(85)

From the available information it is concluded that the state-owned banks in China command the highest market share and are the predominant players in the Chinese financial market; according to the 2006 Deutsche Bank Research on China's banking sector, the state-owned banks’ share may amount to more than 2/3 of the Chinese market. For the same matter the WTO Trade Policy Review of China noted that ‘The high degree of state ownership is another notable feature of the financial sector in China’ (5). It is pertinent to note that the four big state-owned banks (Agricultural Bank, Bank of China, Construction Bank and Industrial and Commercial Bank) appear to represent more than half of the Chinese banking sector. Policy banks and other state-owned banks are more than 50 % state-owned. The Commission also requested information concerning the structure of government control in those Chinese banks and the pursuit of government policies or interests with respect to the Papermaking industry (i.e. board of directors and board of shareholders, minutes of shareholders/directors meetings, nationality of shareholders/directors, lending policies and assessment of risk with respect to loans provided to the cooperating exporting producers). Nevertheless, neither the GOC nor the banks provided such information. They only repeatedly referred to information in the Annual reports of the banks they had submitted. However, the information in the Annual reports of banks did not (and cannot) contain the required level of detailed information. Consequently, the Commission had to use the information available. It concluded on the basis of the available data that those banks are controlled by the government and exercise government authority in a manner that their actions can be attributed to the State. The relevant data used in order to arrive at the aforesaid findings is derived from information submitted by the GOC, the annual reports of Chinese banks that were either submitted from GOC or publicly available, information retrieved from the 2006 Deutsche Bank Research on China's banking sector, information submitted from the co-operating exporting producers and information existing in the complaint. As for foreign banks, independent sources estimate that they represent a minor part of the Chinese banking sector and consequently play an insignificant role in policy lending; with relevant information suggesting that this may represent as little as 1 % of the Chinese market (6). Relevant public available information also confirms that Chinese banks, particularly the large commercial banks, still rely on state-owned shareholders and the government for replenishment of capital when there is a lack of capital adequacy as result of credit expansion (7). With respect to the banks that provided loans to the co-operating exporting producers, the great majority are state-owned banks. Indeed on the basis of the available information it was found that at least 13 out of the 19 reported banks are state-owned banks, including two Policy banks (Export-Import Bank of China, the China Development Bank) and the major Commercial banks in China like Agricultural Bank of China, Bank of China, China Construction Bank and Industrial and Commercial Bank of China. With respect to the remaining state-owned banks, again the Commission requested the same information mentioned above concerning the government control and the pursuit of government policies or interests with respect to the Papermaking industry. Again, no such detailed information was provided apart from a repeated claim to refer to information in the relevant Annual reports of the banks which in the majority of cases was only in Chinese and without any English translation. However, information in the Annual reports of banks cannot provide the required level of detailed information. With respect to the Policy banks, the investigation established that there are no clear legal provisions regulating their role and their relationship with the government. Nonetheless, according to statements made by the GOC during the on-the-spot verification it appears that Policy banks supported government policies in China and are not operating for profit. All the above points confirm that the four banks are controlled by the government and exercise government authority in a manner that their actions can be attributed to the State.