RESTRICTED  WORLD TRADE  
ORGANIZATION  WT/TPR/G/199 
7 May 2008  
 
(08-2153) 
Trade Policy Review Body Original:  English 
   
 
  
 
TRADE POLICY REVIEW 
 
Report by 
 
CHINA 
 
  
 
Pursuant to the Agreement Establishi ng the Trade Policy Review Mechanism 
(Annex 3 of the Marrakesh Agreement Establishing the World Trade 
Organization), the policy statement by China is attached. 
 
 
Note: This report is subject to restricted circ ulation and press embargo until the end of the first 
session of the meeting of the Trade Policy Review Body on China. China WT/TPR/G/199 
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CONTENTS 
 
  Page 
I. INTRODUCTION 5 
II. GENERAL ECONOMIC ENVIRONMENT AND MACROECONOMIC POLICIES 5 
 ( A) E CONOMIC GROWTH AND ADJUSTMENT OF MACROECONOMIC POLICIES  5 
 (i) Continued Steady Growth of China’s Economy 5 
 (ii) Adjustment of Macroeconomic Policies 6 
 ( B) C HALLENGES AND DIFFICULTIES CONFRONTED  7 
III. DOMESTIC POLICY DEVELOPMENT AND REFORM 7 
 ( A) T RANSFORMATION OF ECONOMIC DEVELOPMENT MODE 7 
 ( B) D EVELOPMENT OF SERVICE INDUSTRIES  8 
 ( C) E STABLISHMENT OF THE SOCIAL SECURITY SYSTEM  9 
 ( D) A NTI-MONOPOLY LAW AND REAL RIGHT LAW 9 
 ( E) F INANCIAL SECTOR REFORM AND ADJUSTMENT OF FOREIGN -EXCHANGE POLICY  10 
 (i) Capital Market Development 10 
 (ii) Financial Sector Reform 10  (iii) Adjustment of Foreign Exchange Policy 11 
 (
F) C HANGES IN TAXATION POLICY  11 
 ( G) P ROTECTION OF INTELLECTUAL PROPERTY RIGHTS  12 
IV. TRADE POLICY DEVELOPMENTS 13 
 ( A) T RADE EXPANSION AND PROBLEMS CONFRONTED  13 
 (i) Rapid Growth of Merchandise Trade 13  (ii) Services Trade Deficits Continue Expanding 14 
 (iii) Problems Confronting China’s Foreign Trade Development 14 
 (
B) T RANSFORMATION OF FOREIGN TRADE DEVELOPMENT MODE 15 
 ( C) I NWARD FOREIGN DIRECT INVESTMENT AND OUTWARD DIRECT INVESTMENT  16 
 (i) Inward Foreign Direct Investment 16 
 (ii) Outward Direct Investment 16 
 ( D) T RADE FACILITATION MEASURES  16 
 ( E) C HINA AND THE MULTILATERAL TRADING SYSTEM REPRESENTED BY WTO 17 
 (i) Fulfillment of the WTO Accession Commitments 17 
 (ii) Participation in Mu ltilateral Trade Negotiations 18 
 ( F) C HINA 'S AND REGIONAL TRADE ARRANGEMENTS  19 
 (i) China’s Participation in Regional Trade Arrangements 19 
 (ii) Other Regional Cooperation Mechanisms 20 
 ( G) A ID FOR TRADE  20 
V. OUTLOOK  21 
 
 China WT/TPR/G/199 
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I. INTRODUCTION 
1. Since WTO’s first Trade Policy Review of Ch ina in May 2006, the international trade 
environment has taken on new features. The world economy has been on the alert of a recession; WTO Doha Round negotiations have been making onl y limited progress; and trade protectionism has 
been on the rise. 
2. The risk that the spill-over effect of the US sub-prime mortgage crisis may lead to global 
economic recession manifests the ever-deepening interdependence among economies of the world. 
Therefore, it is the common responsibility of all WTO Members to adopt pro-trade policies with a 
view to maintaining economic growth and to facing up to the looming threat of world economic 
recession. 
3. Against such backdrop, the success of Doha Ro und is particularly crucial. China hopes 
strongly that all Members, especially the develope d ones, to demonstrate sufficient political will and 
exercise maximum flexibility so as to bring the nego tiations to an early conclusion with a balanced 
outcome. 
4. The Chinese Government will continue to take measures including policy incentives to 
stimulate domestic demand and to work out polic ies featuring broader scope and higher level of 
opening up so as to ensure stable economic growth. 
5. The Chinese Government believes that sustai nable and coordinated economic development 
can only be achieved by following the path th at is pro-innovation, resource-conserving and 
environmental-friendly, and by striving to build a harmonious society that enables its entire people to 
share the benefits of development. 
6. The Chinese Government always supports the mu ltilateral trading system and puts it on top of 
its trade policy agenda. China emphasizes the importa nce of maintaining and strengthening the central 
role of WTO in coordinating trade policies of Me mbers and supports the advancement of trade and 
investment liberalization and facilitation worl dwide through multilateral trade negotiations. 
Meanwhile, China regards bilateral and regional free trade arrangements as a necessary supplement to 
multilateral trade liberalization. 
7. China upholds the principle of seeking mutual benefit and win-win result in fostering its 
economic and trade relations, and works for shared  benefits of economic globalization with other 
countries by capitalizing on our respective comparativ e advantages. Being a developing country itself 
and faced with numerous challenges for developm ent, China fully understands the difficulties 
confronting other developing countries in their pu rsuit towards economic deve lopment and prosperity 
and has all along committed itself to providing assist ance, to the best of its capability, to other 
developing countries, especially the LDCs. 
II. GENERAL ECONOMIC ENVIRONMENT AND MACROECONOMIC POLICIES 
(A) E
CONOMIC GROWTH AND ADJUSTMENT OF MACROECONOMIC POLICIES  
(i) Continued Steady Growth of China’s Economy 
8. In 2006 and 2007, China’s economy continued its fast and steady growth, with GDP 
increasing by 11.1% and 11.4% respect ively. For five consecutive years,  the growth rate of China’s 
economy reached 10% or above. WT/TPR/G/199 Trade Policy Review 
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9. In 2006 and 2007, the per capita disposable income of urban residents, adjusted by price 
factors, grew by 10.4% and 12.2% respectively and the per capita disposable income of rural 
residents, also adjusted by price factors, grew by  7.4% and 9.5% respectively over the previous year. 
The net income rise of both urban and rural reside nts in the past two years accelerated markedly. 
10. On employment, in 2006 and 2007, 11.84 million and 12.04 million people  were able to get 
newly employed in the urban areas, while the registered urban unemployment rate was 4.1% and 4.0% respectively. 
11. It is worth noting that in 2007, the contribution of consumption, investment and net exports to 
GDP growth was 4.5%, 4.4% and 2.5% respectively. It was the first time in seven years that the 
contribution of consumption to GDP growth exceeded that of investment . In turn, this has changed the 
underlying mechanism for economic growth from main ly relying on investment and export to an 
approach that coordinates consumption, investment  and exports as an integrated force for growth. 
(ii) Adjustment of Macroeconomic Policies 
12. As China continues to enjoy rapid economic growth, the rise in prices has also exerted 
mounting pressure on the heavily-populated country. CPI rose by 1.5% in 2006 and 4.8% in 2007. 
The increase in the overall level of consumer prices reached a record high of recent years, with the 
biggest jump in food prices.  At present, the risk  is still real that China’s economy may change from 
relatively fast growth to overheating.  In this c ontext, China will continue to adopt a prudent fiscal 
policy and gradually tighten up its monetary policy. 
13. Since the second half of 2007, the People’s Ba nk of China, considering the prevailing 
situation in macroeconomic perform ance, has begun to strengthen liquidity management in order to 
maintain aggregate balance; intensify regulator y measures on credit policies and optimize credit 
structure, so as to guide the rational growth of money supply and credit as well as investment. 
14. In 2006, against the background of excessive i nvestment growth, overwhelming trade surplus 
and excessive supply of money and credit, the Peop le’s Bank of China undertook a series of measures 
including reinforcing open market operations, rais ing RMB deposit reserve ratio and foreign exchange 
deposit reserve ratio, and raising saving and loan  interest rates of financial institutions. 
15. Since the beginning of 2007, China’s economy has been facing heightened pressure of CPI 
increase.  The People’s Bank of China adopted a moderately tighter monetary policy, further strengthened liquidity management, continued to co nsolidate open market operations; raised the RMB 
deposit reserve ratio for 10 times successively; rais ed foreign exchange deposit reserve ratio for the 
second time; raised saving and loan interest rates of  financial institutions fo r 6 times; and further 
strengthened the credit risk warning system and pr ovided guidance to over-heating industries such as 
the real estate. 
16. With regard to the public finance, during 2006-2007, China’s fiscal revenue continued to 
score rapid growth, increasing by 22.5% and 32.4% in 2006 and 2007 respectively. The ratio of fiscal 
revenue to GDP rose to 20.8% in 2007 from 18. 4% in 2006.  The Central Government’s budget 
deficit declined year by year, from Y299.962 billi on in 2005 down to Y274.9 billion in 2006, and 
further down to Y200 billion in 2007. 
17. In recent years, the Chinese Government gra dually changed its fiscal policy from being pro-
active to prudent.  Alongside the decrease of budget deficit year by year, the issuance of treasury bond 
for long-term construction projects has also decr eased year by year, from Y80 billion in 2005 to 
Y60 billion in 2006, and further down to Y50 billion in 2007. China WT/TPR/G/199 
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18. In 2006 and 2007, the Chinese Government adopted an integrated approach that incorporates 
a variety of fiscal policy instruments to ensure structural optimization and promote system innovation so as to respond to the needs of social and econom ic development, and to achieve a well coordinated 
functioning of the economic and social sectors.  These policies include: to expand the public finance 
to cover the three issues concerning "agriculture, rura l areas and farmers" with a view to balancing the 
development of both urban and rural areas;  to increas e the investment for social undertakings such as 
education, science, public health and social security  so as to promote the coordinated development for 
both economic and social sectors; to increase centra l government transfer payment earmarked to the 
interior regions of central and western China so as to achieve coordinated development of different 
regions; and to promote resource conservation a nd environment protection through increased budget 
allocations. 
(B) C
HALLENGES AND DIFFICULTIES CONFRONTED  
19. While maintaining rapid growth, China’s economy has been confronted with both internal and 
external challenges.  On the national front, the persistent imbalances of economic growth remain 
unaddressed.  For example, consumption as a contributi ng factor to economic growth is still relatively 
insignificant; the economy has been excessively dependent on investment and exports; imbalance in 
industrial structure remains with service industr ies accounting for a small proportion of the economy; 
the extensive growth pattern is exerting heavy pr essure on the environment; the income gap between 
urban and rural areas keeps widening and dispariti es of development among regions remain. On the 
international front, the spill-over effects of the US  sub-prime mortgage crisis and the chronic price 
hike of oil and other commodities add to the uncertainty of the world economy and international 
financial market; the rise of trade protectionist me asures, such as the abusive use of trade remedies 
and technical barriers to trade by some WTO Members, particularly the major developed ones, has affected negatively China’s effort to engage in  fair competition in the international market. 
20. The Chinese Government has set forth the major policy directions for r esolving imbalances in 
economic development.  On the one hand, the mode of economic development will be further 
optimized with a view to achieving sustainable growth where domestic de mand serves as the main 
driving force while there will be less dependence on investment and exports. Further more, greater 
emphasis will be given to building a resource-sa ving and environmental-fri endly society so as to 
remove the environmental and resource bottlenecks that constrain economic development. On the 
other hand, readjustment to economic policies w ill be further carried out so that the fruit of 
development can be broadly shared by the entire society. 
III. DOMESTIC POLICY DEVELOPMENT AND REFORM 
(A) T
RANSFORMATION OF ECONOMIC DEVELOPMENT MODE 
21. In recent years, the Chinese Gove rnment has been paying more attention to the transformation 
of economic development mode and following a path of pro-innovation, resources-saving and 
environmental-friendly economic development.  Th e main measures include: policy incentives for the 
development of new and high-tech industries, en ergy-saving and environmental-friendly industries 
and service sectors; restrictions on resource and en ergy-intensive industries as well as high-emission 
industries; more efforts on energy conservation a nd emission reduction, deve lopment of a circular 
economy, reinforcement of environmen tal protection measures and so on. 
22. China’s policy towards foreign investment ha s also been updated accordingly.  The new 
"2007 Industrial Catalogue for the Guidance of Fo reign Investment" has added entries to encourage 
foreign investment in the development of cl ean production, renewable energy and ecological WT/TPR/G/199 Trade Policy Review 
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environmental protection, and to encourage foreign investment in industries featuring comprehensive 
utilization of resources for multiple purposes. M eanwhile, the newly promulgated Catalogue also 
restricts or prohibits foreign investment projects which involve high energy consumption and/or high 
emission. 
23. Over the past few years, Chin a has been intensifying its efforts on environment protection. 
The "11th Five-Year Programme" sets energy saving an d emission reduction as targets to be achieved 
by governments of all levels. In 2006-2007, the Co mprehensive Work Plan for Energy-saving and 
Emission Reduction was drafted and put on track of implementation. Over the past two years, the 
Chinese Government has established energy-consump tion and environmental standards which require 
strict compliance.  All new projects must undergo energy consumption appr aisal and environmental 
impact assessment. Projects that fail to meet the energy-saving and environmental protection standards are not entitled to start operation. Ente rprises whose on-going projects fail to meet the 
standards have to suspend their pr oduction and even shut down altogether  if the failure continues after 
rectification.  The obsolete production capacity featuring high energy-consumption and high pollution 
is to be eliminated through resolute actions.  Fu rthermore, the Chinese Government has reformed the 
pricing system for resource-poor commodities, emis sion charge system, resources taxation system and 
the system of compensation for the use of mineral resources. 
24. These efforts have achieved preliminary resu lts. The energy consumption per unit of GDP 
which had increased by 4.9%, 5.5% and 0.2% resp ectively in the previous three years decreased by 
1.33% in 2006. The total emission increment of ma jor pollutants has slowed down. Thanks to the 
latest measures on energy-saving and emission reduc tion taken by the Chinese Government in 2007, 
energy consumption per unit of GDP declined by 3. 27% compared with the previous year. For the 
first time in recent years, there was a concurrent  decline in both chemical oxygen demand and total 
sulphur dioxide emission, a reduction by 3.14% a nd 4.66% over the previous year respectively. 
(B) D
EVELOPMENT OF SERVICE INDUSTRIES  
25. The proportion of service sector in China’s total output has been relatively low and it has 
gone down further in recent years.  In 2006, th e service sector output accounted for 39.5% of the 
GDP, a decline of 0.5% from the level of 2005; the number of employees was 246 million, accounting for 32.2% of the total. Service sector output in 2007 increased by 11.4% over 2006, yet the share to 
GDP decreased to 39.06%. 
26. To accelerate the development of China’s servi ce sector, the Outline of the 11th Five-Year 
Plan for National Economic and Social Development adopted in 2005 sets out the following targets: 
by 2010, the share of value added service sector in GDP should increase by 3% as opposed to the year 
of 2005, the share of service sector employment should increase by 4%, and the total volume of trade 
in services should reach US$400 billion; large citi es where conditions permit should focus more on 
service sector.  
27. In March 2007, "Opinions of the State C ouncil on Accelerating the Development of the 
Service Sector" (hereinafter referred to as "Opini ons") was promulgated by the State Council, which 
sets out the direction as well as policy considerations  for the development of China’s service sector. 
The "Opinions" regards the accelerated developmen t of the service sector as an important way to 
promote the rationalization of economic structure, transform the economic development mode and the 
foreign trade development mode, effectively remove the bottleneck posed by energy shortage, and to 
improve efficiency in the use of resources as well as to create job opportunities. China WT/TPR/G/199 
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(C) ESTABLISHMENT OF THE SOCIAL SECURITY SYSTEM  
28. Through development efforts of the past ten year s or so, an initial form of social security 
system has taken shape in China.  The evolving social security system c overing both urba n and rural 
residents will comprise basic services such as soci al insurance, medical care and support as well as 
social welfare with emphasis on provision of basi c pension insurance, basi c health insurance and 
subsistence allowance supplemented by char ity and commercial insurance programmes. 
29. The social security fund was set  up to reinforce the development of social security system, a 
fund established to operationalize the social security system. As the most important component of the 
social security fund, China’s so cial insurance fund mainly cons ists of basic pension fund for 
employees, unemployment insurance fund, basic health  insurance fund for urban workers, basic health 
insurance fund for urban residents,  and insurance fund for work-rela ted injury and maternity leaves . 
Among all these, the pension fund is the largest and pl ays a pivotal role in the entire social insurance 
system. 
30. In 1995, the Ministry of Labor and Social Secur ity (MOLSS, restructured to the Ministry of 
Human Resources and Social Security in 2008) was established by the State Council, and mandated to 
oversee all social security affairs. 
31. From 2003 to 2007, the accumulative national fiscal expenditure on social security amounted 
to Y1.92 trillion, an increase of 1.04 times compared  to the previous five-year period.  By 2007, the 
number of participants in the urban basic pension system had exceeded 200 million; the number of 
participants in the basic medi cal insurance for urban workers had reached 180 million; the newly 
established rural cooperative medicare system had covered 86% of the counties nationwide benefiting 
730 million rural residents.  In 2007, the amount of  accumulative national social security fund reached 
Y414 billion, Y289.8 billion more than that of 2002.  Concurrent with continuo us improvement of the 
subsistence allowance system for urban residents is the incremental increase of the threshold of 
subsistence allowance and amount of government assi stance.  In 2007, the subsistence allowance 
system was established in rural areas nationw ide, covering 34.519 million rural residents. 
(D) ANTI-MONOPOLY LAW AND REAL RIGHT LAW 
32. The Anti-Monopoly Law coming into force on August 1, 2008, marks the birth of a basic 
framework of China’s competition policies. This framework mainly consists of the Law against 
Unfair Competition and the Anti-Monopoly Law.  The Anti-Monopoly Law was enacted to prevent 
and restrain monopolistic conducts, protect fair comp etition in the market, improve the efficiency of 
economic performance, and safeguard the interest s of consumers as well as the general public. 
"Monopolistic conduct" is defined in the law as:  monopolistic agreements  between businesses; abuse 
of dominant market positions by businesses; concentra tion of businesses to the effect that excludes or 
restricts competition.  The implementation of the Anti-Monopoly Law will substantially contribute to 
regulating and promoting market competition. 
33. The Real Right Law implemented since October 1, 2007, is a basic civil law governing 
property relationships which aims to regulate th e civil relationships ar ising from ownership and 
appropriation. The Real Right Law makes it clear for th e first time that "the real right of the state, 
collective, individual or any other right holders shal l be protected by law, and shall not be infringed 
by any organization or individual." The implemen tation of the Real Right Law is of significant 
importance to boosting economic developm ent and promoting rule of law. WT/TPR/G/199 Trade Policy Review 
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(E) FINANCIAL SECTOR REFORM AND ADJUSTMENT OF FOREIGN -EXCHANGE POLICY  
(i) Capital Market Development 
34. In May 2005, China Securities Regulatory Comm ission launched the reform of the split share 
structure of listed companies, aimed at realizing th e circulation of non-tradable shares.  By now, 99% 
of the listed companies have completed the reform. 
35. The reform of the split share structure represen ts a major transformation of China’s capital 
market. It has resolved the long standing legacy th at had impaired the healthy development of the 
capital market. The reform puts behind the history wh en two different shares and prices coexisted, 
creating a level playing field for all kinds of share holders, and set the basis to improve the pricing and 
resource-allocation functions of the capital mark et, and to enhance the capacity of the listed 
companies in exercising corporate governance, and to further push forward innovation and development of the capital market. 
36. Since 2006, a multi-level capital market system has taken its initial shape with the rapid 
development of China’s main board and SMEs board  markets, and further expansion of corporate 
bond market. By now, preparatory work for the GEM boa rd and financial futures has been completed. 
With public offerings of such large-scale corpor ations as Industry and Commercial Bank of China 
(ICBC) and Sinopec in the domestic market, the struct ure of listed companies has been optimized, the 
efficiency of market financing significantly enhan ced, and the market capitalization rapidly expanded. 
In 2007, Y772.8 billion was raised through domestic stock market, of which Y459.5 billion was raised 
through Initial Public Offering (IPOs). The number  of listed companies in the SME board reached 
202.  With the establishment of a corporate bond issuance system based on information disclosure and 
market-orientation, the corporate bond market was further improved. 
(ii) Financial Sector Reform 
37. Breakthrough has been achieved in the reform of the Stock System of the State-owned 
Commercial Banks. In late 2003, shareholding refo rm of the state-owned commercial banks was 
formally launched.  In the past 4 years, Indus try and Commercial Bank of China, Bank of China, 
Construction Bank of China and Bank of Communicati ons have completed thei r shareholding reform 
in succession, and have been listed in domestic a nd/or overseas stock markets.  Profound changes 
have taken place in both corporat e governance and managerial concept of these commercial banks.  
As a result, their overall strength, asset quality and management skills have been further enhanced. 
38. In recent years, the reform of China’s Rura l Credit Cooperatives has been making continuous 
progress. Bearing in mind their specific local cond itions, the Rural Credit Cooperatives throughout the 
country have explored different new modalities of  ownership such as shareholding system and 
cooperative stock system, and has on a trial b asis established rural commercial banks and rural 
cooperative banks. After years of re form and development, the fina ncial strength of Rural Credit 
Cooperatives has been significantly improved, and their operational risks have been mitigated. 
Meanwhile, new pilot rural financial institutions ha ve been established. Presently, pilot programmes 
of micro-credit enterprises are being promoted in  Shanxi, Sichuan, Inner Mongolia, Shannxi and 
Guizhou provinces/ autonomous regions where 7 such  enterprises have been set up and started 
operation.  By the end of 2007, the pilot mi cro-credit enterprises had been operating well, 
cumulatively providing Y392,345 million of credit. Fu rthermore, by the end of 2007, 31 new rural 
financial institutions had been approved to st art operation. Among these institutions, 19 are rural 
commercial banks, 4 are loan subsidiaries and th e other 8 are rural mutual cooperatives.  The 
development of new rural financial institutions h as stimulated the development of the local rural China WT/TPR/G/199 
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financial markets, contributed to the improvement of rural financial system, and enhanced the quality 
of financial services in rural areas. 
(iii) Adjustment of Foreign Exchange Policy 
39. The Chinese Government continued to carry out with great care the reform of 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 flex ibility.  Main measures include:  introducing the 
negotiated transaction and market maker mechanism,  so as to improve the way the middle price of 
RMB exchange rate is formed;  expanding the daily floating band of RMB exchange rate and 
increasing its flexibility. Starting from May 21, 2007 , the maximum daily floating band permitted of 
the middle price of RMB against dollar in the inte r-bank market was expanded from ±3 ‰ to ±5 ‰. 
40. After several years of reform, the flexibility of  RMB exchange rate h as increased markedly. 
From July 2005 when China introduced the managed floating exchange rate system to the end of 
2007, RMB had appreciated by 13.3% against USD, and 14.06% against YEN.  Bank for International 
Settlements (BIS) estimated that nominal effective exchange rate of RMB has appreciated by 5.34%, 
while the real effective exchange rate has appreci ated by 10.68%.  RMB appreciation has accelerated 
since 2008.  As of April 10, 2008, the middle rate of RMB against USD dropped to 6.992. 
41. In regard to the foreign exchange management , systemic equilibrium management system of 
foreign exchange outflow and inflow has been gradually implemented in recent years with the 
objective of achieving the basic balance of inte rnational payment.  On the current account 
management, opening of foreign exchange account for current transfers is no longer subject to 
approval. Businesses are entitled to retaining the fo reign exchange income from current transfers and 
the documents and procedures have been simplifie d for sale and payment of foreign exchange for 
trade in services.  Starting from 2007, individuals in China are entitled to purchase a maximum amount of US$50,000 per person per year, largely satis fying the needs of individuals.  On the capital 
account management, in 2007, in order to meet th e legitimate demand of Chinese individuals and 
institutions for overseas financial investment and asset management, the Ch inese residents are entitled 
to invest in foreign security markets via qualifie d domestic institutional investors (QDII). Meanwhile, 
the upper limit was also elevated for qualified forei gn institutional investors (QFII) to invest in the 
Chinese domestic security market. 
(F) C
HANGES IN TAXATION POLICY  
42. In March 2007, "The Law of the People’s Repub lic of China on Enterprise Income Tax" was 
adopted by the Fifth Session of the Tenth Session of the National People’s Congress, and came into 
effect on January 1, 2008.  The implementation of the law ended the coexistence of two tax systems 
applicable to foreign-invested enterprises and Chinese domestic enterprises separately and put in 
place a uniform enterprise income tax law;  the new Enterprise Income Tax Law has lowered the 
statutory income tax rate from 33% to 25%, unifi ed the methods and standards of pre-tax deductions; 
and consolidated tax policy incentives. 
43. The pilot programme of reform on the transformation of VAT has made steady progress. 
From July 1, 2007, taking the stock of experien ces of the VAT reform p ilot programmes undertaken 
in the old industrial bases of Northeast of Ch ina, the VAT conversion pilot programmes were 
extended to cover power, mining a nd other 8 industries in 26 old industrial base cities in the six 
central provinces. 
44. On April 1, 2006, China began to reform its consumption tax system, with a view to 
promoting both environmental protection and re source conservation, and to guiding rational WT/TPR/G/199 Trade Policy Review 
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consumption and indirectly adjusting income distribu tion.  The reform consiste d of two parts: first, 
adjustment to taxable items subject to consumpti on tax, increasing the number of taxable items from 
11 to 14;  and second, adjustment to tax rates of certain number of taxable items. 
45. In view of the continued rapid economic growth, changes in personal income and 
expenditure, as well as changes in consumer prices, significant chang es have been made in personal 
income tax policy in recent years.  First,  the income tax threshold was raised from 
Y800/person/month to Y2,000 /person/month after two rounds of changes. Second, the personal 
income tax rate for deposit inter est was reduced from 20% to 5%. 
46. On January 1, 2006, China abolished "The Inte rim Regulations on the Agricultural Tax of the 
People’s Republic of China" and termin ated the agricultural tax nationwide. 
(G) PROTECTION OF INTELLECTUAL PROPERTY RIGHTS  
47. In order to step up law enforcement on intellect ual property right protection, the State Council 
formulated "the Outline of IPR Protection Acti ons (2006-2007)" in 2006, the National Working 
Group on IPR protection issued the annual action pl ans for China’s IPR protection in March 2006 and 
March 2007 respectively, which gave detailed in structions on 438 specific tasks and supporting 
measures in areas such as law en forcement, special targeted ac tions, international cooperation, 
consultancy and education and so on.  By now, most of these planned tasks have been completed on 
time. 
48. During the past two years, China has enacted  a number of rules and regulations, further 
improving the legal system for IPR protection.  In 2006, the State Council promulgated "the 
Regulations on the Protection of the Right of Communication through Information Network", the 
Supreme People’s Court promulgated the "Decision of the Supreme People’s Court on Amending the 
Interpretations of the Supreme People’s Court on Se veral Issues Concerning the Application of Law 
in the Trial of Cases Involving Copyright Disputes over Computer Network (II)"; the Supreme People’s Procuratorate, Ministry of Public Secu rity, National Copyright Administration, the State 
Administration for Industry and Commerce and Customs General Administration of China 
promulgated four legal instruments to accelerate transfer from executive enforcement to criminal 
justice; The Ministry of Commerce and other ag encies promulgated the rules on IPR protection in 
exhibitions; The State Intellectual Property Office issued "Guidelines for Patent Examination" and 
"Measures for the Reduction or Postponement of the Payment of Patent Fees"; the Supreme People’s 
Court and the Supreme People’s Procuratorate specif ied the threshold of conviction and penalty for 
IPR infringement relating to counterfeiting and piracy of audio-visual products. 
49. In 2007, Supreme People’s Court and Supreme People’s Procuratorate jointly issued 
"Interpretation II of the Supreme People’s Court and the Supreme People’s Procuratorate Concerning 
Some Issues on the Specific Application of Law for Handling Criminal Cases of Infringement upon 
Intellectual Property Right", which lowered substantia lly the criminal law enforcement threshold. In 
addition, the Supreme People’s Court promulgated "I nterpretation of the Supreme People’s Court on 
Some Issues Concerning the Application of La w in the Trial of Civil Cases Involving Unfair 
Competition", and "Regulation Rega rding Certain Laws To Be Applied in Adjudicating Disputes 
Relating to Plant Variety Rights Infringement Disputes". 
50. In order to further strengthen the law enforc ement of IPR protection, various Chinese law 
enforcement agencies and authorities carried out in the past 2 years a series of special nationwide 
campaigns to crackdown on all kinds of infringement activities. China WT/TPR/G/199 
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51. The Chinese Government adopted various means to extend education and training 
programmes to enhance the public awareness on IPR protection.  Every year, activities of various 
forms are organized, such as IPR Week to comme morate the "World Intellectual Property Day 
(April 26)".  Special training courses on IPR ha ve been conducted by the Chinese Government 
tailored for senior officials including ministers,  director-generals and provincial and municipal 
governors, as well as law enforcement officials an d judicial personnel.  Meanwhile, the Central 
Government has also set up 32 IPR education an d research institutions and has incorporated IPR 
courses into primary and secondary school curricula. 
52. Since April 2006, China has established nati on-wide IPR complaint service network 
consisting of IPR reporting and complaint service cente rs in fifty large and medium-sized cities.  The 
Chinese court system has set up 172 IPR courts, and 140 collegiate Panels specializing in IPR issues. 
53. On December 29, 2006, China decided to join the WIPO Copyright Treaty and the WIPO 
Performances and Phonograms Treaty.  On June 9, 2007, the two Treaties formally came into force in 
China.  China has also completed the domestic legal procedure for acceptance of the Protocol on 
Revising the Agreement on Trade-Related As pects of Intellectual Property Rights. 
IV. TRADE POLICY DEVELOPMENTS 
(A) TRADE EXPANSION AND PROBLEMS CONFRONTED  
(i) Rapid Growth of Merchandise Trade 
54. During the period 2005 to 2007, China’s merchandise trade continued to register rapid 
growth, and total trade reached US$1.4, US$1.7 and US$2.1 trillion respectively, representing an 
average annual increase of 23.6%.  Meanwhile, tr ade surplus increased year by year, reaching 
US$101.88 billion, US$177.47 billion and US$262.21 b illion respectively. During the same period, 
imports also increased rapidly, with growth ra tes year on year reaching 17.7%, 20.0% and 20.7% 
respectively. 
2005-2007 China’s Total Merchandise  Trade (Unit:  billion USD)  
 2007 2006 2005 
Total Amount 2,173.02 1,760.69 1,422.12 
Export 1,217.20 969.07 762 
Import 955.82 791.61 660.12 
Balance 261.38 177.46 101.88 
55. As of the end of 2007, China’s top three trad ing partners were the EC, the United States and 
Japan with bilateral trade volumes of US$352.81 billion, US$302.08 billion and US$236.02 billion 
respectively.  Meanwhile, China h as become the second largest trading partner of the United States 
and the EC, and the largest trading partner of Japan.  Trade between China and ASEAN, Russia, 
India, Brazil, Korea and Australia also maintained  rapid growth.  Take ASEAN for example, between 
2005 and 2007, bilateral trade in goods between  China and ASEAN reached US$130.37 billion, 
US$160.84 billion and US$202.51 billion, an year incr ease of 23.1%, 23.3% and 25.9% respectively. 
Trade between China and African c ountries has recorded an even fast er rate of growth.  Between 2005 
and 2007, trade volume between China and A frican countries reached US$39.75 billion, 
US$55.46 billion and US$73.31 billion, an in crease of 34.9%, 39.5% and 32.1% respectively. WT/TPR/G/199 Trade Policy Review 
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(ii) Services Trade Deficits Continue Expanding 
56. In recent years, China has also seen rapid grow th in its services trade.  In 2006, China’s 
services import and export amounted to US$191.75 b illion, an increase of 22.1% over the previous 
year.  In a breakdown, export stood at US$91. 42 billion, and import reached US$100.33 billion, 
representing an increase of 23.7% and 20.6% over the previous year.  In the first half of 2007, the 
total value of China’s services import and export w as US$114.2 billion, an annual increase of 33.1%.  
In a breakdown, its services exports amounted to US$55.53 billion, an increase of 38.7%, while imports amounted to US$58.67 billion, an increase of 28.3% over the previous year.  In contrast with 
merchandise trade, China’s trade in services is of a smaller scale and has long been in deficit. From 
2002 to 2006, the services trade deficit amounted to US$6.699 billion, US$8.477 billion, 
US$9.546 billion, US$9.263 billion, and US$8.906 billion respectively. 
(iii) Problems Confronting China’s Foreign Trade Development 
57. The export structure needs to be further rationa lized. In terms of China’s exports, products of 
energy-intensive, high emission and resource-intens ive nature take up a high proportion, while the 
proportion of technology-intensive pr oducts and services remains relativel y low.  Such a structure for 
export not only added shortage on China's resour ces and energy, but also exerted pressure on the 
environment. 
58. Now that China's exports still overly concentrat e on a few markets, further efforts should be 
made to further diversify the markets. 
59. Rising trade protectionism among some WTO Members, particularly some major developed 
ones, has large negative impact on China’s exports. 
60. For 13 consecutive years from 1995 to 2007, China h as been subject to the largest number of 
anti-dumping actions in the world. While China’s merchandise exports only accounted for 6% of the 
world’s total, the proportion of anti-dumping cas es against China accounted for 15.6% of all the 
antidumping measures by WTO Members.  From 2006 to 2007, the number of antidumping actions against China was as high as 126.  During the same pe riod, 10 countervailing investigations were also 
initiated against China, making China the larg est target of countervailing measures as well. 
61. In recent years, numerous technical standards and sanitary and phytosanitary measures have 
become major obstacles to China’s exports. According to a survey by the Ministry of Commerce in 
2007 on influence of foreign standard measures on Ch ina’s foreign trade, 15.22% of China’s export 
enterprises were affected by TBT measures in 2006. Amongst all the 22 major categories of China’s 
exports, 21 categories suffered direct losses from standard measures with a total value of 
US$75.8 billion, accounting for 7.82% of the total e xport in 2006.  The additional production costs to 
Chinese enterprises for compliance with the ne wly proposed technical standards reached 
US$26.2 billion in 2006.  Trade opportunities lost for China's export enterprises due to foreign 
technical barriers amounted to US$143.7 billion, accounting for approximately 14.83% of the total 
export of China in 2006. 
62. The appreciation of RMB and the rising labor co sts have also brought challenges to China’s 
exports, especially for labor-intensive products.  A fe w years ago, shortage of labor already occurred 
in some coastal areas, the hear tland of China’s export industry. 
63. In recent years, China’s trad e surplus has risen continuously  as its trade volume increased. 
While reasons for the trade surplus are multifaceted, the changing pattern of international division of 
labor and the relocation of global manufacturing ac tivities is one of the major elements. China’s China WT/TPR/G/199 
 Page 15 
 
 
economic reform and opening-up in the past 30 year s and its accession to the WTO has brought about 
a continued improvement of its legal system, e nhanced transparency of its economic and trade 
policies, and a much better environment for busi ness and investment. These together with overall 
labor quality improvement and low labor costs have resulted in a steady relocation of manufacturing 
activities into China, which in turn has led to a shift in trade patterns: i.e., a significant part of the 
direct exports originated from some Asian countries and regions to the U.S. and Europe have become 
indirect exports to U.S. and Europe via China, thus  contributing to China’s substantial trade surplus. 
The fact that foreign-invested enterprises account  for over 57% of China's total exports makes people 
understand better the nature of interdependence. Meanwhile, it should be pointed out that the 
unnecessary control of high-tech exports to Chin a by some major developed WTO Members has 
always been an important cause of Chin a’s trade surplus with those Members. 
64. It is worth noting that while China is in tr ade surplus vis-à-vis some WTO Members, China 
also has major trade deficit with a number of ot her WTO Members.  The Chinese Government always 
believes that excessive trade surplus would bring about adverse impact on China's economy and aggravate excessive domestic liquidity, creating di fficulties for China to implement monetary policy. 
Therefore, the Chinese Government has never singl e-mindedly pursued trade surplus and has been 
doing everything possible to reduce trade surplus through comprehensive measures including those to 
boost domestic demand. 
(B) T
RANSFORMATION OF FOREIGN TRADE DEVELOPMENT MODE 
65. Transformation of trade development mode is crucial in addressing the problems affecting 
China’s foreign trade.  Specific measures include: promote the upgrading of processing trade, reduce 
exports with energy-intensive, high-emission a nd resource-poor products;  increase export of high-
tech and new technology products and services; a nd increase import of advanced technology and 
equipments, energy-saving and environmental protec tion equipments with key parts and components. 
66. From 2006 to 2007, China made a series of policy adjustments relating to processing trade, 
with a view to improving the structure of export commodities, discouraging the excessive exports of 
low value-added and low technology content products , promoting the transformation and upgrading of 
processing trade, and to encouraging the relocation of processing trade activities to the central and 
western parts of China.  To this end, on April 5, 2007, the government issued the Prohibited Commodities Catalogue for the Processing Trade and on  July 23, 2007, and issued the Restricted 
Commodities Catalogue for the Processing Trade.  On December 21, 2007, the second batch of 
Prohibited Commodities Catalogue for the Processing Trade was issued.  Products covered by these 
catalogues mainly include some chemical, smelting and other energy-intensive, high emission and resource-poor products and labor-intensive products such as plastics and textiles. 
67. In order to reduce the production, consumpti on and export of high energy-intensive, high 
emission and products of exhaustible resource, the Chinese Government ad justed the export VAT 
rebate policy on July 1, 2007, covering 2,831 co mmodities, which accounted for 37% of the total 
number of export commodities. To be specifi c, China cancelled export tax rebates for 
553 commodities and lowered such rebates for 2,268 commodities. 
68. Development of trade in services.  The Outline of the 11th Five-Year Programme for National 
Economic and Social Development put forward the obj ectives that by 2010, Ch ina’s trade in services 
should reach US$400 billion. To this end, efforts have  been undertaken in China to further develop a 
services export promotion system, including those to improve the statistics system of trade in services, 
to set up outsourcing bases for services and to encour age the participation of foreign investment in 
software development, the cross-border outsourcing and logistics industries. WT/TPR/G/199 Trade Policy Review 
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(C) INWARD FOREIGN DIRECT INVESTMENT AND OUTWARD DIRECT INVESTMENT  
(i) Inward Foreign Direct Investment 
69. In 2006, foreign investment inflows to Ch ina reached US$69.468 billion, down 4.06% from 
2005, making China the fourth largest destination in the world and the largest destination among 
developing countries.  FDI attracted by China in 2006 accounted for 6.72% of global foreign direct 
investment flows, 1.5 percentage points lower than that  of 2005.  In 2007, foreign direct investment in 
China amounted to US$78.339 billion, slightly above the figure for 2006. 
70. Over the past two years, in particular in 2007, China conducted a series of policy adjustments 
related to foreign investment, mainly including: unifying the income tax of domestic and foreign-
funded enterprises; upgrading processing trade by prohibiting and restricting the processing trade of 
certain products; adjusting the export valued added ta x rebate policy by reduci ng the rate of export tax 
rebates on energy-intensive, high emission and r esource-poor products;  adjusting land use policy; 
promulgating and implementing the Labor Contract Law;  and revising the Industrial Catalogue for 
the Guidance of Foreign Investment. The objective of  these policy adjustments was to create a more 
equitable and normal market environment, and to guide the enterprises to accelerate industrial 
upgrading to adapt to the ever-changing world economy and the Chinese economy. 
71. In order to redirect foreign investment, the Chinese Government encourages foreign capital in 
industries such as high-tech and new technology, modern service industries, high-end manufacturing sectors, infrastructure and environmental protecti on.  Meanwhile, transnational corporations are 
encouraged to set up regional headquarters, R&D cent ers, as well as procurement and training centers 
in China. 
(ii) Outward Direct Investment 
72. China encourages and supports domestic enterp rises with sufficient capacities to conduct 
international operations and divers ified forms of economic and techni cal cooperation, particularly in 
developing countries and least-developed countries.   As early as 1998, China called on the Chinese 
businesses to "go-global", and encourages enterpris es to engage in activities such as: setting up 
production facilities, research and developmen t centers as well as sales networks; conducting 
processing trade; engaging in contracted proj ects and providing skilled labours; engaging in 
consulting services; getting listed in overseas capit al markets; and conducting cross-border merger 
and acquisitions.  Enterprises "going-global" are also  encouraged to make utmost contributions to 
development of local communities and the improvement of the livelihood of the local people. 
73. China's overseas direct investment grew rapi dly in recent years. In 2006, China's non-
financial overseas direct investment amounted to US$16.13 billion, an increase of 31.6% over 2005; in 2007, China's non-financial overseas direct i nvestment reached US$18.72 billion, up 6.2% over 
2006. 
(D) T
RADE FACILITATION MEASURES  
74. Customs clearance and transit reform. Over th e past few years, China has been pushing 
forward reform on regional customs regime of clearance and transit goods. The reform include 
measures to make better use of information technol ogy, integrate the inland customs’ management 
resources with those of the port customs; simplif y the transit customs clearance; carry out customs 
clearance mode of "declaring goods at dependency while inspecting and clearing goods at ports" for 
inter-customs imports and exports  and apply "cross-border express clearance" between Hong Kong, China WT/TPR/G/199 
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Macao and Guangdong customs.  These practices have  improved the efficiency of customs clearance 
in China. 
75. Custom Valuation. The current valuation princi ples and procedures employed by the Chinese 
customs to imported goods are fully in line with the requirements of the WTO "Customs Valuation 
Agreement". China's customs author ities act according to the Decision on the Treatment of Interest 
Charges in Customs Value of Imported Goods and the Decision on the Valuation of Carrier Media 
Bearing Software for Data Processing Equipm ent adopted by the WTO Committee on Customs 
Valuation. Starting from 2005, the Customs has app lied the transaction valuation method to more than 
95% of imported goods in determining the custom s value of imported goods each year.  For those 
imported goods whose transaction prices are not used in determining the customs value, the Customs 
would re-assess the customs value strictly in accordan ce with the regulations that are in line with the 
principles and procedures stipulated in the WTO Customs Valuation Agreement. 
76. Inspection and Quarantine. After the last Tr ade Policy Review of China, the Chinese 
Government added 88 new items to the Catalogue  of Import and Export Commodities Subject to 
Inspection and Quarantine by the Import and Expor t Inspection and Quarantine Authorities, with a 
view to better protecting the interests of cons umers at home and abroad. Meanwhile, the Chinese 
Government has never stopped efforts to improve  the efficiency of inspection and quarantine 
procedures, and to enhance bilateral a nd multilateral cooperation in this regard. 
77. Standards and Conformity Assessment.  To fu rther improve the national standardization 
system, the Chinese Government has committed to  reforming the relevant working mechanism, 
keeping existing standards and technical regulations up to date, encouraging enterprises to participate 
more actively in the development and revision of standards and technical regulations. Efforts have 
been made to facilitate adoption of international standards and a dvanced foreign standards with a 
view to adapting to the swift development of sci ence and technology, and enhancing international 
competitiveness of domestic industries. In order to promote compliance with standards and technical regulations, the Chinese Government has established a unified conformity assessment system. 
78. Certification and Accreditation. The Chinese Government has established a unified and 
standard certification and accreditation system wh ich applied equally to  domestic and foreign 
enterprises, and has effectively implemented the compulsory certification system, thus virtually 
eliminating the double authentication existed prior to China’s accession to the WTO. With a view to 
reducing obstacles to and facilitating the conduct of international trade, the Chinese Government has 
always been actively participating in the activitie s of international and regional certification and 
accreditation organizations, and has been actively ca rrying out international mutual recognition of 
product certification.  
(E) C
HINA AND THE MULTILATERAL TRADING SYSTEM REPRESENTED BY WTO 
(i) Fulfillment of the WTO Accession Commitments 
79. In 2006 and 2007, China further lowered its tari ff rate, increased market  access to trade in 
services, and enhanced the transparency of its trade policy. 
80. In 2006-2007, China reduced the tariff rate of 187 items in accordance with its accession 
commitments. Until January 1, 2008, China's overall tariff level had been reduced from 15.3% at the 
time of accession to 9.8%, among which the average tariff rate of industria l products had been cut 
from 14.8% to 8.95%, and the rate of agricultural products from 23.2% to 15.2%. It should be pointed 
out that 100% of China's tariffs are bound at the applied level. WT/TPR/G/199 Trade Policy Review 
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81. On January 1, 2006, in accord ance with its accession commitment s, China eliminated tariff 
quotas of 10 items including soya oil, palm oil, and rapeseed oil. 
82. Since the last trade policy review, the Chinese Government has also established a set of new 
rules and regulations to promote further opening up of  its service sectors. These rules and regulations 
mainly included: Provisions on the Administration of Foreign-invested Construction Engineering 
Service Enterprises, Detailed Rules for the Implementation of Administrative Regulations on Foreign-funded Construction Engineering Design Enterpri ses, Decision of the State Council on Amending the 
Regulation of the People’s Republic of China on Sino-foreign Cooperation in the Exploitation of 
Continental Petroleum Resources, Regulation on Administration of Commercial Franchise, Measures 
for the Administration of the Refined Oil Market, Measures for the Administration of the Crude Oil 
Market, Supplementary Provisions II on the Measu res for the Administration on Foreign Investment 
in Commercial Fields, Detailed Rules for th e Implementation of the Regulations on the 
Administration of Foreign-funded Banks of the People’s Republic of China, Measures for the 
Information Disclosure of Commercial Banks, Measur es for the Administration of Trust Companies, 
Measures for the Administration of Finance Le asing Companies, Measures for the Overseas 
Investment with Insurance Funds, Administrative Measures for Insurance Li censes, Measures for the 
Administration of Foreign Stock Exchanges' Representative Offices in China, and etc.. These laws and regulations not only embody China’s WTO co mmitments but also incorporate measures of 
autonomous liberalization, demonstrating China’ s positive stand towards opening up its trade in 
services. 
83. The Provisions on the Disclosure of Government  Information promulgated on April 5, 2007 
was put into effect on May 1, 2008, has set out even more operational and specific requirements to ensure transparency of government actions. As a designated publication of the Chinese Government 
to make public trade-related laws and regulati ons, China Foreign Economic and Trade Gazette has 
made public more than 3,300 laws, regulations and specific measures by the end of 2007.  In 2006, 
China submitted the first comprehensive notificatio n on subsidies after its accession to the WTO. At 
present, China is in the process of collecting info rmation to prepare for the next comprehensive 
notification on subsidies. 
(ii) Participation in Multilateral Trade Negotiations 
84. The Chinese Government believes that the multila teral trading system plays an irreplaceable 
role in maintaining world economic stability and pr omoting global trade liberalization. A fairer and 
more equitable multilateral trading system woul d be conducive to building confidence among 
Members and preventing trade protectionism. As a top priority in its trade policy, China has 
committed to pushing forward the Doha Round negotia tions to an early and successful conclusion. In 
this regard, China has actively participated in all the negotiations under Doha Development Agenda 
and played a constructive role. China has subm itted a large number of proposals on agriculture, 
NAMA, services, rules, trade facilitation etc which contribute to the development objectives of the 
negotiations. 
85. In China’s view, the multilatera l trade negotiations should ensure an outcome benefiting all 
Members, particularly the developing ones. Under th e 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 issues should take into full consideration of the 
development level and capacity of developing countries, and enable them to gain tangible benefits 
through Special and Differential treatment. Therefor e the special concerns of G20, G33, NAMA 11, 
the LDCs, the SVEs, the Cotton 4, the ACP Group,  the African Group, RAMs and other developing 
country groupings should be eff ectively addressed in this Round. China WT/TPR/G/199 
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86. Since China‘s entry into WTO, eight cases i nvolving China have been brought to DSB, 
among which China is the complaint for two cases, and respondent for the other six. Meanwhile, 
China, as a third party, also pa rticipated in another 62 cases. 
(F) CHINA 'S AND REGIONAL TRADE ARRANGEMENTS  
87. While multilateral trading system remains the priority, China believes that regional trade 
arrangements established on the basis of openness a nd non-discrimination can play a supplementary 
role to the multilateral trading system. Guided by this principle, China has conducted bilateral and 
regional trade arrangement negotiations with a number of trading partners. 
(i) China’s Participation in Regional Trade Arrangements 
88. To date, a total of 12 regional trade arrange ments involving 29 countries and regions have 
been either signed by China or still in the process of negotiations. 
89. On 1st September, 2006, outcome of the third round negotiation of the Asia Pacific Trade 
Agreement (APTA, formerly known as the Bangkok Agreement) came into force.  On 26
th October, 2007, the second session of the Ministeria l Council of APTA was held in Goa, India. 
The Council adopted the Ministerial Declaration an d Procedures for the Issuing and Verification of 
Certificates of Origin, and launched the f ourth round negotiation on tariff concessions. 
90. In June 2006, the Mainland of China signed Su pplement III to Closer Economic Partnership 
Arrangement (CEPA) with Hong Kong, China and M acao, China respectively. Supplement IV to 
CEPA with Hong Kong, China and Macao, Chin a was signed on 29th June and 2nd July 2007 
respectively. 
91. China-ASEAN Free Trade Agreement:  On 14t h January, 2007, China signed Free Trade 
Agreement on Trade in Services with ASEAN. 
92. China-Chile Free Trade Agreement: China-Chile  Free Trade Agreement on Trade in Goods 
formally came into force on 1st October 2006.  The Agreement on Trade in Services was signed on 
13th April, 2008. 
93. China-Pakistan Free Trade Agreement:  On 24t h November 2006, China and Pakistan signed 
China-Pakistan Free Trade Agreement on Trade in Goods, which came into force on 1st July, 2007. 
Negotiation of Agreement on Trade in Services is underway. 
94. China-New Zealand Free Trade Agreement:  On 7th April 2008 China and New Zealand 
concluded negotiations and signed Fr ee Trade Agreement that covers a number of fields including 
trade in goods, trade in services, investment, a nd cooperation in intellectual property protection. 
95. China-Gulf Cooperation Council Free Trade Agreem ent:  By the end of 2007, China and Gulf 
Cooperation Council had conducted fo ur rounds of Free Trade Agre ement negotiations with positive 
progress. 
96. China-Australia Free Trade Agreement:  The negotiations on China-Australia Free Trade 
Agreement were launched in Ap ril 2005, and are still underway. 
97. China-Singapore Free Trade Agreement:  In  August 2006 China-Singapore Free Trade 
Agreement negotiations were la unched and are still underway.  WT/TPR/G/199 Trade Policy Review 
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98. China-Iceland Free Trade Agreement:  The negotiations on China-Iceland Free Trade 
Agreement were launched in Dece mber 2006, and are still underway. 
99. China-Peru Free Trade Agreement: On 7th September 2007, during the APEC leaders’ 
informal meeting in Sydney, Chinese President Hu Jintao and Peruvian President Garcia jointly 
launched China-Peru Free Trade Agreemen t negotiations which are still underway. 
(ii) Other Regional Cooperation Mechanisms 
100. In November 2007, the 11th ASEAN and China,  Japan, and Korea (10+3) Summit was held 
in Singapore. The Summit adopted the second Join t Statement on East Asia Cooperation and the 
ASEAN and China, Japan, and Korea Cooperation Work Plan (2007-2017). China gives strong 
support to advance the regional trade agreement an d cooperation in fiscal and financial sector; to 
conduct in-depth study on "10+3" ASEAN Free Tr ade Agreement; to speed up multilateral process of 
"Chiang Mai Initiative"; and to establish "10+3" regional foreign exchange reserves as early as 
possible. In 2007, China also increased its fundi ng support worth US$15 million to "Special Funds for 
Asia Regional Cooperation". 
101. China has actively participated in trade and i nvestment liberalization under the framework of 
the APEC and Asia-Europe Meeting (ASEM) and pr omoted a pragmatic approach in cooperation. 
China hosted the ASEM Meeting Forum & Exhibiti on on Tourism Investment and Cooperation in 
October 2006 and the ASEM SMEs Ministerial Mee ting, ASEM Trade & Investment Fair on SMES 
in October, 2007. China is now preparing for th e 7th ASEM Summit to be held in Beijing in 
October 2008, and is ready to intensify efforts on investment promotion under the ASEM Framework. 
102. The Great Mekong Sub-regional Cooperation (GMS), aimed at enhancing economic 
cooperation, alleviating poverty and promoting development, was initiated in 1992 by 6 Members 
namely China, Cambodia, Laos, Myanmar, Thailand a nd Vietnam.  On 31st March, 2008, at the Third 
Summit of GMS held in Vientiane, Laos, a progra mme of action was adopted for the sub-regional 
development of GMS from 2008 to 2012. 
103. Forum on China-Africa Cooperation (FOCAC) ha s been a platform on which China and 
African countries hold collective dialogue as a new mechanism to promote South-South cooperation. 
The FOCAC Beijing Summit and the 3rd Ministerial Conference was held from 3rd to 5
th November 2006, in Beijing. China and 48 Af rican countries attended the Summit and the 
Ministerial Conference. The Forum adopted the D eclaration of the Beijing Summit of FOCAC and the 
Beijing Action Plan (2007-2009). China announced  8 new measures for Sino-African cooperation 
including those on duty-free market access a nd debt relief programmes for African LDCs. 
104. China and the other Members of Shanghai Cooperation Organization are working out 
concrete terms for a number of cooperation project s in the fields of energy, transportation, and 
telecommunication, etc. 
(G) AID FOR TRADE  
105. As a developing country, China’s per capita  GDP ranked behind more than 100 other 
countries in the world and has 135 million people living on less than US$1 a day. As a result, China shares the same sentime nt for the difficulties encountered by other developing countries in their 
economic development. China’s foreign aid progra mme dates back to 1950s.  Over more than 
50 years, China has provided assistance to more than  160 countries in Africa, Asia, East Europe, Latin 
America and South Pacific Regions in forms of gran ts, interest-free loans, and preferential loans.  
Through these assistance programmes, the Chinese G overnment helped recipient countries build China WT/TPR/G/199 
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nearly 2,000 projects covering agriculture, transpor t, communication, culture and education, health 
care, and social public facilities, all of which clo sely related to the production activities and daily life 
of the local people. 
106. Aside from providing assistance to infrastructur e development, China also attaches great 
importance to helping recipient countries strengthen capacity for economic development, especially to 
improving the trade-related capacity building.  To date, nearly 100 thousand officials and 
management and technical personnel from recipi ent countries have attended training and research 
activities in China. Meanwhile, the Chinese Government has also promoted the trade-related 
production capacity building in the recipient countries through increased direct investment. 
107. To promote exports of the least-developed countri es to China, by the end of 2007, the Chinese 
Government had granted duty-free treatment to 41 least-developed countries having diplomatic 
relations with China for most of products they ha ve the ability to export, accounting for 97.9% of their 
total export volume to China in 2007. 
108. China fully supports and participates in Aid for Trade initiative of the WTO and has been 
very active on bilateral basis.  In February 20 08, the Chinese Government pledged a donation to WTO 
for the first time on multilateral basis to support ot her developing countries to enhance their capacity 
to participate in international trade. 
V. OUTLOOK 
109. The next two years are the last two years for China’s implementation of its 11th Five-Year 
Programme.  The Chinese Government will endeavor  to maintain a stable and relatively rapid 
economic growth and avoid dramatic fluctuations.  As factors dr iving price increase are still active, 
significant pressure to push up the prices will remain.  Therefore, China is yet to take on an arduous 
task to rein in inflation.  Meanwhile, a number of  other developments may also bring about adverse 
impact on China’s economic development, including:  the worsening situation in terms of persistent 
imbalances in global economy; the slow-down of global economic growth; the spill over effect of the 
U.S. sub-prime mortgage crisis; the continuing depreciation of the US dollar which increases the risks 
in the international financial markets; and continue d rise in prices of oil and other commodities in the 
international market. 
110. The national economic and social development ta rgets expected to be reached by the Chinese 
Government in 2008 are:  the GDP is projected to grow by about 8% on the basis of further economic 
structural reform, improved productivity, enhanced  energy efficiency and better environmental 
protection;  the CPI is to be checked at around 4. 8%; ten million new jobs remain to be created in 
urban areas; registered urban unemploym ent rate to be kept at around 4.5%. 
111. The primary task for the macroeconomic regulat ion in 2008 is to maintain stable and 
relatively rapid economic development while preven ting the relatively fast economic growth from 
becoming overheated, and to keep structural price in crease from developing into serious inflation.  To 
this end, in 2008, the Chinese Government will con tinue to follow a stable fiscal policy combined 
with a tightened monetary policy.  According to the central government’s plan, the deficit for the 
central government budget and the investment via the issuance of treasury bonds will be further 
reduced, with the deficit for the central govern ment budget in 2008 projected at Y180 billion, 
Y65 billion less than 2007, and investment via the issu ance of treasury bonds projected at Y30 billion, 
Y20 billion less than 2007.  The decision to follo w a tightened monetary policy is based on the 
following considerations: the growing pressure of  a rebound in fixed asset investment, continued 
excessive money supply and credit, the unsolved pr oblem of excessive liquidity, and considerable WT/TPR/G/199 Trade Policy Review 
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pressure of price increases.  For these reasons, Chin a needs to intensify regulation of its financial 
sectors in order to keep in check the ex cessive growth in money supply and credit. 
112. The main orientation of China’s economic structural  reform in the next  few years will still be 
to change the economic development mode.  Adhe ring to the policy of boosting domestic demand 
especially the consumption-led demand, the Chinese Government will make every effort to change 
the underlying mechanism for economic growth from so lely relying on investment and export to an 
approach that coordinate consumption, investment and exports as an integrated force for growth; from 
relying mainly on the manufacturing industry towards a combination of agriculture, manufacturing and service industries, and from relying on increasi ng consumption of material resources towards 
making headways in scientific and technological progress, as well as in the improvement of the labor 
quality, and innovation in management. 
113. The Chinese government will further enhance produ ct quality and safety.  In 2008 alone, the 
Chinese Government will complete the formulation or modification of more than 7,700 national safety standards on food, drugs and other consumer goods. In addition, it will further improve the 
system of safety standards on consumer goods. 
114. Other important reform and development measures to be taken in the next few years include: 
reform of resource tax system to improve the syst em of compensation for the use of resources and the 
compensation mechanism for damage to ecological environment; expansion of the pilot programmes 
for the reform of VAT system and research on a possible scheme to expand the reform nationwide; 
continuation of the reform of the banking sector  focusing on the shareholding reform of the 
Agricultural Bank of China and the reform of the State Development Bank, and the introduction of the 
deposit insurance system and reform of the medical  and healthcare system. An initial programme has 
already been drawn up which will be circulated to solicit public comment; further improvement of the 
social security system, and the estab lishment of housing guarantee system. 
115. In 2008, several important laws including the Enterprise Income Tax Law, the Labor Contract 
Law, the Real Right Law and Anti-Monopoly Law will come into force, which will have significant 
impact on China’s economy and social life. 
116. China is committed to strengthening the multilate ral trading system and is willing to make 
joint efforts with other members to bring the D oha Round negotiations to an early and successful 
conclusion. 
117. The Chinese government will continue to st rengthen bilateral and regional economic and 
trade cooperation in pursuance of its opening-up polic y and on the basis of mutual benefit to achieve a 
win-win outcome. China will implement in earnest the agreements to which China is a signatory. 
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