  
  
G/SCM/Q2/CHN/96  
30 October  2020 
(20-7646) Page: 1/17 
Committee on Subsidies and Countervailing Measures  Original:  English  
 
  
SUBSIDIES  
REPLIES TO QUESTIONS1 FROM THE EUROPEAN UNION REGARDING THE  
NEW AND FULL NOTIFICATION OF CHINA2 
The following communication, dated 27 October  2020, is being circulated at the request of the 
delegation of  China . 
 
_______________  
 
 
General questions  
Question 1 
With regard to the programs granted or maintained at sub -central government level, there 
appears to be significant difference in the number of schemes reported for some provinces 
over others . Can China confirm if this notification covers all provinces/municipalities and 
all schemes administered by the various sub -central regions.  
Reply : 
In recent years, China has made great efforts to strengthen the completeness of subsidy 
notifications, especially sub -central subsidy notifications . The second sub -central subsidy notification 
submitted by China in July 2018 achieved the full coverage of provincial administrative regions for 
the first time . The third sub -central subsidy notification submitted by China on June 30, 2019 
involved a total of 420 sub -central subsidy policies.  
Question 2 
According to Bank of China, at the end of 2016 the number of governmental guidance 
funds exceeded 1,000 (1.9 trillion RMB paid in at that date), up 30 % in number and 144 % 
in volume compared to 2015 – see information in link . Can China explain why no such 
guidance fund is included in this notification to the WTO?  
http://pic.bankofchina.com/bocappd/rareport/201709/P020170929497812585464.pdf  
Question  3 
In order to facilitate the review process of China 's subsidy notification, would it be 
possible for China to provide the Chinese titles of the schemes listed in Annex attached.  
Reply : 
The governmental guidance fund is a corporate equity investment fund owned by the Fund Company,  
which is a joint stock enterprise established in accordance wit h the Company Law . The employees 
of the company are not public servants and have no administrative ranks . In the principle of 
 
1 G/SCM/Q2/CHN/79.  Please note that the replies for the questions between 38 and 46 are yet to be 
provided.  
2 G/SCM/N/315/CHN.  G/SCM/Q2/CHN/96  
- 2 - 
  separation between ownership and management, the fund entrusts a professional management 
company to be responsible for the managem ent and independently conduct investment business 
based on market -oriented principles . The fund 's investment management and decision -making are 
completely market -oriented, and governmental departments do not intervene or participate in any 
investment decis ion-making programs of the fund . As the fund adopts the form of equity investment, 
its shareholders have clear demands on financial returns of the fund . Therefore, the investment by 
fund does not involve any subsidy . 
Question  4 
Could China please explain w hich of the schemes included in the notification are relevant 
for the steel industry – apart from the one notified which relates to dissolving 
overcapacity in that industry.  
Reply : 
In our latest subsidy notification for the year of 2015 -2016, we incorporated subsidies involving steel 
sector . Basically, these policies are not specific on steel industry . However, we included them in the 
notification for the purpose of improving transparency.  
For example, at the central governmental level there are P referential tax treatment for 
environmental protection, water and energy conservation, Clean Development Mechanism, Fund for 
energy conservation and emission reduction, Fund for air pollution prevention and control, R&D 
super deduction for enterprises, Rew ard and support fund for the structural adjustment of industrial 
enterprises.  
At the local governmental level, there are.  
1. Special fund for power demand -side management of Tianjin Municipality.  
2. Special fund for the prevention and control of atmospheric poll ution, Jiaozuo City of Henan 
Province.  
3. Special fund for industrial and informatizational transformation and upgrading, Yancheng City of 
Jiangsu Province.  
4. Special fund for energy conservation of Tianjin Municipality.  
5. Special fund for the prevention and cont rol of atmospheric pollution of Hebei Province.  
6. Special reward and subsidy fund for the resolving of overcapacity in coal of Ningxia Hui 
Autonomous Region.  
Question  5 
According to the Competitiveness Reports to the US Congress by the US Exim Bank, 
China' s two official export credit agencies CEXIM and Sinosure are globally the biggest 
providers of medium - and long -term export credit support (their combined annual support 
in recent years has been in excess of USD 30  billion ). These are only conservative 
estimates given the lack of transparency regarding Chinese data . Export credit support, 
unless provided in accordance with an international undertaking on official export credits 
specified in the WTO SCM Agreement constitutes prohibited export  subsidy within the 
meaning of the SCM Agreement . Can China explain why it did not notify to the WTO any 
measures constituting official export credit support given the above -mentioned 
information about the scale of its official export credit programmes?  
Reply : 
China believes that questions regarding subsidy notifications should focus on the notifications 
already submitted by Members.  G/SCM/Q2/CHN/96  
- 3 - 
  Questions regarding 2015:  
Question 6 
On the basis of the PRC 's 2015 budget heading "capital injections to SOEs ", could you 
explain how enterprises were selected as eligible to the following capital injections : 
(executed budget data)  
• Capital injections related to the economic structural adjustment : RMB 
26 billion  
• Capital injections related to the development of forward -looking strategic 
industries : 6 billion  
• Capital injections related to the support to scientific and technological 
progress : RMB 1.9 billion?  
• Reply : China believes that questions regarding subsidy notifications should 
focus on the notifications already subm itted by Members.  
Reply : 
China believes that questions regarding subsidy notifications should focus on the notifications 
already submitted by Members.  
Where in the notification are any of these schemes listed?  
Data source : http://yss.mof.gov.cn/2016czys/201603/t20160325_1924189.html  
Reply : 
China believes that questions regarding subsidy notifications should focus on the notifications 
already submitted  by Members.  
Question 7 
On the basis of the PRC 's 2015 budget heading "policy subsidies to SOEs ", could you 
explain how enterprises have been selected as eligible to these subsidies totalling RMB 
9.5 billion ? 
Where in the notification are any of these sche mes listed?  
Data source : http://yss.mof.gov.cn/2016czys/201603/t20160325_1924189.html  
Reply : 
China believes that questions regarding subsidy notifications should focus on the notifications 
already submitted by Members.  
Question  8 
On the basis of the PRC 's 2015 budget heading "other expenditures related to SOE 's 
operational budget ", could you explain what kind of expenditures this heading (RMB 12. 
8 billion ) covers and to what extent they are related to MIC 2025?  
Where in the notification are any of these schemes listed?  
Data source : http://yss.mof.gov.cn/2016czys/201603/t20160325_1924189.html  
Reply : 
China believes that questions regarding subsidy notifications should focus on the notifications 
already submitted  by Members.  G/SCM/Q2/CHN/96  
- 4 - 
  Question 9 
On the basis of the PRC 's 2015 budget allocations (central -to-local transfers), could you 
explain what programmes were eligible under the following insurance subsidy scheme:  
V.2– Central financial budget allocation guiding the local science and technology 
development  
Essentially used for the insurance subsidy scheme in support of newly -built large 
technology equipment (sets) : total RMB 1.4.  
Where in the notification is this scheme listed?  
Data source : http://yss.mof.gov.cn/2015czys/201503/t20150324_1206251.html  
Reply : 
China believes that questions regarding subsidy notifications should focus on the notifications 
already submitted by Members.  
Question 10 
On the basis of the PRC 's 2015 budget allocations (central -to-local transfers), could you 
explain what programmes were eligible for the following allocations:  
XII.3 -Budget allocation for the dismantling of old ships and standardisation of ships : RMB 
4 billion  
XIII. 1 Budget allocation for the development of strategic and emerging industries : RMB 
8 billion  
XIII.2 Budget allocation for the industry transformation and upgrade : RMB 1  billion  
XIII.4 –Budget allocation for SME 's development : RMB 10.1  billion  
XIII.5 - Budget allocation for capital construction : RMB 15.7  billion  
Where in the notification are any of these schemes listed?  
Data source : http://yss.mof.gov.cn/2015czys/201503/t20150324_1206251.html  
Reply : 
XIII.5 is irrelevant to  subsidies . The above items  have all been notified by China except XIII.5 . 
Please refer to  the subsidy notification submitted by China.  
Questions regarding 2016  
Question 11 
On the basis of the PRC 's 2016 budget heading "capital injections to SOEs ", could you 
explain how enterprises have been selected as eligible to the following capital injections : 
(executed budget data)  
• Capital injections related to the economic structural adjustment : RMB 
20 billion  
• Capital injections related to the development of forward -looking strategic 
industries : 10 billion.  
• Capital injections related to the support to scientific and technological 
progress : RMB 1.2 billion  G/SCM/Q2/CHN/96  
- 5 - 
  Where in the notification are any of these schemes listed?  
Data source: http://yss.mof.gov.cn/2017zyys/201703/t20 170324_2565527.html  
Reply : 
China believes that questions regarding subsidy notifications should focus on the notifications 
already submitted by Members.  
Question 12 
On the basis of the PRC 's 2016 budget heading "policy subsidies to SOEs ", could you 
explain how enterprises have been selected as eligible to these subsidies totalling RMB 
9.3 billion? W here in the notification are any of these schemes listed?  
Data source : http://yss.mof.gov.cn/2017zyys/201703/t20170324_2565527.html  
Reply : 
China believes that questions regarding subsidy notifications should focus on the notifications 
already submitted  by Members.  
Question 13 
On the basis of the PRC 's 2016 budget heading "other expenditures related to SOE 's 
operational budget ", could you explain what kind of expenditures this heading (RMB 
10.1 billion ) covers and to what extent they can be related to MI C 2025 ? Where in the 
notification is the scheme listed?  
Data source : http://yss.mof.gov.cn/2017zyys/201703/t20170324_2565527.html  
Reply : 
China believes that questions regarding subsidy notifications should focus on the notifications 
already submitted by Members.  
Question 14 
On the basis of the PRC 's 2016 budget allocations (central -to-local transfers), could you 
explain what programmes were eligible to the following allocations:  
• I.4-Institutional settlement subsidy budget allocation of RMB 140,5  billion , up 
35.9% compared to 2014.  
Essentially used to expand strategic support to the setting up of One Belt, One 
Road, to the coordinated development of the BEIJING -TIANJIN -HEBEI area, and to 
the setting up of the Yangtze River economic belt . 
• II.13 - Budget allocation to build capacities f or the national science and 
technology innovation bases (system) : RMB 1.6  billion  
• II.14 - Central financial budget allocation guiding the local science and 
technology development RMB 1.4  billion  
• II.42 - Budget allocation for the industry enterprise transformation and 
upgrade : RMB 20 billion (+10  billion  at central level for capital construction)  
• II.66 - Budget allocation for the dismantling of old ships and standardisation 
of ships : RMB 5.6 billion  
• II.68 – Budget allocation for the development of strategic and emerging 
industries RMB  3.5 billion  
• II.69 –Budget allocation for industry transformation and upgrade RMB 
11 billion  
• II.71 - Budget allocation for SMEs development : RMB 8.5  billion  G/SCM/Q2/CHN/96  
- 6 - 
  • II.74 - Budget allocation for the foreign economi c and trade development : RMB 
11 billion  
Where in the notification are the schemes listed?  
Data source: http://yss.mof.gov.cn/2016czys/201603/t20160325_1924488.html  
Reply : 
The item s that meet the notification requirements in the above budget expenditures have already 
been included in the subsidy notification submitted by China . Please refer to China 's latest 
notification.  
Questions on notified schemes : 
Question 15 
Could China please explain why the following 33 schemes have been notified to the WTO 
in the context of this subsidy notification exercise - Schemes 1.2, 1.11, 1.37,1.48, 1.57, 
1.58, 1.60, 1.61, 1.62, 1.66, 1.67, 1.74, 1.75, 1.76, 2.4, 2.12, 2.14, 2.15, 2. 16, 2.23, 2.43, 
2.44, 2.51, 2.59, 2.60, 2.66, 2.74, 2.79, 2.80, 2.87, 2.91, 2.100, 2.108 . These do not appear 
to be concerned with the production of goods but rather to provision of services or other 
policies including poverty alleviation, environmental co nservation, infrastructure 
development, disease and pest control etc. T herefore, could China please explain the 
reasons for including these in the notification?  
Reply : 
The SCM Agreement authorizes Member to sub mit its notifications according to their own 
understanding . We have also found subsidy policies related to poverty alleviation and environmental  
conservation  in the subsidy notifications submitted by the EU.  
Scheme 1.2 - Preferential tax policies for enterprises with foreign investment established 
in Special Economic Zones (excluding Shanghai Pudong area).  
Question 16 
This tax scheme appears  to relate, in the main, to infrastructure projects . However, 
agriculture operatio ns are also mentioned . Could China please provide information on the 
type of agriculture projects/products that are covered under this scheme ? What are the 
criteria for agriculture projects to benefit under this tax scheme?  
Reply : 
According to the provisio ns of the Income Tax Law of the People 's Republic of China for Enterprises 
with Foreign Investment and Foreign Enterprises and its implementation regulations, the Notice of 
the State Council on the Implementation of Transitional Preferential Policies for E nterprise Income 
Tax (Guo Fa  [2007] No. 39), enterprises  with foreign  investment  established  in the Hainan  Special  
Economic  Zone and engaged  in infrastructure  projects  such as airports and  harbours  and enterprises  
with foreign  investment  engaged  in the agriculture development  and management where  the period  
of operations  is 15 years  or more shall,  commencing  with the first profit -making  year, be exempt  
from enterprise  income  tax from the first year to the fifth year and subject  to enterprise  income  tax 
at a rate reduced  by one half from the sixth year to the tenth  year. This preferential policy was a 
transitional policy adopted many years ago . At present, there is no eligible enterprise  engaged  in 
agriculture  development and management  in Hain an Special Economic Zone that can enjoy the 
transitional tax preference . In addition, this policy has already been cancelled with the abolition of 
the Income Tax Law of the People 's Republic of China for Enterprises with Foreign Investment and 
Foreign Ente rprises.  G/SCM/Q2/CHN/96  
- 7 - 
  Scheme 1.5 - Preferential tax policies for high or new technology enterprises.  
Question 17 
Can China please list what are the "high or new technology enterprises " covered by this 
tax policy and in what legislation/guidelines are they defined?  
Reply : 
Please refer to relevant provisions of Notice of the Ministry of Science and Technology, the Ministry 
of Finance and the State Administration of Taxation on Revising and Issuing the Measures for the 
Administration of the Certification of High or New Technol ogy Enterprises (Guo Ke Fa Huo [2016] 
No. 32). 
Schemes 1.13 to 1.17 - Various preferential tax treatments for production with integrated 
utilization of resources.  
Question 18 
What is meant by integrated utilization of resources ? Could China please provide 
information on whether manufacturing companies in the steel and aluminium sectors are 
covered by any of these tax schemes ? What are the criteria for such companies to qualify 
for these preferential tax schemes ? Can China please provide information on the specific 
legislation that applies to these sectors?  
Reply : 
1. About 1.13  Preferential tax treatments for production with integrated utilization of resources.  
According to the provisions of the Enterprise Income Tax Law and its implementatio n regulations, 
the incomes generated by an enterprise from producing products conforming to the industrial policies 
of the state in the way of comprehensive utilization of resources may be downsized in the calculation 
of the amount of taxable incomes . The above -mentioned income downsizing means that the incomes 
obtained by an enterprise from producing products that are not restricted or prohibited by the state 
and satisfy relevant state and industry standards by using the resources listed in the Catalogue o f 
Preferential Enterprise Income Tax Treatments for Comprehensive Resource Utilization Enterprises 
as key raw materials shall be included in the total income at a reduced rate of 90 %. The percentage 
of such key raw materials to the materials for the produc tion of relevant  products shall not be less 
than the standard specified in the Catalogue of Preferential Enterprise Income Tax Treatments for 
Comprehensive Resource Utilization Enterprises.  
2. About 1.14 Preferential tax treatment for building materials produ cts produced with integrated 
utilization of resources, 1.15 Preferential tax treatment for products produced with integrated 
utilization of resources and 1.16 Preferential VAT on comprehensively utilized products with 
agricultural surplus and forestry resi dues as raw materials.  
According to the provisions of the Notice of the Ministry of Finance and the State Administration of 
Taxation on Issuing  the Catalogue of Preferential VAT Treatments for Comprehensive Resource 
Utilization Products and Labor Services (Cai Shui [2015] No. 78), a manufacturing enterprise in steel 
or alumin ium industry that sells self -produced comprehensive resource utilization products or 
provides comprehensive resource utilization labor services may, when relevant conditions are met, 
enjoy the policy of VAT refund upon collection . For example, a taxpayer that sells self -produced 
furnace burden products made from scrap steel produced or disassembled from dismantled buildings 
or others may enjoy a 30 % VAT refund upon collection.  
The main c onditions include : first, the taxpayer is an ordinary VAT payer ; second, the sales of 
comprehensive resource utilization products and the comprehensive resource utilization labor 
services do not belong to the prohibited or restricted items listed in the Ca talogue for the Guidance 
of Industrial Restructuring issued by the National Development and Reform Commission ; third, the 
sales of comprehensive resource utilization products and the comprehensive resource utilization 
labor services do not belong to the "highly polluting and high environmental risk " products or highly G/SCM/Q2/CHN/96  
- 8 - 
  polluting processes listed in the Environmental Protection Comprehensive List issued by the Ministry 
of Environmental Protection.  
In order to promote the comprehensive utilization of resources  and energy conservation and 
emission reduction, the resources subject to comprehensive utilization in the Catalogue of 
Preferential Enterprise Income Tax Treatments for Comprehensive Resource Utilization Enterprises 
include symbiotic and associated minera l resources, waste water (liquid), waste gas, waste residue 
and renewable resources, while the resources subject to comprehensive utilization in the Catalogue 
of Preferential VAT Treatments for Comprehensive Resource Utilization Products and Labor Services  
include symbiotic and associated mineral resources, waste water (liquid), waste gas, waste residue 
and renewable resources,  farming and forestry surplus and others.  
3. About 1.17 Preferential consumption tax on comprehensively utilized and produced petroleum  
products.  
According to the Notice of the Ministry of Finance and the State Administration of Taxation on the 
Exemption of Consumption Tax on Non -mineral Oil and Renewable Oil Products (Cai Shui [2013] 
No. 105), this policy is aimed at encouraging enterpri ses to produce industrial oils such as base oil 
for lubricating oil, gasoline and diesel oil with recycled waste mineral oil as raw materials . Among 
them, waste mineral oil refers to the waste lubricating oil the efficiency of which has been lost or 
reduced after being used by mechanical equipment in the field of industrial production and 
transportation equipment such as automobiles and ships.  
A taxpayer meeting the following conditions at the same time may enjoy the policy of exemption 
from consumpti on tax : 1. the taxpayer must obtain the Hazardous Waste (Comprehensive) 
Operating License issued by the relevant environmental protection department, have the relevant 
qualifications as required and  file properly ; 2. the weight of waste mineral oil in raw materials must 
account for more than 90 % of the weight of the raw materials . The finished products must include 
base oil for lubricating oil, and the base oil for lubricating oil produced per ton of waste mineral oil 
should not be less than 0.65 ton ; 3. the products produced by using waste mineral oil and the 
products produced by using other raw materials should be accounted separately . The above policy 
does not apply to manufacturers in steel and aluminum industries.  
Scheme 1.18 - Preferential VAT on photo voltaic generated electricity  
Question 19 
The notification states under "To whom is the subsidy provided " - The electricity produced 
by solar energy . Could China please clarify who is the actual recipient of the subsidy under 
this scheme?  
Reply : 
Please refer to the notification.  
Scheme 1.20  - Preferential tax treatment for energy saving and new energy vehicles and 
vessels.  
Question 20 
Can China please clarify if this tax treatment is applicable to the users of these vehicles 
and/or the manufacturer s of the vehicles ? What is meant by vessels?  
Reply : 
Preferential tax treatment for energy saving and new energy vehicles and vessels are applicable to 
the owners or manag ement personnel of vehicles and vessels, including the users of these vehicles 
and vessels, but the manufacturers of these vehicles and vessels are not included.  
Taxable vehicles and vessels refer to the motor vehicles and vessels that shall be registered in the 
vehicle and vessel registration administration departments according to law, and the motor vehicles G/SCM/Q2/CHN/96  
- 9 - 
  and vessels running or operating in internal sites of units that do not need to be registered in the 
vehicle and vessel registration administration dep artments according to law.  
Schemes 1.25, 1.26 and 1.27 - Various preferential policies for small enterprises making 
little profits  
Question 21 
Can China please provide the detailed criteria for each of the schemes in question as to 
what constitutes little profits ? What safeguards exist to ensure that these schemes do not 
enable the continuation of otherwise unprofitable/unsustainable industries?  
Reply : 
1. About 1.25 Preferential income tax policies for small enterprises making little profits.  
According to the Enterprise Income Tax Law and its implementation regulations , a qualified  small 
enterprise making little profits refers to an enterprise that operates in an industry not restricted or 
prohibited by the state and satisfies the following conditions:  
(1) an i ndustrial enterprise with an annual taxable income of no more than 300,000 yuan, a payroll 
size of at most 100 persons, and a total amount of assets not exceeding 30  million  yuan;  
(2) an enterprise other than an industrial enterprise with an annual taxable  income of no more than 
300,000 yuan, a payroll size of at most 80 persons, and a total amount of assets not exceeding 
10 million  yuan. 
In the tax reduction policies for small enterprises making little profits, the requirements on these 
enterprises have be en continuously relaxed in recent years . After the current policy adjustment, the 
upper limits of the annual taxable incomes, payroll sizes and total assets of small enterprises making 
little profits have been raised to 3  million  yuan, 3  hundred  persons and 50  million  yuan respectively . 
According to the basic principle of enterprise income tax, enterprises making no profits do not need 
to pay enterprise income tax ; enterprises that operate in industries not restricted or prohibited by 
the state d o not satisfy the policies conditions and thus cannot enjoy the above preferential tax 
policies.  
2. About 1.26 Preferential VAT and business tax policies for small enterprises making little profits.  
According to the provisions of the Notice of the Ministry of  Finance and the State Administration of 
Taxation on the Policy Further Supporting the VAT and Business Tax of Small Enterprises Making 
Little Profits (Cai Shui [2014] No. 71), the taxpayers that may enjoy the tax -free policy shall be 
small -scale VAT taxpa yers with monthly sales of 20,000 yuan (including 20,000 yuan, the same 
below) to 30,000 yuan, and business tax payers with monthly turnovers of 20,000 yuan to 30,000 
yuan.  
3. About 1.27 Exemption from relevant governmental funds for small enterprises making little 
profits . 
According to Cai Shui [2014] No. 122, the enterprises enjoying exemption from relevant 
governmental funds include : the monthly tax payers whose monthly sales volumes or turnovers do 
not exceed 30,000 yuan (including 30,000 yuan), and the qu arterly tax payers whose quarterly sales 
volumes or turnovers do not exceed 90,000 yuan (including 90,000 yuan) ; small enterprise s making 
little profits , the number of disabled people employed by which does  not reach the prescribed 
proportion or the total number of employees of which is less than 20 (including 20).  G/SCM/Q2/CHN/96  
- 10 - 
  Schemes 1.29 and 1.30 - Preferential tax policies for companies employing disabled 
people  
Question 22 
For both schemes the subsidy is provided to "The eligible enterprises that employ disabled 
people ". Could China please clarify what is meant by "eligible "? What enterprises are 
eligible?  
Reply : 
1. About 1.29 Preferential VAT policies for enterprises that employ disabled people.  
Please refer to the relevant provisions of the Notice of the Ministry of Finance and the State 
Administration of Taxation on Preferential VAT Policies Promoting the Employment of Disabled People 
(Cai Shui [2016] No. 52). 
Please see the web link: http://www.chinatax.gov.cn/n810341/n810755/c2138740/content.html . 
2. About 1.30 Preferential income tax policies for enterprises that employ disabled people.  
According to Article 96 of the  Implementing Regulations of the Law of the People 's Republic of China 
on Enterprise Income Tax, the additional deduction of salary payment made by an enterprise for the 
disabled employees employed by it as mentioned in the Law means that an enterprise whi ch employs 
disabled employees may claim, on top of the actual deduction of the salaries paid to such disabled 
employees, an additional deduction of 100 % of the salaries paid to such disabled employees . The 
relevant provisions of the Law of the People 's Republic of China on the Protection of Disabled Persons 
shall be followed in determining the scope of disabled persons.  
Scheme 1.35 - Preferential tax policies for enterprises engaged in projects of preliminary 
processing of agricultural, forest, animal an d fishery products.  
Question 23 
Can China please explain what are projects of preliminary processing  in each of the four 
sectors mentioned, agriculture, forest, animal and fishery products ? Where are these 
defined in legislation ? The notification mentions that the preferential tax is applicable to 
income derived by an enterprise from stipulated projects . Could China please explain what 
are the stipulated projects and where are they mentioned in the legislation?  
Reply : 
The scope of projects of preliminary pr ocessing is specified in the Notice of the Ministry of Finance 
and the State Administration of Taxation on Issuing the Scope of Projects of Preliminary Processing 
of Agricultural Products Enjoying Preferential Policies on Enterprise Income Tax (Trial) (Cai  Shui 
[2008] No. 149) and the Supplementary Notice of the Ministry of Finance and the State 
Administration of Taxation on the Relevant Scope of Projects of Preliminary Processing of Agricultural 
Products Enjoying Preferential Enterprise Income Tax Treatmen ts (Cai Shui [2011] No. 26). 
According to the Implementing Regulations of the Law of the People 's Republic of China on Enterprise 
Income Tax, the agricultural, forestry, animal husbandry and fishery projects that may enjoy 
preferential treatments include : cultivation of vegetables, grain crop, tuber crop, oil -bearing crop, 
bean and pea crop, cotton, bast -fiber plants, sugar crops, fruit and nut ; selection and cultivation of 
new types of agricultural products ; cultivation of Chinese medicine herb ; breeding and cultivation of 
forestry ; raising of livestock and poultry ; collection of forestry products ; service projects relating to 
agriculture, forestry, animal husbandry and fishery such as irrigation, agro -product preliminary 
processing, veterinary ser vices, promotion of agricultural technologies, agricultural machinery 
services and repair of agricultural machinery ; ocean fishing . Cultivation of flower, crop for tea and 
other beverage and spice crop ; sea water fish farming and fresh water fish farming . But enterprises 
engaging in projects that are restricted or prohibited by the state shall not enjoy the preferential G/SCM/Q2/CHN/96  
- 11 - 
  enterprise income tax treatments for agricultural, forestry, animal husbandry and fishery 
enterprises.  
Scheme 1.39  - Preferential tax polic ies on filling mining and mining resources in 
exhaustion stage  
Question 24 
What are the eligible mineral resources covered by this scheme ? Where are the products 
listed?  
Reply : 
According to the provisions of the Notice of the Ministry of Finance and the St ate Administration of 
Taxation on Comprehensively Promoting the Reform of Resource Tax (Cai Shui [2016] No. 53), in 
order to strengthen the management of preferential tax policies for mineral resources and improve 
the comprehensive utilization efficiency o f resources, the resource tax will be reduced by 50 % for 
the mineral resources mined through filling mining, and by 30 % for the mineral resources mined in 
the exhaustion stage . All the mineral resources listed in the Table on the Range of the Tax Items 
and Tax Rates of Resource Tax attached to Cai Shui [2016] No. 53 can enjoy the above preferential 
policies if the requirements are met.  
Scheme 1.49 - Fund for development of modern agriculture  
Question 25 
What is the amount allocated under this fund ? Which provincial governments receive this 
funding ? Do they in turn forward the funds to farmers, producers?  
Reply : 
The Fund for development of modern agriculture of the central governmen t was a comprehensive 
and special fund allocated from the central finance to provinces and was used by various provinces 
in a coordinated way within the scope of the policy . The beneficiaries  included farmers and 
agricultural producers . This fund was cance lled in 2017.  
Scheme 1.51 - Subsidy for purchasing agricultural machinery  
Question 26 
Are the subsidies under this scheme available for the purchase of imported agricultural 
equipment also ? Where is this specified in the legislation?  
Reply : 
The subsidy for purchasing agricultural machinery treats the purchase of domestic and foreign 
agricultural machinery products as equals, and farmers can also be offered  subsidy when purchasing 
qualified imported agricultural machinery.  
Scheme 1.52 - Subsidy  for fine crop seeds  
Question 27 
Are the subsidies under this scheme available for the purchase of imported crop seeds ? 
Where is this specified in the legislation?  
Reply : 
the subsidy is provided to farmers mainly by direct payment, and for the detailed information, please 
refer to Cai Nong [2009] No.440 in the notification submitted by China.  G/SCM/Q2/CHN/96  
- 12 - 
  Scheme 1.53 - Comprehensive subsidies for agricultural inputs  
Question 28 
What inputs qualify for subsidies under this scheme ? What determines which inputs  
qualify ? How is the fund divided among the provincial governments ? What provinces are 
concerned ? Is this scheme still in operation?  
Reply : 
Comprehensive subsidies for agricultural inputs refer to subsidies offered to farmers to make up for 
the increase in  grain production expenses caused by the price rises of chemical fertilizers and diesel 
oil. The increase of fertilizer input was mainly determined by the relevant data of cost -benefit survey 
of agricultural products. The increase of diesel oil input was m ainly calculated based on the total 
amount of diesel used in grain planting and the price of refined oil. The fund was distributed to 
various provinces mainly by taking into account of the grain planting areas, yields and commodity 
volumes of each province  (region, municipality). This policy was cancelled in 2016.  
Scheme 1.59 - Fund for agricultural resources and ecological protection  
Question 29 
What is meant by "strengthen fishery resources protection " and how much of this fund is 
allocated to fishery projects ? What provinces are covered by this fund ? How are the funds 
allocated between provinces?  
Reply : 
Part of the subsidy fund for agricultural resources and ecological protection is used to support aqu atic 
organisms multiplication release necessary for the protection and utilization of fishery resources. 
398.5  million yuan were arranged in 2015 and 2016 respectively. According to the status of fishery 
resources and tasks, the funds are allocated to the provinces with the task of multiplication release 
based on a factor approach.  
Scheme 1.63 - Subsidy for scrapping and dismantling vessels and for ship type 
standardization  
Question 30 
Does this scheme relate to fishing vessels ? If so, can China please prov ide details about 
the number of fishing vessels which have been scrapped under this scheme?  
Reply : 
Reply: The subsidy for scrapping and dismantling vessels and for ship type standardization relates 
to fishing vessels, and the number of fishing vessels whic h were scrapped under this scheme was 
2,449 (2015 -2016).  
Scheme 1.65 - Aquatic improved breed subsidy  
Question 31 
What are the eligible aquafarms ? What breeds are involved ? Is the subsidy payable in the 
form of a grant and, if so, how is the amount determined?  
Reply : 
In 2015, the investment in the aquatic improved breed subsidy scheme within the central budget 
was 92.6  million yuan. Qualified aquatic breeding farms should have the qualifications of aquatic 
breeding plants at or above the provincial level and the qualif ications of independent legal persons, G/SCM/Q2/CHN/96  
- 13 - 
  and have work experience in the protection of varieties declared for more than three years. The 
main varieties involved were carp, catfish, river crab, shrimp and other major aquaculture varieties. 
The central investm ent fund was determined according to the annual fund scale and expert review 
opinions.  
In 2016, the investment in the aquatic improved breed subsidy scheme within the central budget 
was 100  million yuan. Qualified aquatic breeding farms should have the qua lifications of aquatic 
breeding plants at or above the provincial level and the qualifications of independent legal persons, 
and have work experience in the protection of varieties declared for more than three years. The 
main varieties involved were four m ajor Chinese carps, catfish, river crab, shrimp and other major 
aquaculture varieties. The central investment fund was determined according to the annual fund 
scale and expert review opinions.  
Scheme 1.66 - Subsidy for scrapping old vehicles  
Question 32 
Is the subsidy conditional on the purchase of a new vehicle ? How much is payable per 
vehicle?  
Reply : 
Reply: The subsidy  expired at the end of 2016 and was no longer implemented any more. In 
2015-2016, the subsidy was not conditional on the purchase of new ve hicles. The subsidy for each 
semi-trailer tractor and heavy -duty truck was 18,000 yuan, and that for each medium -sized truck 
was 13,000 yuan.  
Scheme 1.69  - Support for new energy vehicle promotion and utilization  
Question 33 
Can China please provide the amount budgeted for this scheme ? If not available will China 
please ensure it is notified to the WTO as soon as possible?  
Reply : 
Support for new energy vehicle promotion and utilization is one of the support directions of the 
subsidy funds for energy conse rvation and emission reduction. The amount of the subsidy funds for 
energy conservation and emission reduction has been notified  to the WTO.  
Schem e 1.77 - Fund for development of strategic emerging industries  
Question 34 
What are the eligibility criteria for this program ? What is the approval process for 
investment decisions ? Are SOE eligible for this Fund ? If yes, what is the share of SOEs 
among beneficiaries ? To what extent is the Fund related to MIC2025 ? How are the 
subsidies channelled to the beneficiaries ? Are the given directly or via cooperation 
agreements with Banks ? If the latter, which banks ? In what form are the funds disbursed 
(loans, subsidies interest rates, subsidised insurance premia, grants, equity)?  
Reply : 
As the details of the su bsidy please refer to MOF Circular Cai Jian No.1111 of 2012.  G/SCM/Q2/CHN/96  
- 14 - 
  Scheme 1.79  - Reward for public -private partnership (PPP) projects  
Question 35 
Could China please explain further the purpose of this scheme . What are the criteria to 
qualify for support under th is fund ? What industries are covered by this scheme?  
Reply : 
First, a s for the background and the purpose of this scheme. From 2016 to 2018, the central finance 
arranged special funds to give certain awards to eligible PPP projects. Through overall planning, 
these funds were used in project prophase cost subsidies and other financial expenditures so as to 
improve the normative nature of project operations, ensure the quality of project implementation, 
further attract social capitals to participate in  the investment, operation and management of public 
service projects, and improve the supply capacity and efficiency of public services. The central 
government stopped arranging these funds in 2019.  
Second , about the coverage of the projects. The reward po licy for PPP projects is not targeted at 
specific industries or sectors. Both eligible demonstrative PPP projects of the central finance and 
eligible existing projects of local financing platform companies which have transformed into PPP 
projects can apply  for the support of this policy. At present, 19 industries including transportation, 
municipal administration, environmental protection, comprehensive urban development, education, 
medical treatment and pension are covered by this scheme.  
Scheme 1.80 - Industrial transformation and upgrading fund  
Question 36 
What are the eligibility criteria for this programme ? What industries are covered ? Are 
SOEs eligible for support under this Fund ? If yes what is the share of SOEs among 
beneficiaries ? To what extent is the Fund related to MIC2025 ? How are the subsidies paid 
to the beneficiaries ? In what form is the support provided (loan, subsidies interest rates, 
subsidised insurance premia, grants, equity?) What is the amount available under this 
fund? How long is the fund in place and is the legislative framework listed correct and up 
to date - if not can China please provide the details of the current framework?  
Reply : 
Reply: Established according to Cai Jian [2016] No.  844 of the Ministry of Finance,  the industrial 
transformation and upgrading fund mainly supports the innovation and development in five major 
fields: establishing a manufacturing innovation centre, intelligent manufacturing, strengthening the 
industrial base, green manufacturing and hig h-end equipment innovation, and promotes the overall 
improvement of the manufacturing industry.  
Scheme 1.81 - Reward and support fund for restructuring of industrial enterprises  
Question 37 
What are the eligibility criteria for this programme ? What is the approval process for 
investment decisions ? Are SOE eligible to this Fund ? If yes what is the share of SOEs 
among beneficiaries ? To what extent is the Fund related to MIC2025 ? How are the 
subsidies channelled to the beneficiaries ? directly?  via cooperat ion agreements with 
Banks ? if yes which banks ? In what form ? (Loan, subsidies interest rates, subsidised 
insurance premia, grants, equity?)  
Reply : 
The purpose of the reward and support fund for restructuring of industrial enterprises is to support 
the resettlement of laid -off employees in the process of resolving excess capacity in local steel and 
coal industries, and different ownership enterprises are treated as equals.  G/SCM/Q2/CHN/96  
- 15 - 
  Scheme 2.13 - Fund for research and development of applicative technologies  
Question 38 
What are the eligibility criteria for this programme ? What is the approval process for 
investment decisions ? Are SOE eligible to this Fund ? If yes what is the share of SOEs 
among be neficiaries ? To what extent is the Fund related to MIC2025 ? How are the 
subsidies channelled to the beneficiaries ? Directly?  Via cooperation agreements with 
Banks ? If yes which banks ? In what form ? (Loan, subsidies interest rates, subsidised 
insurance prem ia, grants, equity?)  
Scheme 2.17 - Fund for development of emerging industries  
Question 39 
Can China explain which banks administer this scheme ? Can support from this fund be 
cumulated with support from the national Fund for development of strategic emerging 
industries (1.77) ? Can China explain why only one sub -central fund for strategic emerging 
industries is notified ? Is it China 's understanding that there is only one sub -central fund 
of this kind ? How does China explain that funds such as  the Shandong Guidance Fund for 
strategic emerging industries and set up in 2015 (Lu  Caiqi 2015/51, 28 sept 2015) or 
Shandong Province 's New and Emerging Industries and Business Creation Guidance Fund 
(ref: http://www.gov.cn/zhengce/2015 -09/25/content_5044504.htm ) are not notified?  
Scheme 2.3 - Fund for renovation of boilers and industrial furnaces  
Question 40 
Can China please provide information on the companies that benefit from this program ? 
Are there steel and aluminium manufacturing companies included ? If so, which companies 
are they?  
Scheme 2.5 - Fund for development of low -carbon manufacturing industry  
Question 41 
What companies in what sectors benefit from these interest sub sidies ? Which banks 
administer this scheme?  
Scheme 2.25 - Subsidy for purchase of pure electric passenger vehicles  
Question 42 
Who are the subsidies paid to – car manufacturers or purchasers ? Is this scheme still in 
operation ? What is the amount paid in 2016?  
Scheme 2.27 - Fund for research and development of enterprises  
Scheme 2.28  - Fund for technical renovation of industrial enterprises  
Scheme 2.29 - Fund for development of industrial enterprises  
Scheme 2.57 - Fund for promotion of industrial restructu ring 
Question 43 
What industries/sectors are covered by these schemes ? What are the criteria to qualify 
for support ? How are the funds paid?  
Schemes 2.31 and 2.63 - Funds supporting public listing of companies  G/SCM/Q2/CHN/96  
- 16 - 
  Question 44 
It is noted that China has notified two schemes supporting the public listing of companies . 
We note that there may be other such schemes in existence such as the "ZHUHAI City 
Fund for public listing of enterprises ". Can China explain why it has not notified this 
scheme and if there are others which should have been notified?  
Scheme 2.55 - Fund for product quality improvement  
Question 45 
What are the criteria to qualify for this fund ? What industries/sectors are covered?  
Scheme 2.34 - Fund for the industrialization of high and new tec hnologies  
What type of projects are covered by this scheme ? What industries qualify for support?  
Scheme 2.38 - Fund in support of leading fishery enterprises  
What are the criteria applicable for this fund ? What are the enterprises that have 
benefitted from  support under the fund?  
Schemes 2.40, 2.45 and 2.67 - Funds for dissolving overcapacity  
While these three schemes relate to overcapacity reduction in coal, only one (2.40) 
concerns reduction in overcapacity in the steel industry - for Yunnan province . In the 13th 
FYP for Steel, China seeks to reduce China's steel overcapacity by 100 -150 mmt by the 
year 2020 . In this context can China explain why only one scheme for reducing 
overcapacity in steel is notified . In this context were ot her schemes put in place to reduce 
overcapacity in steel and, if so, why were these not notified?  
Scheme 2.53 - Fund to foster start -up science and technology enterprises  
Question 46 
What are the criteria applicable to this fund ? Which banks are the loans channelled 
through?  
Schemes 1.20, 1.22, 1.23, 1.69, 2.1, 2.25, 2.68, 2.93 - Schemes relating to new energy 
vehicles  
Can China confirm that these schemes emanate from the Made in China 2025 priorities, to 
support the NEV sector ? Are the funds governed centr ally? In a notice on its website on 
19 March  2019, The Ministry of Industry and Information Technology (MIIT) announce 
the preliminary review of new  energy vehicles (NEV) subsidies from 2016 and previous 
years until 25 Mar 2019, in line with  'Notice on set tling 2015 and 2016 NEV subsidies . Can 
China please explain which of the subsidies in the lists provided in MIIT website are 
notified in the current Subsidy notification . For those schemes in the lists, which were not 
notified, can China please explain why  this is the case and if they intend to make a 
supplementary notification.  
  G/SCM/Q2/CHN/96  
- 17 - 
  ANNEX - SCHEMES FOR WHICH EU WOULD LIKE TO RECEIVE THE CHINESE NAME  
CENTRAL LEVEL  
1.76 Fund for development of strategic emerging industries  
1.77 Fund for the development of international economic relations and trade  
1.78 Reward for public -private PPP projects  
1.79 Industrial transformation and upgrading fund  
1.80 Reward and support fund for restructuring of industrial enterprises  
1.81 Fund for promotion of ener gy-saving products  
SUBCENTRAL LEVEL  
2.13  Luoyang Fund for research and development of applicative technologies  
2.17  Nanjing City (Jiangsu) Fund for development of emerging industries  
2.18  Yancheng city (Jiangsu) Fund for transformation and upgrading of industry and 
IT 
2.27  Shandong Fund for research and development of enterprises  
2.28  Tianjin Fund for technical renovation of industrial enterprises  
2.29  Tianjin Fund for development of industrial enterprises  
2.31  Tianjin Fund supporting public listing of enterprises  
2.34  Tianjin Fund for the industrialisation of high and new technologies  
2.48  Hebei Fund in support of scientific and technology innovation  
2.49  Hebei Fund rewarding public listing of enterprises  
2.52  Hangzhou Fund for science and techno logy innovation projects  
2.55  Wenzhou Fund for product quality improvement  
2.56  Ningbo Fund in support of engineering (technology) centers of enterprises  
2.57  Ningbo Fund for promotion of industrial restructuring  
2.61  Shaanxi Reward for public private partnership projects PPP  
2.63  Ningxia Hui Fund supporting public listing of enterprises  
2.64  Ningxia Hui Fund for projects of new type industrialisation development  
2.65  Ningxia Hui Fund for the development of SMEs and non -public economy  
2.72  Guangxi Fund for the transformation of scientific and technology achievements 
purchased by enterprises  
2.83  Shanghai Fund for industrial transformation and development  
2.86  Shanghai Fund for scientific and technology innovation  
2.88  Shanghai Fund for development through structural adjustment and change in 
growth pattern  
2.89  Shanghai Fund for development of emerging industries  
2.90  Shanghai Fund for industry and information technology projects  
 2.106  Chaozhou Fund for high and new technology enterpr ises 
 
 
__________  