. /.   WORLD TRADE  
ORGANIZATION  G/SCM/Q2/CHN/38 
2 September 2008 
 (08-4106) 
Committee on Subsidies and 
Countervailing Measures Original:   English 
 
 
 
SUBSIDIES 
 
Replies to Follow-up Questions po sed by the EUROPEAN COMMUNITIES1 
regarding the New and Full Subsidy Notification of CHINA2 
 
  The following communication, dated 21 August 2008,  is being circulated at the request of the 
Delegation of China.    
_______________ 
  Question 1 
 
With regard to question I. 2(c) and I. 3(b) in G/SCM/Q2/CHN/25 the replies submitted 
by China do not seem to be complete or do not address the question.  The EC therefore asks 
China to provide a more meaningful answer to these questions.    
Reply
 
 
 With regard to I.2(c) of China's repli es in G/SCM/Q2/CHN/25, please take reference to 
China's previous notification as contained in G/SCM/N/123/CHN which includes information on 
Special Economic Zones.   With regard to I.3(b) of China's repli es in G/SCM/Q2/CHN/25, the purpose of the two 
policies is to alleviate poverty.  The funds are main ly used for general infrastructure construction and 
labour force training. 
  With regard to the total amount of subsidi es during the period of 2001-2004, please refer to 
China's notification on subsidies in G/SCM/N/123/CHN.  With regard to the total amount of subsidies 
during the period of 2005-2008, Ch ina is still preparing the data and will notify in China's next 
notification on subsidies. 
 
Question 2   With regard to questions II. 1,2,3,4,5,6 in G/SCM/Q2/CHN/25, China did not provide 
the information requested on various subsidy schemes according to the format set out in 
G/SCM/6/Rev.1.  The EC therefore asks China to notify these subsidy schemes according to the appropriate format.     
                                                     
 
1 G/SCM/Q2/CHN/34/Rev.1 
2 G/SCM/N/123/CHN.   G/SCM/Q2/CHN/38 
Page 2  
 
  Reply
 
  China has already provided its replies in G/SCM/Q2/CHN/25. 
 
Question 3 
 
 China did not provide any statistical data as requested in G/SCM/Q2/CHN/25.  Could China indicate when it will be able to provide statistical data as stipulated in Article 25.3 SCM Agreement?    
Reply
 
 
 China has made its best efforts in providing various statistical data as requested by the WTO 
Members.  As regards this part of the statistical  data requested by the EC, China has no such data 
collected so far.  Question 4   In its last New and Full Notification, China, d espite the fact that subsidies at all levels of 
government must be notified, only notified subs idies at central level gove rnment level.  Could 
China please indicate whether it will submit a complete subsidy notification for the next 
notification?   
 
Reply
 
  On notification of subsidies from local governments, as indicated in the statement of the 
Chinese representative at the Special Meeting of the WTO SCM Committee on review of new and full 
subsidy notifications in November 2006, China h as been exploring methodologies on how to gather 
information in an efficient and effective way.  Pr eparations for notification on local subsidies will 
entail training of local officials on the SCM Agreement in a more in-depth and technical approach.  It will also involve a lot of other preparatory work.  China will continue its work in order to submit a 
notification to the WTO on policies and meas ures of local governments in this respect. 
 Question 5   With regard to the VAT question, China requested further information regarding its basis.  The EC would like to refer to the agricul tural sector.  It appears to be the case that, in 
China, farmers do not have to pay any VAT on th e sale of agricultural products.  However, 
VAT is levied on imports of agricultural pro ducts and no VAT is re funded to importers upon 
import of these products.  The EC asks China to co nfirm that this framework exists.  If it exists, 
we request China to notify this scheme in accordance with the format G/SCM/6/Rev.1 as this appears to be prohibited under Article 3 SCM Agreement.    
Reply
 
  At present, the VAT on self-produced agriculture  products sold by agricultural producers, 
including food grains and other agricultural produ cts, is exempted in China.  According to the 
provisional Regulation of the People's Republic of China on Value-Added Tax , during the circulation 
of food grains, the sellers and traders, except for those primary producers, shall pay a tax rate of 
13 per cent for the selling or importing of food grai ns.  These regulations are consistent with 
Article III of GATT 1994 and Article  3 of the SCM Agreement. 
 
__________