation of the consumption-driven growth 
trend. 
170. In order for China to increase productivity, more  attention was needed in human resource 
development, which would need to be comprehensive,  as well as in the needs of specific sectors, such 
as industry, services, and rural areas. 
171. The discussant stated that the measures mentioned by China to  reduce the income gap were 
aimed at urban wage earners, and did not address the ru ral income gap;  thus attention needed to be 
paid to productivity. 
172. He highlighted the possibility of using the exch ange rate to manage inflation.  He also 
proposed that China assume a larger/greater  leadership role in the DDA negotiations. 
173. The representative of the United States  stated that he was particularly interested in learning 
more about China's exchange rate regime, China's experiments with a consumption-based value-added 
tax (VAT), and its labour policies.  He was pleased  to receive China's assu rance that it was committed 
to pursuing further reform of its exchange rate regime to add more  flexibility and to allow market 
forces to play more of a role in determining the ex change rate.  It would be beneficial both to China 
and its trading partners for China to move furthe r in this direction as expeditiously as possible. 
174. He asked for China's response to US written questions regarding reforms still needed for 
China to be in a position to adopt a completely fr eely floating exchange rate (question 1.b.), and on 
China's experiments with a consumption-based VAT.   
175. He appreciated the constructive discussions on tr ansparency under the U.S.-China Strategic 
Economic Dialogue.  He also appreciated the r esponses that China had provided the U.S. written 
questions on transparency.  He wondered whether Ch ina could establish a single official journal for 
all laws and regulations, whether or  not trade-related.  He urged China to make notice-and-comment 
procedures mandatory, as a general rule, for proposed  new laws and regulations.  He also asked for 
responses to U.S. questions on subsidies, SPS measures, and VAT rebates.   
176. The representative asked some follow-up ques tions on China's replies to U.S. written 
questions.  Regarding question 13, he asked China to  clarify how import restrictions applied to used 
machinery and equipment that had b een re-manufactured or refurbished in particular.  On question 17, 
he asked China to identify the criteri a it used to adjust the list of goods  subject to state trading.  On  
question 19, he asked for further clarifications in regard to steps the Ministry of Commerce took to 
confirm that China's customs authorities collected  the correct amount of anti-dumping duty and that 
other charges, such as the VAT, were not assessed on the anti-dumping duty.  On question 32 on 
export duties, China's response discussed only a few of  the products at issue in a general way and did 
not cite any WTO provisions justifying the export duties;  he asked China to provide further clarifications.  On question 34 on export quotas, he asked China to provide sep arate justifications for 
compatibility with China's WTO commitments for each of the 13 export quotas on certain basic 
metals and other raw materials.  
177. In its presentation on the second day, China had stated that it imposed stricter restrictions on 
domestic production and consumption than on exports;  he asked for an explanation of this statement, WT/TPR/M/199 
Page 28  
 
 because that was not consistent with the facts as he knew them.  For example, in the case of coke, 
China maintained an annual export quota of 14 million tonnes while it produced domestically more 
than 300 million tonnes each year.  China did no t appear to treat domestic production more 
restrictively than exports in the case of coke.   
178. On export restrictions, China stated, at the top of page 44 of its written responses, that one of 
its top considerations was not only to ensure a stab le domestic supply, but also to "ensure supply to 
developing countries";  he asked China to explain how imposing export restrictions helped to ensure 
supply to developing countries.  
179. On U.S. question 48.b., he appreciated China's circulation of the first set of draft 
Anti-Monopoly Law implementing regulations for public comment, and urged China to follow the 
same practice as further implementing regulations were being developed. 
180. On U.S. question 55 concerning the respective ju risdictions of the State Trademark Office and 
the General Administration of Quality, Supervisi on, Inspection and Quarantine (AQSIQ) in approving 
geographical indications (GIs), he considered th at producers and consumers were having difficulty 
understanding these regulations, and asked China provide the requested clarifications.  On 
question 61, China had confirmed that no VAT was charged when farmers in China sold their goods 
to an agricultural trader.  However, China did not  seem to dispute that VAT would be charged if a 
foreign farmer were to export its goods to China and sold them to that same agricultural trader.  He 
asked about China's position on whether this treatme nt was consistent with  its obligations under 
Article III of the General Agreem ent on Tariffs and Trade 1994, and if  so, on what grounds it justified 
this position.  On question 67, he asked China to e xplain the basis for its statement that the electronic 
payment services provided by credit card companies fell under the category of "settlement and 
clearing services for financial assets" in its GATS Sc hedule.  On questions 72.a., 72.b. and 72.c., 
China had not responded to two questions under qu estion 72.c.;  he asked for responses to those 
questions.  On question 78 on mobile telecommuni cations services, China explained that China 
Mobile had not been issued a licence by the Ch inese authorities to provide 3G services and that 
instead it had been a purely R&D business decision ma de by China Mobile independently to begin 
feasibility testing of commercial applications of 3G  services in some cities;  he asked China to 
confirm whether telecommunications companies in China could also begin conducting feasibility testing of commercial applications of 3G ser vices using standards other than TD-SCDMA. 
181. The representative of Brazil
 stated that in China's responses there was no definition of CBUs 
in the automobile sector or the list of tariff lines pr ovided.  As a follow-up question he asked if any of 
the tariff lines corresponded to automobiles or products  that could be classified as CBUs.  With regard 
to environmentally friendly production of automobiles,  he asked what was meant by neo energy and if 
there was a certification or authority that would assess if an industry was environmentally friendly.  He also asked if the "special authorization" of factories producing automobiles would apply to foreign 
producers, especially when establishi ng themselves for the first-time, as they would not have a track 
record.  He pointed out that a VAT exemption wa s in place for agricultural products being sold 
directly to consumers, and this should be in  conformity with Article III of GATT 1994.   
182. He asked for clarification regarding the requireme nt for information provided by importers to 
be convincing before import licences were granted.  He also asked for a list of products subject to 
import licensing measures in English, with HS cod es.  He agreed with Ch ina's answer regarding 
re-manufactured and used goods, and stated that neither HS codes or Members schedules mentioned 
re-manufactured goods (except tyres and clothing);  thus, it was a matter of interpretation and should 
be treated according to Member's domestic legislation. 
183. The representative of China
 responded to some of the queries raised by Members.  She fully 
agreed with the discussant, and point ed out that China paid special a ttention to the needs of different  WT/TPR/M/199 
 Page 29 
 
 
 sectors as well as rural and urban areas to address the income gap.  She also stated that China had 
22% of the world's population, but only 7% of the world's farmland;  this illustrated China's 
contribution to world peace and stability.  China pr omoted green production so  as to alleviate world 
prices.  She also reiterated that the multilateral tr ading system was China's priority;  it had honoured 
its accession commitments and would continue to play  an active role in the DDA negotiations.  China 
would work with Members towards a successful conclusion of the round;  however, developed 
countries needed to assume more responsibility and set an example by reducing trade-distorting subsidies and cutting high tariffs, and to refrain fro m abusing trade remedies.  She believed that RTAs 
and FTAs could play a supplementary role to the multilateral trading system. 
184. She noted that labour standards were outside the domain of the WTO.  Nonetheless, she stated 
that China had just promulgated a law to enhance labour protection.  With regard to transparency, 
China had honoured its commitments and expanded tr ansparency.  On 1 May 2008, regulations on 
government information disclosure had entered into force.  In addition, the State Council published 
annually the collection of laws and regulations in English.  China imposed export restrictions to 
protect its environment.   
185. China would discuss SPS issues raised by the United States at the bilateral level, and 
information with regard to subsidies would be prov ided in written form soon.  Products subject to 
state trading were a result of China's accession negotiations.  On re-manufactured products, she stated that China had started a pilot project and needed to  gain experience in regulating such products:  at 
present there were no regulations in this sector.  On the issue of geographical indicators, China did not 
see the inconvenience of the regulatio ns.  With regard to 3G feasibilit y studies, if foreign enterprises 
were licensed to do business in China, they coul d enjoy the same treatment as national providers to 
undertake commercial feasibility studies. 
186. With regard to VAT on agricultural products, sh e stated that that China was a large and 
diverse county and it was difficult to levy VAT on sm all farmers; thus it had exempted small farmers 
specifically, from VAT on primary products. 
187. In response to the U.S. question on credit cards  and insurance, China differed from the United 
States on the understanding of its commitments and suggested bilateral discussions on this matter. 
188. China welcomed Brazil's comments on the auto in dustry.  China's target was to promote an 
environmentally friendly auto industry, and confirme d that there was no legislation in this area that 
was inconsistent with WTO regulati ons.  With regard to bio-fuels, China had initiated a project based 
on sweet potatoes.  China would provide Braz il with the requested HS nomenclature list. 
189. The representative of the European Communities
 stated that transparency remained a 
fundamental principle of the WTO and this Trade Po licy Review was a great opportunity for China to 
demonstrate its commitment to this principle, in particular, by providing substantial answers to the 
questions and comments raised by WTO Members.  He noted with regret that more than one third of 
EC questions had not been answer ed, and hoped to see more replies to questions that had been 
submitted, in accordance with the established timelines.   
190. Due to the very late circulation of the Govern ment Report, the EC had not had the opportunity 
to pose questions and comments on it.  Therefor e, it would submit questions on the Government 
Report today, together with some additional a nd follow-up questions after having examined the 
preliminary replies provided by China.  
191. He considered government interference in Chin a as a major issue that affected a number of 
horizontal and sectoral fields, including investment, financial services, and industrial policies, all of 
which hindered market-based economic development.   China had listed a number of its economic WT/TPR/M/199 
Page 30  
 
 problems in its oral intervention, such as overh eated growth in fixed asset investment, excessive 
supplies of money and credit, and excessive large tr ade surplus;  these problems could be paraphrased 
as ineffective investment, dysfunctional capital market s, and excessive imbalances in trade.  All of 
these problems were rooted in a level of state inte rference that partly replaced rational market-based 
decision-making and, if unchanged, could lead  to an unsustainable economic structure.  
192. Effective protection of intellectual property righ ts in China was a major concern for the EC, 
which continued to seek further clarification on sever al issues, including:  rules for the payment of 
royalties, for example in the ICT industry;  the patent and trade marks system;  on-line copyrights piracy;  and effective enforcement by administrative and judicial means.   
193. Issues relating to standards and certification need ed to be addressed with a view to ensuring 
compliance with WTO rules.  He sought more clar ity on the different levels of standards, the 
ambiguity of the role of industry, and voluntary standards-making in the Chinese system.   
194. China was in a position to be more transparent about its regulating and trading regime. 
Greater transparency was in China's own inte rest, since this would preclude any unnecessary 
misunderstanding of its trade practices and measures, and foster better decision-making in China.  He 
acknowledged that this was a continuous process th at required constant effort and improvement.  
Public consultation arrangements prior to formul ating policies and regulations were of great 
importance, and China had to afford equal treatme nt to companies with foreign participations.  
195. In its oral statement China had pointed out that the RMB had appreciated in the past few 
years.  Nonetheless, the Secretariat Report showed that the RMB had depreciated against the euro by 
over 5% since July 2005.  Against that backdrop,  the EC welcomed China's commitment to push 
forward the reform of RMB exchange rate to allow market demand and supply to shape it.  
196. The representative of Japan
 hoped that China's openness would help to ensure compatibility 
of China's regulations with its WTO commitments. Nonetheless, she regretted that no written answers 
had been provided to Japan's questions on IPRs;  she hoped to receive a prompt reply to Japan's 
questions.  
197. Japan was pleased that certain subsidies were to be repealed, following agreement among the 
parties concerned with respect to a Panel on certain measures granting refunds, reductions or 
exemptions from taxes and other payments to enterpri ses in China.  She would continue to follow the 
implementation of the agreement.  
198. She was interested in the issue of financial in formation services, as mentioned by Canada on 
the first day.  She appreciated China's written an swers on telecommunications, and asked for further 
clarification, including on the prohibition on fore ign enterprises in China pr oviding Internet services 
such as "Internet data centre" services.  On Jap an's question 55 (page 83), Japan had submitted 
follow-up questions in written form, and expected answers in due course. 
199. The representative of Canada  requested net coal production and capacity figures for the whole 
of China, related to Canada's question 54, an d how these net figures related to reduced domestic 
production and consumption to justify reduced domes tic exports of energy-intensive and polluting 
goods.  She also asked when China's new regulat ion (amendment) on travel agencies would be 
available. 
200. The representative of the United States  made a point of clarification that he had not raised a 
question on labour standards in his intervention on the second day.  WT/TPR/M/199 
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 201. The representative of China  stated that, with respect to  SPS measures, China had already 
answered some questions in written form and ha d had bilateral discussions on specific issues, and 
hoped that problems raised by Members would be reso lved.  In April 2006, China had made its first 
notification on subsidies, including 78 subsidy measur es at the central level.  At present, the Chinese 
Government was preparing a second subsidy notifica tion, which would cover many adjustments the 
Government had made in the past two years.  In  addition, although it was a complicated task and 
involved difficulties, China was trying to work out an effective way of gathering information 
regarding local subsidies.  She noted that during China's development, many developed countries had 
maintained trade-distorting subsidies;  thus, they sh ould have a more tolerant approach to developing 
countries in regard to their support for infant indus tries in carrying out their development strategies.   
With regard to tourism, particularly on ADS, Chin a had not discriminated against any country in it's 
negotiations;  any Member could request consultations with China.  On services, particularly financial 
services, China had honoured its WTO commitments a nd even exceeded its commitments in certain 
areas.  Liberalization of the banking sector had b een carried out from pilot regions to the whole 
countries, from foreign currencies to the local curre ncy, and from foreign residence to nationals. 
Capital account convertibility had also made progr ess, with about 60% of the 43 capital items were 
now convertible (many related to l ong-term investment areas);  less than 15 items remained restricted 
due to their high risk nature and liquidity issues (s uch as monetary market tools, derivative tools, and 
cross-border loans provided by natural persons).  China had actively encouraged foreign strategic 
investors and financial investors to hold shares in domestic banks;  29 fore ign financial institutions 
had invested in 21 Chinese banks.  China had ex panded the scope of RMB circulation and usage 
overseas;  China provided arrangements with banks  in Hong Kong and Macao Special Administrative 
Regions regarding RMB business, and encouraged the use of the RMB Union Pay card overseas.  RMB was also used in border trade.  China allowe d foreign-funded banks to engage in RMB business 
in major cities in north-east and mid-west China.  China took part in various forms of regional and 
international finance cooperation such as signing bi lateral currency exchange agreements with the 
central banks of six countries.  Foreign participa tion in the security industries and stock exchanges 
was also rising;  foreign investors could acquire listed companies in the A-stock market as strategic 
investors.  Domestic commercial banks, insuran ce companies, fund management companies, and 
social security funds were allowed to inv est in the overseas market with approval.  
202. The representative stated that tr ansparency was an important principle of the WTO, which 
could make an important contribution to the society through the rule of law.  Besides faithfully 
implementing its WTO obligation of transparency, China had made additional efforts to increase 
transparency.  The representative pr omised to provide replies at a later date in written form to 
questions related to IPR, SPS, export credit, and coal.   On export credit, Ch ina followed the OECD 
undertaking;  there was no contradiction between  China's practice and the international norm.   Internet 
services (as value-added services) were not included  in China's GATS Schedule, and foreign investors 
were not allowed to engage in these services. China w as willing to discuss this issue at a future date.  
The representative stated that many policies were needed to achieve the various desired objectives and 
export controls were only one component.  For envi ronmental reasons, there was domestic pressure to 
reduce or ban exports of coke.  However, to ensure  stable supply to other countries, including some 
developing countries, and balance this requirement  with domestic requirement on environment, China 
continued to supply more than 10 million tonnes of coke each year to the international market.   
 WT/TPR/M/199 
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 VI. CONCLUDING REMARKS BY THE CHAIRPERSON 
203. This second Trade Policy Review of the People's Republic of China has provided an excellent 
opportunity to improve transparency, and thereby a better understanding of China's trade and related policies.  I thank Assistant Minister Qiu Hong and her delegation together with the Discussant, 
Ambassador Noor Yacob of Ma laysia, and Members of the Trade Policy Review Body for 
contributing to our exchange of views.  China's r esponse to a large number of questions is also much 
appreciated.  I join Members in extending sympathi es to the victims and those suffering as a result of 
the recent earthquake in the Sichuan province of China. 
204. Members complimented China on its strong att achment to the WTO and its support for the 
Doha Development Agenda.  Many Members also expressed their appreciation of China's assistance 
to LDCs.  On China's bilateral/regional trading agreements (RTAs), which it regards as a necessary 
supplement to multilateral trade liberalization, Memb ers hoped that they would not diminish China's 
commitment to the multilateral trading system.    
205. Members commended China's continuing reforms,  including trade liberalization, which had 
contributed to real economic growth of over 10% annually since its previous Review, resulting in 
rapidly rising per capita income and poverty reduction.  Many Members noted that China's growth 
provided an impressive example of how a country can foster development.  China has also continued to be one of the largest recipients of inward foreign direct investment.  Clearly, the multilateral 
trading system, of which China has been a Member fo r more than six years, has also contributed to 
China's economic growth, by keeping foreign market s open to China's exports.  Nevertheless, China 
faces a number of challenges.  These include the need to stimulate domestic consumption without 
fostering inflation, growing in come inequality between urban a nd rural areas, unequal growth in 
different sectors of the economy, and social welf are and environmental concerns.  Some Members 
called for a greater flexibility in China's monetary/e xchange rate policy, whic h would be facilitated by 
a more smooth-functioning capital market.   
206. Members remarked on the fact that all China' s tariff lines are bound and that the relatively 
low applied MFN rates are close to bound MFN rates, thereby imparting a high degree of 
predictability to its tariff regime.  Nonetheless, Members were concerned about remaining regulatory 
and other barriers to trade and investment, especi ally customs procedures, import restrictions, anti-
dumping measures, standards, technical regulations, and SPS, and restrictions on foreign investment.  
Concerns were also raised on China's export regime , which had become more restrictive, and could 
potentially distort product markets.  Members appreciat ed China's efforts to e nhance transparency, but 
some aspects of China's policy regime, including  standards and domestic regulations, remained 
complex and opaque;  Members looked forward to improvements in this regard.  Many Members 
welcomed China's application to join the Agreem ent on Government Procurement in December 2007. 
207. Members welcomed China's move towards adopting new competition and property rights 
legislation.  However, Members expressed con cern that industrial policies entailing government 
intervention were still used in certain sectors, part icularly manufacturing, including iron and steel.   
Many Members thought that, despite China's conti nued efforts, the enforcement of intellectual 
property rights remained insuffici ent, partly due to the lack of  appropriate infrastructure and 
insufficient manpower.  They urged China to continue to address this matter.   
208. Agricultural reform was commended by Members, although some were concerned about tariff 
and non-tariff barriers and the re-introduction of price controls on some agricultural products.  
Members noted that, in China, labour productivity in agriculture is one fifth of that in the rest of the 
economy.  Members called for more market-oriented energy pricing.  WT/TPR/M/199 
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 209. On services, many Members noted that commit ments undertaken by China are more extensive 
than those of most other developing countries.  However, liberalization in services has been slower 
than in other areas and most services sectors remain subject to both a high degree of state control and significant restrictions on foreign investment a nd private-sector activities.  Members encouraged 
China to continue to accelerate its liberalization of services.   
210. With China now the world's third largest econo my and trader, Members looked to China to 
assume greater leadership in shaping the multilate ral trading system.  Members urged China to 
continue its active participation in the current negotiations and to continue to work towards a 
successful conclusion of the Doha Development Agenda. 
211. This Review has been very useful in providing us with an update of China's trade policies and 
practices.  I would once again like to thank the Chin ese delegation for their efforts, the discussant for 
his insightful and thoughtful comments, and Member s for contributing to wh at has been a very 
extensive and informative two days of discussions.  We look forward to receiving responses to the 
remaining questions within the next month. 
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