risk. The detailed loan appli cation and approv al processes are sim ilar to tho se in the United States and oth er countries. Third, SOCBs Loans do not cons titute a financial contribution although the GOC does have a m ajority stake in SOCBs. Fourth, Lendings of SOCBs and Policy Banks in C hina is not specific. Th e five-year plans and other related government documents do not serve as mandated preferences in relation to lending to the forestry and paper industries.

However, the US DOC disagreed with GOC’s responses. As discussed in the Preliminary Determination, the DOC continues to find that the GOC has a policy in place to encourage and support the growth and de velopment of the pa per industry through preferential financing initiatives, as illust rated in the five-year plans and industrial policies. In the DOC’s vi ew, loans provided by Policy Banks and SOCBs in China constitute a direct financial contribution from the government.

**3. Appropriateness of the Benchmarks.** The GOC disagrees with the benchm ark used by the DOC in the Preliminary Determination to calculate the benefit of the Government Policy Lending Program. The GOC argues th at the DOC should use the appropriate commercial benchmarks from China in the benefit calculation. Aft er the gradual liberalization of the financial markets in China, domestic interest rates can serve as an appropriate benchmark. If the DOC continues to reject inter est rates in Chin a as appropriate benchmarks, then it should consid er more than one factor in s electing “surrogate” countries.  In a ddition to gross national incom e (GNI), other factors should be taken into account such as national savings rate and inflation, as China is a country with a high savings rate and lo w inflation, as compared to c ountries in the same income group.

The US DOC argues that no interest rate in China could be used as a suitable benchmark for measuring the benefit of bank loans, and that it is appropriate to resort to an external benchmark. The DOC continues to construct a benchmark by using data from a group of lower-middle income countries, but agrees to change the m ethod of calculation. Instead of a simple average from these countries, the DOC used a more com plex method to take into account other factors that m ay drive in terest rate variation across income levels, including institutions, level of savings, market risk, and transaction costs. Benchmarks for loans denom inated in f oreign currencies and Chinese currenc ies were deter mined separately by using a regression of inflation-adjusted interest rate on a composite index of certain governance indicators that apply to all of th ese countries. These indicators reflect the quality of each country’s in stitutions across several dimensions, including political stability, government effectiveness, regulat ory quality, rule of law, and control of corruption.

4. **Application of Adverse Facts Available to Chenming.** During the final stage, Shandong Chenming Paper Holdings Ltd. (Chenm ing) withdrew from the investigation as one of the mandatory respondents due to reasons unknown to us. The US DOC based the net cou ntervailable subsidy ra te for Chenming on adverse facts available (AFA) methodology in the final determination. Since the AFA is not available, the DOC applied the highest calculated final subsidy rate s for income tax, VAT and policy lending programs of all the other producers/exporters in this investigation. That is why Chenming 29