WORLD TRADE
ORGANIZATIONG/SCM/N/1/CHN/1
11 September 2002
(02-4783)
Committee on Subsidies
and Countervailing MeasuresOriginal:  English
NOTIFICATION OF LAWS AND REGULATIONS UNDER
ARTICLE 32.6 OF THE AGREEMENT
PEOPLE'S REPUBLIC OF CHINA
The following communication, dated 3 September 2002, has been received from the
Permanent Mission of the People's Republic of China.
_______________G/SCM/N/1/CHN/1
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REGULATIONS OF THE PEOPLE'S REPUBLIC OF CHINA
ON COUNTERVAILING MEASURES
(Adopted at the 46th Executive Meeting of the State Council on 31 October 2001,
promulgated by Decree No. 329 of the State Council of  the People’s Republic of China, and effective
as of 1 January 2002)
CHAPTER I - GENERAL PROVISIONS
Article 1.  These Regulations are formulated in accordance with the Foreign Trade Law of
the People's Republic of China for the purpose of maintaining the foreign trade order and fair
competition.
Article 2.  Where an imported product to which a subsidy is granted causes material injury or
threat of material injury to an established domestic industry, or causes material retardation of the
establishment of such an industry, a countervailing investigation shall be initiated and countervailing
measures applied in accordance with the provisions of these Regulations.
CHAPTER II - SUBSIDY AND INJURY
Article 3.  The term “subsidy” means a financial contribution or any form of income or price
support which is provided by the government or any public body of an exporting country (region) andwhich will benefit the recipients.
The government or any public body of an exporting country (region) is hereinafter
collectively referred to as “the government of an exporting country (region)".
The term "financial contribution" in Paragraph 1 of this Article shall include:
(1) the government of an exporting country (region) directly provides funds in form of
grants, loans, or equity infusion, etc., or potentially directly transfers funds or
liabilities in form of loan guarantees or otherwise;
(2) the government of an exporting country (region) forgoes or does not collect revenue
that is otherwise due;
(3) the government of an exporting country (region) provides goods or services other
than general infrastructure, or purchases goods;
(4) the government of an exporting country (region) carries out the above-mentioned
functions by making payments to a funding mechanism, or entrusts or directs a
private body to carry out the above-mentioned functions.
Article 4.  A subsidy subject to countervailing investigation and countervailing measures
under these Regulations must be specific.
A subsidy falling under one of the following circumstances shall be specific:(1) the subsidy received by certain enterprises or industries explicitly specified by the
government of an exporting country (region);
(2) the subsidy received by certain enterprise s or industries explicitly provided for in
laws and regulations of an  exporting country (region);G/SCM/N/1/CHN/1
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(3) the subsidy received by enterprises or industries located within a designated specific
area;
(4) the subsidy contingent upon export perfor mance, including those illustrated in the
List of Export Subsidies annexed to these Regulations;
(5) the subsidy contingent upon the use of domestic over imported products.In determining the specificity of a subsidy, such factors as the number of subsidized
enterprises, the amount, proportion, length of time, and form of the subsidy received by enterprises
shall also be considered.
Article 5.  The Ministry of Foreign Trade and Economic Cooperation (hereinafter referred to
as “MOFTEC”) shall be responsible for the investigation and determination of a subsidy.
Article 6.  The amount of a subsidy to an imported product shall be calculated according to
the following methods by distinguishing among differing cases:
(1)  where the subsidy is  granted in form of a grant, the amount of the subsidy shall be
calculated on the basis of the actual amount received by an enterprise;
(2) where the subsidy is granted in form of a loan, the amount of the subsidy shall be
calculated on the basis of the difference between the amount of interest an enterprise
should pay on a loan in the ordinary commercial loan conditions and the amount of
interest the enterprise pays on this loan;
(3) where the subsidy is granted in form of a loan guarantee, the amount of the subsidy
shall be calculated on the basis of the di fference between the amount of interest an
enterprise should pay on a commercial loan absent such guarantee and the amount of
interest the enterprise actually pays on a loan guaranteed;
(4) where the subsidy is granted in form of an equity infusion, the amount of the subsidy
shall be calculated on the basis of the actual amount of the capital an enterprisereceives;
(5) where the subsidy is granted in form of the provision of goods or services, the amount
of the subsidy shall be calculated on the basis of the difference between the price of
the goods or services at normal market price and the price that an enterprise actuallypays;
(6) where the subsidy is granted in form of purchase of goods, the amount of the subsidy
shall be calculated on the basis of the difference between the actual price the
government pays and the normal market price of the goods;
(7) where the subsidy is granted in form of forgoing or not collecting due revenue, the
amount of the subsidy shall be calculated on the basis of the difference between the
amount payable under law and the actual amount an enterprise pays;
The amount of subsidies granted in forms other than those enumerated in the preceding
paragraph shall be calculated in a fair and reasonable way.G/SCM/N/1/CHN/1
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Article 7.  The term “injury” means material injury or threat of material injury caused by a
subsidy to an established domestic industry, or material retardation of the establishment of a domestic
industry.
The State Economic and Trade Commission (hereinafter referred to as “SETC”) shall be
responsible for the investigation and determination of injury. The countervailing investigation of
injury to a domestic industry involving agricultur al products shall be conducted by SETC jointly with
the Ministry of Agriculture.
Article 8.  The following factors shall be examined in the determination of injury caused by a
subsidy to a domestic industry:
(1) the trade effects likely to arise from the subsidy;
(2) whether the volume of subsidized imports, including the volume of subsidized
imports either in absolute terms or relative to the production or consumption of a like
domestic product, has been increasing significantly, or the possibility of a significantincrease in subsidized imports;
(3) the effects of subsidized imports on prices, including the price undercutting of the
subsidized imports, or the significant suppressing or depressing effects on the price of
a like domestic product, etc.;
(4) the impact of the subsidized imports on the relevant economic factors and indices of
the domestic industry;
(5) the production capacity or export capacity of the exporting country (region) or  the
country (region) of origin, and inventories  of the product under investigation;
(6) other factors that may cause or have caused injury to a domestic industry.The determination of threat of material injury shall be based on facts and not merely on
allegation, conjecture or remote possibility.
When determining the injury caused by a subsidy to a domestic industry, the determination
shall be based on positive evidence, and the injuries caused by factors other than subsidy must not be
attributed to the subsidy.
Article 9.  Where subsidized products from more than one country (region) simultaneously
satisfy the following requirements, the effects of such subsidized imports on a domestic industry may
be cumulatively assessed:
(1) the amount of subsidization established in relation to the subsidized imports from
each country (region) is not de minimis , and the volume of imports from each country
is not negligible;
(2) a cumulative assessment of the effects of the subsidized imports is appropriate in light
of the conditions of competition between  the subsidized imports and the conditions
of competition between the subsidized imports and the like domestic product.
A subsidy is de minimis  if the amount of the subsidy is less than 1 per cent of the value of a
product; however, with respect to the subsidized products from developing countries (regions), the
subsidy is de minimis  if the amount of the subsidy is less than 2 per cent of the value of a product.G/SCM/N/1/CHN/1
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Article 10.  The effect of the subsidized imports shal l be assessed in relation to the separate
identification of the domestic production of the like product. If such separate identification of that
production is not possible, the effect of the subsidized imports shall be assessed by the examination of
the production of the narrowest group or range of products, including the like domestic product.
Article 11.  The term “domestic industry” means the domestic producers as a whole of the
like products within the People’s Republic of China or those of them whose collective output of the
products constitutes a major proportion of the total production of those products, except that when
domestic producers are related to the exporters or importers or are themselves importers of the
subsidized products or like products.
In exceptional circumstances, the producers within a regional domestic market may be
regarded as a separate industry if the producers within such market sell all or almost all of the like
products in that market, and the demand in that market is not to any substantial degree supplied by
domestic producers of the like products located in other domestic regions.
Article 12.  The term “like product” means the product that is identical to the subsidized
product, or in the absence of such a product, another product that has characteristics closely
resembling the subsidized product.
CHAPTER III - COUNTERVAILING INVESTIGATION
Article 13.  Any domestic industry or natural person, legal person or relevant organization on
behalf of the domestic industry (hereinafter collectively referred to as “the applicant”) may make a
written application to MOFTEC for a countervailing  investigation in accordance with the provisions
of these Regulations.
Article 14.  The application shall contain the following information:
(1) the name, address and other relevant information of the applicant;(2) a complete description of the imported products in question, including the names of
the products, the exporting countries (regions) or the countries (regions) of originconcerned, the identity of known exporters or producers, etc.;
(3) a description of the volume and value of domestic production of the  like product;(4) the effect of the volume and price of the imported product in question on the domestic
industry;
(5) other information that the applicant considers as necessary to submit.Article 15.  The application shall be supported by the following evidence:
(1) existence of a subsidy to the imported product in question;(2) injury caused to a domestic industry;
(3) existence of a causal link between the subsidy and the injury;
Article 16.  MOFTEC shall, within 60 days from the date of receipt of the application and
relevant evidence submitted by the applicant, examine whether the application is made by or on
behalf of the domestic industry and the contents of the application and the evidence attached thereto,G/SCM/N/1/CHN/1
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and shall, after consulting with SETC, decide whethe r or not to initiate an investigation. Under special
circumstances, the examination period may be extended.
Prior to the decision to initiate an investigation, the government of the country (region) the
product of which may be subject to such investigation shall be invited for consultation regarding thesubsidy in question.
Article 17.  An application shall be considered to have been made by or on behalf of the
domestic industry, and a countervailing investigation may be initiated, if  the application is supported
by those domestic producers whose collective output constitutes more than 50 per cent of the total
production of the like product produced by that portion of the domestic industry expressing either
support for or opposition to the application. However, no investigation shall be initiated when theoutput of those domestic producers expressly supporting the application accounts for less than 25 per
cent of total production of the like domestic product.
Article 18.  If, in special circumstances, MOFTEC does not receive any written application
for a countervailing investigation, but has sufficient evidence of a subsidy, injury and causal linkbetween the two, it may, after consulting with SETC, decide to initiate an investigation.
MOFTEC and SETC are hereinafter collectively referred to as “the investigating authorities”.Article 19.  MOFTEC shall publish the decision to initiate an investigation and notify the
applicants, the known exporters and importers, other interested organizations and parties (hereinafter
collectively referred to as “the interested parties”), and the government of an exporting country
(region).
As soon as the decision to initiate an investigation has been published, MOFTEC shall
provide the full text of the application to the k nown exporters and the government of the exporting
country (region).
Article 20.  The investigating authorities may conduct investigation and collect information
from interested parties by, among others, sending questionnaires, using samples, holding hearings and
making on-the-spot verification.
The investigating authorities shall provide oppor tunities for all interested parties and the
government of interested country (region) to present their views and supporting arguments.
MOFTEC may send its staff members to the countries (regions) concerned to carry out
investigations if it deems necessary to do so, unless the countries (regions) concerned object to suchan investigation.
Article 21.  An interested party and the government of an interested country (region) shall
provide authentic information and relevant docume ntation to the investigating authorities in the
process of the investigation.  In the event that any interested party or the government of the interested
country (region) does not provide authentic information and relevant documentation, or does not
provide necessary information within a reasonable time-limit, or significantly impedes the
investigation in other way, the investigating author ities may make determinations on the basis of the
facts available.
Article 22.  An interested party or the government of an interested country (region) may
request the investigating authorities to treat the inform ation it provided as confidential if they consider
that any disclosure of such information would create significantly adverse effect.G/SCM/N/1/CHN/1
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The investigating authorities shall treat the in formation submitted by the interested party or
the government of the interested country (region) as confidential if they consider that the request for
confidentiality is justifiable, and shall require th e interested party and/or the government of the
interested country (region) to provide non-confidential summaries thereof.
The confidential information shall not be disclosed without permission of the interested party
or the government of the interested country (region) submitting it.
Article 23.  The investigating authorities shall allo w applicants, interested parties and
governments of interested countries (regions) to have access to the information relevant to the
investigation, provided that the information has not been treated as confidential.
Article 24.  Throughout the period of investigation, the government of the country (region)
the products of which are the subject of the investigation shall be afforded a reasonable opportunity to
continue consultations. The consultations shall not prevent the investigating authorities from
conducting investigations and adopting countervailing measures in accordance with the provisions of
these Regulations.
Article 25 .  MOFTEC and SETC shall, on the basis of their findings, make a preliminary
determination on subsidization and injury respectively, and make a preliminary determination on
where there exists a causal link between subsidization and injury. The preliminary determinations
shall be published by MOFTEC.
Article 26.  In the case where a preliminary determination on subsidization, injury and the
causal link between the two is affirmative, MOFTEC  and SETC shall conduct further investigations
on the subsidization and its amount, the injury and its degree and make final determinations
respectively on the basis of their findings. The final determinations shall be published by MOFTEC.Before the final determinations are made, MOFTEC shall inform all known interested parties and the
government of the interested country (region) of the essential facts on which the final determinations
are based.
Article 27.  A countervailing investigation shall be concluded within 12 months from the date
of publication of the decision to initiate the investigation, and such period may be extended in special
circumstances, but in no case the extension shall be more than 6 months.
Article 28.  In any one of the following circumstances, a countervailing investigation shall be
terminated and such termination shall be published by MOFTEC:
(1) the application has been withdrawn by the applicant;(2) there is no sufficient evidence of the ex istence of a subsidy, injury and causal link
between them;
(3) the amount of  the subsidy is de minimis ;
(4) the actual or potential volume of the subs idized imports or the injury is negligible;
(5) an agreement has been reached with the government of the  country (region)
concerned after consultations, and therefore the countervailing investigation is nolonger necessary;
(6) other circumstances that both MOFTEC and SETC consider not appropriate to
continue the countervailing investigation.G/SCM/N/1/CHN/1
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If the product under investigation imported from one country (region) or some countries
(regions) falls into one of the circumstances set forth in Item (2), (3), (4) or (5) of the preceding
paragraph, the countervailing investigation on such product shall be terminated.
CHAPTER IV - COUNTERVAILING MEASURES
Section I:  Provisional Measures
Article 29.  Provisional countervailing measures may be applied if the preliminary
determination establishes the existence of a subsidy and the injury caused by the subsidy to a
domestic industry.
Provisional countervailing measures shall take the form of provisional countervailing duties
guaranteed by cash deposits or bonds.
Article 30.  The proposal applying provisional countervailing measures shall be put forward
by MOFTEC, on the basis of which the State C ouncil Tariff Commission shall make a decision
thereon. The decision shall be published by MOFT EC.  The Customs shall implement the decision
from the effective date set forth in the public notice.
Article 31.  The period for applying provisional countervailing measures shall not exceed 4
months from the effective date set forth in the public notice regarding the decision on provisional
countervailing measures.
No provisional countervailing measures shall be applied within 60 days from the date of
publication of the decision to initiate the countervailing investigation.
Section II:  Undertakings
Article 32.  During the period of a countervailing investigation, if the government of an
exporting country (region) proposes an undertaking to eliminate or limit a subsidy or takes other
relevant measures, or if an exporter proposes an undertaking to revise its prices, MOFTEC shall give
it full consideration.
MOFTEC may suggest price undertakings to an e xporter or the government of an exporting
country (region).
The investigating authorities shall not force an exporter to enter into any undertaking.
Article 33.  The fact that exporters or governments of exporting countries (regions) do not
offer undertakings, or do not accept any suggestion regarding price undertakings, shall in no way
prejudice the investigation and determination of a countervailing case. The investigating authorities
have the right to determine that a threat of injury is  more likely to be realized if the exporters continue
subsidizing the imports.
Article 34.  If considering that an undertaking is acc eptable, MOFTEC may, after consulting
with SETC, decide to suspend or terminate th e countervailing investigation without applying
provisional countervailing measures or imposing countervailing duties. The decision to suspend orterminate the countervailing investigation shall be published by MOFTEC.
If MOFTEC does not accept an undertaking, it shall provide the reasons therefor to the
exporter concerned.G/SCM/N/1/CHN/1
Page 9
Undertakings shall not be sought or accepted unless the investigating authorities have made a
preliminary affirmative determination of subsidization and injury caused by such subsidization.  In the
case where an exporter enters into an undertaking without consent of the government of an exporting
country (region), the investigating authorities shall not seek or accept such an undertaking.
Article 35.  After the suspension or termination of  the investigation according to the
provisions of Paragraph 1, Article 34 of these Re gulations, upon the request of the government of an
exporting country (region) or the investigating authorities deem necessary, the investigating
authorities may continue the investigation of subsidization and injury.
On the basis of the findings of the investigation, the undertaking shall automatically lapse if a
negative determination is made on subsidization or inju ry, or shall remain in force if the determination
is affirmative.
Article 36.  MOFTEC may require the exporter or the government of an exporting country
(region) from whom an undertaking has been accepted to provide periodically information anddocumentation relevant to the fulfilment of such an undertaking, and make verification on such
information and documentation.
Article 37.  In case of violation of an undertaking, MOFTEC may, after consulting with
SETC, decide to resume the countervailing investigation immediately in accordance with theprovisions of these Regulations, or on the basis of the best information available, decide to apply
provisional countervailing measures and levy a countervailing duty retroactively on the product
imported within 90 days prior to the application of such provisional countervailing measures, except
the product imported before the violation of the undertaking.
Section III:  Countervailing Duties
Article 38.  If the efforts made to complete consultations produce no positive results, and a
final determination establishes the existence of su bsidy and the injury caused by the subsidy to a
domestic industry, a countervailing duty may be imposed.
Article 39.  The proposal imposing a countervailing duty shall be put forward by MOFTEC,
on the basis of which the State Council Tariff Commission shall make a decision which shall be
published by MOFTEC. The Customs shall implement the decision from the effective date set forth in
the public notice.
Article 40.  Countervailing duties shall be imposed on products imported after the date of the
publication of the final determination, with the exception of circumstances set forth in Articles 37, 44
and 45 of these Regulations.
Article 41.  Countervailing duties shall be paid by importers of subsidized imports.
Article 42.  Countervailing duties shall be determined separately on the basis of the amount
of subsidy each exporter has received. Where it is necessary to impose a countervailing duty on the
subsidized imports of an exporter who was not ac tually investigated, an expedited review shall be
conducted and a countervailing duty applicable to the exporter shall be determined in a reasonable
way.
Article 43.  No countervailing duties shall be levied in excess of the amount of a subsidy as
established in a final determination.G/SCM/N/1/CHN/1
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Article 44.  In the case where a final determination establishes the existence of a material
injury, and provisional countervailing measures have been applied prior to the final determination,
countervailing duties may be levied retroactively for the period for which provisional countervailing
measures have been applied.
In the case where a final determination establishes the existence of a threat of material injury,
and provisional countervailing measures have been applied in the situation that the absence of such
provisional countervailing measures would have led to a determination of injury, countervailing duties
may be levied retroactively for the period for which provisional countervailing measures have been
applied.
If the countervailing duty determined in a final determination is higher than the amount
guaranteed by the cash deposit or bond, the difference shall not be collected; if the duty is less than
the amount guaranteed by the cash deposit or bond, the excess amount shall be reimbursed.
Article 45.  When the following three circumstances exist simultaneously, a countervailing
duty may, when necessary, be retroactively levied on products imported not more than 90 days priorto the date of application of provisional countervailing measures:
(1) the subsidized imports increased massively  during a short period of time;(2) such increase has caused injury which is difficult repair to a domestic industry; and(3) such products have  benefited from the subsidy.Article 46.  Where a final determination decides not to levy a countervailing duty, or does not
decide a retroactive levy of a countervailing duty, any cash deposit made during the period of theapplication of provisional countervailing measures shall be refunded and any bonds released.
CHAPTER V - DURATION AND REVIEW OF COUNTERVAILING
DUTIES AND UNDERTAKINGS
Article 47.  The period for the levy of a countervailing duty and fulfilment of an undertaking
shall not exceed 5 years. However, the period for the levy of the countervailing duty may be extendedas appropriate if, as a result of review, it is determined that the termination of the countervailing duty
would be likely to lead to continuation or recurrence of subsidization and injury.
Article 48.  After a countervailing duty has taken effect, MOFTEC may,  after consulting with
SETC, decide on justifiable grounds to review the need for the continued imposition of thecountervailing duty; such a review may also be conducted, provided that a reasonable period of time
has elapsed, upon request by any interested party and on the basis of examination of the relevant
evidence submitted by the interested party.
After an undertaking has taken effect, MOFTEC may, on justifiable grounds, decide to review
the need for the continued fulfilment of an undertaking; such a review may also be conducted,
provided that a reasonable period of time has elapsed, upon request by any interested party and on the
basis of examination of the relevant evidence submitted by the interested party
Article 49.  On the basis of  the findings of a review, MOFTEC shall, in accordance with the
provisions of these Regulations, make a proposal on the retention, revision, or termination of a
countervailing duty. The State Council Tariff Commission shall, in light of the proposal made by
MOFTEC, make a decision which shall be publishe d by MOFTEC. Meanwhile, MOFTEC may, afterG/SCM/N/1/CHN/1
Page 11
consulting with SETC, make a decision on the retention, revision or termination of an undertaking and
publish such decision in accordance with the provisions of these Regulations.
Article 50.  The review proceedings shall be conducted with reference to the relevant
provisions of these Regulations on countervailing investigation.
Any review shall be concluded within 12 months of  the date of decision of initiation of such a
review.
Article 51.  During the period of review, the review proceedings shall not impede the
application of countervailing measures.
CHAPTER VI - SUPPLEMENTARY PROVISIONS
Article 52.  Where any party is not satisfied with a final determination made under Article 26
of these Regulations, or not satisfied with a decision on whether or not to impose a countervailing
duty and a decision on retroactive imposition of a duty, made under Chapter IV of these Regulations,or not satisfied with the review findings made  under Chapter V of these Regulations, it may, in
accordance with the law, apply for administrative reconsideration, or file a lawsuit in the people's
court.
Article 53.  A public notice issued under these Regulations shall contain, inter alia, important
information, facts, reasons, basis, findings and conclusions, etc.
Article 54.  MOFTEC and SETC may take appropriate measures to prevent the
circumvention of countervailing measures.
Article 55.  Where any country (region) discriminatorily imposes countervailing measures on
exports from the People's Republic of China, the People’s Republic of China may, on the basis of
actual situations, response by taking corresponding measures against that country (region).
Article 56.  MOFTEC shall be responsible for foreig n-related consultations, notification and
dispute settlement concerning countervailing activities.
Article 57.  MOFTEC and SETC may, in accordance with these Regulations, formulate
specific implementing measures of these Regulations.
Article 58.  These Regulations shall be effective as of 1 January 2002.  The provisions on
countervailing measures contained in the Regulations of the People’s Republic of China on Anti-Dumping and Anti-Subsidy promulgated by the State Council on 25 March 1997 shall be repealed
simultaneously.G/SCM/N/1/CHN/1
Page 12
ANNEX
List of Export Subsidies
1. The provision of direct subsidies by the government of an exporting country (region) to an
enterprise or industry contingent upon export performance.
2. Foreign currency retention schemes or any similar practices which involve bonus on exports.3. Internal transport or freight charges on exports, provided for or approved by the government
of an exporting country (region), on terms more favorable than for domestic goods.
4. The provision of goods or services by the government of an exporting country (region) either
directly or indirectly to the production of exports, on term more favorable than for provision of like
goods or services to the production of domestic goods, except for special circumstances.
5. The full or partial remission, exemption or deferral of direct taxes or social welfare charges
specifically related to exports which have been paid or are payable by enterprises.
6. The deductions directly related to exports or export performance, over and above those
granted in respect to domestic production, in the calculation of the base on which direct taxes arecharged.
7. The remission, exemption or reimbursement, in  respect of the production and distribution of
exports, of indirect taxes in excess of those levied in respect of the production and distribution of like
domestic products.
8. The remission, exemption, reimbursement or defe rral of prior-stage cumulative indirect taxes
on goods or services used in the production of exports in excess of the remission, exemption,
reimbursement or deferral of like prior-stage cumulative indirect taxes on goods or services used in
the production of like domestic product, except for special circumstances.
9. The remission, exemption or reimbursement of import charges on imported inputs for the
production of exports in excess of those levied on such inputs when they are imported, except for
special circumstances.
10. The provision by the government of an exporting country (region) of export credit guarantee
or insurance programmes, of insurance or guarantee programmes against increases in the cost ofexported products or of exchange risk programmes at premium rates which are inadequate to cover
the long-term operating costs and losses of the programmes.
11.  The grant by the government of an exporting country (region) of export credits at rates below
those which are actually paid for the employment of such funds, or the payment by it of all or part ofthe costs incurred by exporters or financial institutions in obtaining credits, in order that that could
attain advantages in the field of export credits terms, except for special circumstances.
12. Any other charges on the public account constituting an export subsidy.
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