  
  
G/SCM/Q2/CHN/128  
18 April 2024 
(24-3241) Page: 1/17 
Committee on Subsidies and Countervailing Measures  Original:  English  
 
  
SUBSIDIES  
REPLIES TO Q UESTIONS POSED BY THE UNITED STATES1 REGARDING  
THE NEW AND FULL NOTIFICATION OF CHINA2 
The following communication, dated and received on 1 2 April 2024, is being circulated at the request 
of the delegation of  China . 
 
_______________  
 
 
Question 1  
A. In past submissions, we have sought additional information as to how "high -tech" 
is defined for purposes of Central Government Program 3 "Preferential tax policies 
for high -tech enterprises", but have been referred by China to the general legislation 
governing this program. Can China please further explain, beyond a reference to the 
underlying legislation, how "high -tech" is defined for pur poses of this program?  
Reply :  
According to the " Measures for the Administration of the Recognition of High -tech Enterprises " (GKFH 
[2016] No. 32), high -tech enterprise means the resident enterprises registered within China that 
are engaging in continuous research and development as well as transformation of their 
technological achievements in the fields as prescribed in the " High-tech Fields Supported by the 
State ", have formed their intellectual property rights and are carrying out business act ivities based 
on the said intellectual property rights. The "High -tech Fields Supported by the State" provides a 
detailed description of several technology categories in eight areas, including electronic information 
technology, biology and new pharmaceutic al technology, high -tech service industry, new energy and 
energy -saving technology etc. Relevant information can be found on: 
http://www.mofcom.gov.cn/aarticle/bh/200805/20080505 534363.html  
B. Further, China uses the term "high -tech" with respect to several provincial -level 
programs. Could China elaborate how "high -tech" is defined for the purposes of the 
following programs:  
i. Shandong Province Pr ograms 1, 5, and 7  
ii. Henan Province Programs 11, 18, 19, and 22  
iii. Guangdong Province Programs 11, 21, 22, and 24  
iv. Guangxi Zhuang Autonomous Region Programs 6, 9, 11, and 13  
v. Hainan Province Program 7  
vi. Sichuan Province Programs 8 and 22  
Reply : 
The recognition standards for "high -tech" by local governments and Central Governments are 
consistent. Therefore, the answer to this question is the same as replies to Question A above. The 
high-tech enterprise to which the subsidy project belongs shall be  the enterprise identified and filed 
according to the " Measures for the Administration of the Recognition of High -tech Enterprises " 
 
1 G/SCM/Q2/CHN/124  
2 G/SCM/N/401/CHN  G/SCM/Q2/CHN/128  
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  (GKFH  [2016] No. 32), including resident enterprises registered within China that are engaging in 
continuous research and de velopment as well as transformation of their technological achievements 
in the fields as prescribed in the " High-tech Fields Supported by the State ", have formed their 
intellectual property rights and are carrying out business activities based on the said intellectual 
property rights.  
Question 2  
A. With respect to Central Government Program 15 "Preferential tax treatment for 
energy -saving and new energy vehicles and vessels", are "vessels" referring 
explicitly to fishing vessels?  
Reply : 
"Vessels" do not expli citly refer to fishing vessels. The " Vehicle and Vessel Tax Law of the People's 
Republic of China " and its implementing regulations stipulate that "Reduction or exemption of vehicle 
and vessel tax may be granted to those vehicles and vessels that conserve energy or use new 
energy". In order to promote energy conservation and encourage the use of new energy, Article 2.3 
of the " Notice on Preferential Vehicle and Vessel Tax Policies for Energy -saving and New -energy 
Vehicles and Vessels " (CS [2018] No. 74) ( https://www.gov.cn/zhengce/zhengceku/2019 -
10/25/content_5445047.htm ) stipulates that "New -energy vessels on which vehicle and vessel tax 
may be exempted shall satisfy the following standards: The main propulsion unit of the vessel shall 
be a pure natural gas engine, in which energy is released through the combustion of diesel and the 
percentage of heat of combustion is no higher than 5% of the  total heating value". Article 5 stipulates 
that "When checking and inspecting the main propulsion unit of vessels, the Ship Inspection 
Organization (SIO) shall mark the words "Pure Natural Gas Engine " on the certificate of marine 
products for the vessels satisfying the Notice's standards of new -energy vessels; and when 
inspecting the building of vessels, the SIO shall mark the words "Vessel Powered by Pure Natural 
Gas" on the inspection certificate service book of vessels having the certificate of marine p roducts 
marked with the words "Pure Natural Gas Engine " for its main propulsion unit. For a vessel using 
the main propulsion unit without marking the words "Pure Natural Gas Engine ", the vessel owner or 
manager shall, when deeming it meets the Notice's standards for new -energy vessels, file to the 
SIO for appr oval application during the annual ship inspection, submit supporting materials, and be 
responsible for the authenticity of the information. The SIO shall, through reviewing the materials 
and on -site inspection, verify its authenticity, and mark the words "Vessel Powered by Pure Natural 
Gas" on the inspection certificate service book for vessels that meet the Notice's standards. 
Taxpayers shall enjoy the vehicle and vessel tax exemption by virtue of the ship inspection certificate 
marked with the words "Vessel Powered by Pure Natural Gas" ". Therefore, new -energy vessels can 
enjoy exemption from vehicle and vessel tax as long as they meet the above  requirements.  
B. If so, please describe how incentivizing the creation of new fishing vessels is not 
contributing t o fishing overcapacity.  
Reply : 
The answer to Question A is "no", so there is no need to answer this question.  
C. China indicates that eligibility is limited to the "new energy vehicles that are listed 
in the Catalogue of the Models of New Energy Vehicles Exem pted from Vehicle 
Purchase Tax." What new energy vehicles that are manufactured outside of China 
are included in the Catalogue of the Models of New Energy Vehicles Exempted from 
Vehicle Purchase Tax?  
Reply : 
According to preliminary statistics, nearly 100 i mported foreign brands, such as Audi, BMW, Porsche, 
Volkswagen, Chrysler, Tesla and Cherokee, had been included in the " Catalogue of the Models of 
New Energy Vehicles Exempted from Vehicle Purchase Tax " as of the end of 2023.  G/SCM/Q2/CHN/128  
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  Question 3  
A. As noted in past submissions, China's subsidy notification appears to over -report 
inconsequential subsidy programs that need not be notified, and China's responses 
to these inquiries in the past have been largely nonresponsive and/or inadequate. 
Given that the followi ng programs appear generally available to all enterprises, why 
does China believe that Central Government Programs 21, 22, 23, 24, 25, 26, 59, 
and 63 – programs benefiting enterprises employing the handicapped or disabled or 
benefitting the aforementioned classes of people directly, or subsidizing medicine 
to combat HIV -AIDS and cancer, or medicine for orphans – are specific under 
Article  2 of the Subsidies Agreement?  
Reply : 
China included the above -mentioned policies in the subsidy notification based on it s understanding 
of the SCM Agreement . During this notification period, considering that the above -mentioned policies 
are still being implemented, in order to avoid misunderstandings and to share China's policies in 
promoting inclusive trade development, Ch ina continued notifying the above -mentioned policies.  
Moreover, we note that the U.S. indicates at the very beginning of its own subsidy notification that 
"The United States has included certain activities in this notification which arguably are not (or ar e 
not always) 'specific subsidies ' within the meaning of the Agreement ". China suggests the U.S. adopt 
a coherent position on the scope of subsidy notification.  
Question 4  
A. As noted in previous years, under Central Government Program 27 (Preferential tax 
policies for farming, forest, animal husbandry and fishery product projects), distant 
water fishing enterprises are completely exempt from income tax. Is that correct?  
Reply : 
The income obtained from distant water fishing business by distant water fishing enterprises that 
have obtained the "Qualification Certificate for Distant Water Fishing Enterprises" issued by Ministry 
of Agriculture and Rural Affairs (MARA) and are within its validity period shall be exempt from 
corporate income tax, but not al l income of distant water fishing enterprises is completely exempt 
from income tax.  
Question 5  
A. China invests in various sectors by having government guidance funds that are 
majority state -owned purchase equity in Chinese enterprises. Pursuant to National 
Development and Reform Commission 2019 Document 1638, these investments 
must comply with China's national industrial policies, among other policies. 
Moreover, a report on below -market financing by the Organization for Economic 
Cooperation and Development (O ECD) concluded that many of the government 
equity investments made by government guidance funds have not generated a 
return at a level consistent with the expectations of a private investor.  
In light of these facts, why has China not notified the followin g government 
guidance funds: (1) National IC Fund; (2) Advanced Manufacturing Industry 
Investment Fund; (3) Strategic Emerging Industries Guidance Fund; and (4) 
National IC Fund, Phase 2?  
Reply : 
1. According to relevant documents of China, government inves tment funds (rather than 
government guidance funds) refer to funds arranged by the governments at all levels through their 
budgets and created by the governments solely or jointly with social capital for the purposes of, in 
such a market -oriented way as eq uity investment, directing various social capital to invest in the 
key fields and weak links of economic and social development and supporting the development of 
relevant industries and fields. The fundraising, investment, post -investment management, G/SCM/Q2/CHN/128  
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  liquidation and exit of a government investment fund shall be operated under the market -oriented 
principle.( https://www.gov.cn/gongbao/content/2016/content_5051233.htm ). Therefore, saying 
that "China invests in various sectors by having government guidance funds that are majority 
state-owned purchase equity in Chinese enterprises " is wrong in the first place.  
2. The description of this question seems to be based on the OECD Report, which suggests that 
China's government investment funds constitute subsidies. China is not a member country of OECD, 
and the relevant research reports of OECD do not consult with China. China does not recognize these 
reports. A ccording to China's preliminary research, the OECD report has obvious problems in terms 
of methodology and data, lacking objectivity, impartiality, and accuracy. Specifically, in terms of 
methodology, the OECD report did not explain how it calculates the i nterest rate spread "excluding 
government guarantees", resulting in over 90% of Chinese corporate having loan interest rates lower 
than the so -called "market" benchmark, while over 90% of OECD countries have corporate loan 
interest rates higher than the ma rket benchmark, which are obviously against market definitions 
and basic common sense. In terms of data sources, the OECD Report is mainly based on "other 
income" in the financial reports of listed companies, and the coverage of "other income" is much 
larger than that of "subsidy" defined by WTO. To sum up, it is untenable to conclude that government 
investment funds constitute subsidies based on the OECD Report.  
3. Regarding the operation of China's government investment fund, the Chinese side clarified ag ain 
that the fund is  established in accordance with laws like the Company Law of the People 's Republic 
of China , and a market -oriented fund governance structure is established based on the law. The 
government, together with other investors, participates in  the contribution to the fund and shares 
the investment return brought by the fund. The fund in operated in a market -oriented manner and 
is an independent market entity. The government does not interfere with the daily management and 
operation of the fund.  Therefore, the projects invested by government investment funds are the 
result of the market -oriented decision -making of relevant fund management companies and they 
are not subsidies.  
Question 6  
A. Why is China notifying a program that provides subsidies to "registered poor people" 
(Central  Government Program 38 Promoting entrepreneurship and employment of 
key groups)?  
Reply : 
Please refer to the replies to Question 3.  
Question 7  
A. Are the benefits under Central Government Program 48 and Anhui Province Program 
1, both for "development of international economy and trade," provided by the same 
program funding?  
Reply : 
The Special Funds for Development of International Economy and Trade are arranged through the 
central general public budget to support the hi gh-quality development of foreign trade and economic 
cooperation. The fund at sub -central level are transfer payments through central budget.  
B. Are the benefits provided under these programs linked to exports? If not, please 
explain in greater detail the cri teria for evaluating eligibility for the program?  
Reply : 
The Negative List for the Use of Special Funds for Development of International Economy and Trade 
requires that funds shall not be used for prohibited subsidies that violate WTO rules, shall not be 
used contingent to export performance. The scope of support includes guiding the coordinated 
development of import and export, improving the level of international two -way investment, and G/SCM/Q2/CHN/128  
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  improving the public service system in foreign trade and economic coo peration. Projects or 
enterprises that meet the scope of support can apply for the funds.  
Question 8  
A. What types of industries receive benefits under Central Government Program 46 
Fund for Energy Conservation and Emission Reduction?  
B. Is this program limited  to certain high -polluting industries, and if so, which 
industries?  
Reply : 
Reply to A -B: The scope of support for energy conservation and emission reduction includes the 
basic capacity building and construction for public platforms, comprehensive demonstra tion of fiscal 
policies for energy conservation and emission reduction, energy conservation and emission reduction 
in key areas, industries and regions, demonstration, promotion, transformation and upgrading of 
key technologies for energy conservation and emission reduction.  
Question 9  
A. China reported that "project cities" are recipients of benefits under Central 
Program  47 (Fund  for Air Pollution Control). Does this mean that government bodies 
are receiving funds under this program, or are enterprises or industries receiving 
funds?  
B. If enterprises or industries are receiving funds under this program, please explain 
what types of industries or enterprises receive benefits under this program.  
Reply : 
Reply to A -B: Funds for air pollution control  are allocated by the project method and factor method, 
and the cities for winter clean energy heating projects in northern China are selected through 
competitive evaluation. The funds are mainly used for project renovation and operating subsidies in 
rural areas, of which the project renovation funds are mainly used to subsidize local governments 
to support the specific implementation of clean energy heating project renovation. Subsidies for 
operation in rural areas are mainly provided to residents of "coal -to-gas" and "coal -to-electricity" 
projects in relevant areas. The "project cities" shall formulate specific technical routes for renovation 
according to the relevant national requirements on clean energy heating. Clean energy heating can 
be achieved throu gh electricity, natural gas, geothermal energy, biomass energy, combined heat 
and power generation, centralized heating, etc., and the energy conservation renovation of existing 
buildings can be promoted. Enterprises or industries involved in the above wor k indirectly accept 
financial support for clean energy heating projects.  
Question 10  
A. Under Central Government Program 49 (Special fund for the development of clean 
energy), China notified that certain users of natural gas and hydro -power were 
recipients of benefits. What types of industries receive benefits under this program?  
Reply : 
Benefits can be rec eived by enterprises that carry out efficiency improvement and capacity 
expansion transformation of rural hydropower, as well as the development  and utilization of 
unconventional natural gas such as coalbed methane (coal mine gas), shale gas and tight gas. For 
relevant information, please refer to:  
http://jjs.mof.gov.cn /zhengcefagui/202006/t20200630_3540905.htm   G/SCM/Q2/CHN/128  
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  Question 11  
A. Under Central Government Program 50 (Additional subsidy for renewable energy 
tariffs), China merely noted that "grid enterprises" are recipients of benefits. Can 
China explain further what types of industries or enterprises receive benefits under 
this program?  
Reply : 
The funds are mainly used to promote the development of renewable energy, involving industries 
such as wind power, solar power generatio n, and biomass power generation.  
Question 12  
A. What type of commercial enterprises are being subsidized under Central 
Government Program  60 (Preferential tax treatment for relocation from 
inhospitable areas for poverty alleviation)?  
Reply : 
In November 2018, the Ministry of Finance and the State Taxation Administration jointly issued the 
Notice on Preferential Tax Policies for Poverty Alleviation and Relocation Projects  (CS [2018] No.135), 
which clarifies that from January 1, 2018 to December 31, 2020, the imp lementation entities of 
poverty alleviation and relocation projects (hereinafter referred to as "project implementation 
entities") shall be exempted from deed tax and stamp duty on land obtained for construction and 
resettlement housing; stamp tax that sho uld be paid by project implementation entities and project 
units in the process of resettlement housing construction and distribution shall be exempted; land 
for resettlement housing shall be exempted from urban land use tax. Among them, the information 
on poverty alleviation and relocation projects, project implementation entities, impoverished 
populations of poverty alleviation and relocation and relevant resettlement housing shall be 
determined by the competent department of poverty alleviation and reloc ation at the county level, 
which shall provide the above information to the tax authorities at the same level promptly. In 
March  2021, the Ministry of Finance and the State Taxation Administration jointly issued an 
Announcement on Extending the Implementat ion Period of Certain Preferential Tax Policies  ([2021] 
No. 6), which extended the implementation period of preferential tax policies stipulated in CS [2018] 
No. 135 to December 31, 2025.  
The poverty alleviation and relocation projects and project implemen tation entities are the main 
beneficiaries of this above -mentioned preferen tial deed tax, stamp duty and urban land use tax 
policies.  
Question 13  
A. Please explain how Central Government Programs 68 and 69 are not contributing to 
the creation of new overcapacity in the fishing industry?  
Reply : 
Since 2021, China has implemented a new round of support policies for fishery development. Subsidy 
funds for fishery development mainly focus on fishery resource conservation, key projects included 
in national p lanning, and the renovation of facilities and equipment to promote fishery safety 
production. Other general purpose transfer payments for fishery development mainly support local 
governments to coordinate and promote the high -quality development of fishery  in its region, which 
is mainly used for offshore fishermen's ship reduction and conversion, green development of the 
aquaculture industry, fishery resource conservation, etc.  
B. How does Central Government Program 68 differ from the "Subsidy fund for fishery  
development and the scrapping, dismantling and renovating of vessels" program 
that expired December 31, 2019?  G/SCM/Q2/CHN/128  
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  Reply : 
The subsidy funds for fishery development support the construction of national marine ranching, 
modern fishery equipment and facilities, fishery infrastructure public facilities, green circular 
development of fishery, survey and fishery resource conservation and improvement of international 
performance capacity, with more focus on fishery resource conservation and sustainable 
development of fishery.  
C. Can you confirm that the fifth key aspect for allocation of funding under Central 
Government Program 68 includes "basic resource factors" such as the number of 
distant water vessels and their tonnage? How does subsidizing based on the  number 
of distant -water fishing vessels "Reduce the intensity of offshore fishing" or any of 
the other listed policy objectives?  
Reply : 
The funds for the survey and fishery resource conservation and improvement of international 
performance capacity are ca lculated according to basic resource factors (40%) and policy task 
factors (60%). Basic resource factors include the number of distant water fishing vessels and their 
tonnage. Policy task factors include the number of fishing vessels that have perform in c ompliance 
with international conventions, the base number of fishing vessels, and the number of fishery 
resources survey, monitoring and evaluation stations.  
The survey and fishery resource conservation and improvement of international performance 
capacity  focus on supporting distant water fishing vessels that implement international conventions 
to conserve international fishery resources, guiding the rational use of marine fishery resources, and 
supporting the investigation and monitoring of fishery resour ces. 
Question 14  
A. What types of industries or enterprises receive benefits under Beijing Municipality 
Programs  1, 2, 3, and 8?  
Reply : 
Enterprises scrapping or transferring high -emission old vehicles out of the city, enterprises with 
medical waste disposal q ualifications and advanced low -carbon technology application units can 
receive benefits under Beijing Municipality Program 1 (energy conservation and emission reduction 
as well as environmental protection funds).  
The subsidy objects of Beijing Municipality  Program 2 (subsidy funds for new energy passenger cars) 
are the consumers of new energy passenger cars.  
Enterprises whose charging facilities comply with relevant national and local standards and 
regulations, whose business licenses include construction a nd operation of charging facilities and 
sales of motor vehicle charging, who have charging safety liability insurance and signed a safety 
production management agreement, and whose charging facilities are connected to the municipal 
facility management plat form and meet the power access requirements, can receive benefits under 
Beijing Municipality Program 3 (funds for the construction of electric vehicle charging infrastructure).  
Beijing Municipality Program 4 (support funds for green development) supports t he green 
development of economic and technological development zones, promotes pollution reduction, 
energy conservation and carbon reduction, and eligible enterprises in the zones.  
Question 15  
A. Were the companies that benefitted from Beijing Municipality Program 6 
state -owned enterprises? If not, please explain which enterprises benefitted from 
the program during the period covered by China's notification.  G/SCM/Q2/CHN/128  
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  Reply : 
Enterprises listed on the domestic main board, sci -tech innovation board, growth enterprise market, 
etc. as per the Measures of Beijing Municipality for the Administration of Municipal Subsidy Funds 
for the Listing of Enterprises  (JCJR [2018] No. 2347) can receive subsidy funds after being reviewed 
and approved by the competent departm ent. The companies benefitted are not limited to the 
ownership nature of enterprises.  
Question 16  
A. Are any of the benefits provided under Beijing Municipality Program 10 for 
enhancing "international business capabilities" linked to exports?  
Reply : 
The support provided by this program is aimed at enhancing enterprises' international business 
capability and is not directly related to exports.  
B. If not, please explain any criteria for eligibility for the program in greater detail.  
Reply : 
The Program supports 15 types of enterprise projects and group projects for enterprise training, 
such as enterprises' part icipation in international exhibitions, management system certification, 
product certification, overseas patent application, trademark registration, overseas advertising, 
international market promotion, foreign trade software cloud services and other infor mation 
construction, international market investigation (expenses for exhibitors at international exhibitions), 
overseas bidding (negotiation) tendering, improvement of the informatization level of operation and 
management, improvement of the scientific de cision -making level of operation and management, 
improvement of financing services, online international exhibitions, authorized use of "three 
identical" ("identical line, identical standard, identical quality") product logos.  
Question 17  
A. Under Beijing Mun icipality Program 11, what are considered "cutting -edge 
industries"?  
Reply : 
Cutting -edge industries focus on innovation -driven, digital empowerment, green and low -carbon 
development. They are an industrial cluster led by technology -intensive industries, supported by 
efficiency -and-benefit -leading industries, with digital technologies extension and integration as the 
business format, and featuring green, low carbon and energy conservation.  
Question 18  
A. What types of industri es or enterprises receive benefits under Anhui Province 
Program 2?  
Reply : 
Industrial enterprises (excluding Zongyang Conch Company) with independent legal person status 
that are registered in Zongyang County, pay taxes locally according to law, organize th e 
implementation of the application project within the county and include it in the statistical scope, as 
well as R&D institutions and public service institutions established according to law that directly 
serve the industrial economy, are all included in the scope of special fund support. The Program 
applies to both foreign -invested and domestic enterprises, as well as foreign trade and domestic 
trade enterprises.  G/SCM/Q2/CHN/128  
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  Question 19  
A. For the Shaanxi Province Program 5 (Fund for New Energy Vehicle Promotion and 
Application Projects) and the Qingdao City of Shandong Province Program 1 (Fund 
for Promotion and Application of New Energy Vehicles), are certain models and/or 
brands of electric vehicles only eligible for these subsidies or are the subsidies 
widely availabl e?  
Reply : 
It is not limited to specific model or brand.  
B. If eligibility for either of these subsidies is limited, please elaborate on how and/or 
whom it is limited to . 
Reply : 
Subsidies are provided to buyers of eligible new energy vehicles according to the technical standards 
such as driving range, power consumption and energy density of battery system, etc.  
Question 20  
A. For Gansu Province Programs 5, 7, and 9, please elaborate on what makes an 
enterprise eligible for these three programs.  
Reply: 
In the  Several Measures of Baiyin City to Support Science and Technology Innovation and Promote 
High-Quality Development  (SWBF [2022] No. 34) of Gansu Province Program 5 and the Opinions on 
Further Stimulating Innovation Vitality, Strengthening Science and Technology Guidance and 
Accelerating the Construction of Innovative Pingliang  (PBF [2021] No. 46) of Gansu Province 
Program 9, according to the stipulation of Measures for the Administration of the Recognition of 
High-Tech Enterpr ises (GKFH [2016] No. 32), eligible enterprises refer to resident enterprises 
registered within China that continue to conduct research and development, transform technological 
achievements, form intellectual property rights of enterprises, and carry out b usiness activities 
based on this within the High-tech Fields Supported by the State . 
According to the  Implementation Plan for Strengthening Science and Technology in Wuwei 
(2022 -2025) (WBF [2022] No. 36) of Gansu Province Program 7, eligible enterprises ar e 
state-recognized high -tech enterprises, provincial science and technology innovation enterprises and 
technological innovation demonstration enterprises. The high -tech enterprises recognized by China 
refer to those recognized following the Measures for th e Administration of the Recognition of 
High-Tech Enterprises  (GKFH [2016] No. 32).  
B. To the extent that that only "high -tech" enterprises are eligible, can China please 
further explain how "high -tech" is defined for purposes of each program and 
whether these  programs are limited to certain "high -tech" industries and/or 
enterprises ? 
Reply : 
"High -tech" in Gansu Province Programs 5, 7 and 9 refers to the High-Tech Fields Supported by the 
State  stipulated in the Measures for the Administration of the Recognition of High -tech Enterprises  
(GKFH [2016] No. 32). Please refer to Reply under Question No. 1A.  
There are no further specific limitations for industries or enterprises on Gansu Province Programs 5 
and 7. The industries in Gansu Province Program 9 refer to the manufacturing industries with 
relatively high R8D input intensity in national economic indus tries according to the High-Tech 
Industry (Manufacturing Industry) Classification  (2017) issued by the National Bureau of Statistics, 
including 6 categories, i.e. pharmaceutical manufacturing, aviation and spacecraft equipment 
manufacturing, electronic and  communication equipment manufacturing, computer and office G/SCM/Q2/CHN/128  
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  equipment manufacturing, medical instruments and apparatus manufacturing, information 
chemicals manufacturing.  
Question 21  
A. For Xiamen City of Fujian Province Program 1, please explain how this pro gram is 
not contributing to fishing or fishing -related activities that lead to the creation of 
new overcapacity or overfishing in the fishing industry.  
Reply : 
The program is aimed at the transformation and industrialization of marine scientific and 
technol ogical achievements, tackling technical bottlenecks and key problems in the marine industry, 
public service platforms and other types of projects, which will not lead to overcapacity or overfishing 
in the fishery industry.  
Question 22  
A. For the Xiamen City of Fujian Province Program 2, please elaborate on what makes 
integrated  circuit (IC) enterprises eligible for this subsidy. Is eligibility based on a 
certain chip size or the type of IC an IC enterprise produces?  
Reply : 
Relevant enterprise qualifications:  Enterprises with independent legal person status and fixed place 
of business, specializing in the design, manufacturing, package testing, production and R&D of 
equipment and materials in the integrated circuit field (including but not limited to BDA tools , DP, 
logic circuits, analog/power circuits, memories, characteristic process semiconductors, wide bandgap 
semiconductors, MEMS and intelligent sensors, basic electronic components, Mini/Micro LBD, OLED, 
laser indication, etc.). The subsidy is mainly for t he financing guarantee, scientific research support, 
production and operation involved in the operation of enterprises. Certain preferential policies are 
introduced to reduce the upfront cost of enterprises and promote the development of regional 
integrate d circuit industry clusters.  
This program is not based on a certain chip size or the type of integrated circuit (IC) an IC enterprise 
produces, and it is an industry -wide inclusive benefit.  
Question 23  
A. For the Shenzhen City of Guangdong Province Program 4, please elaborate on what 
it is meant by "units" being eligible for this subsidy as opposed to "enterprises." 
Further, please explain what types of industries or enterprises benefit from this 
subsidy. I s this program limited to certain industries?  
According to the Measures of the Management of Yantian District , the fund application objects include 
enterprises, private non -enterprise units, social organizations, government organs and public 
institutions and individuals. The "units" eligible for the fund refer to the private non -enterprise units, 
government organs and public institutions that meet the relevant application conditions in the 
Measures of the Management of Yantian District . From the actual sit uation of supported projects, 
enterprises supported by this program involve multiple industries including solar power, logistics and 
pharmaceutical industries. The supported objects and industries are inclusive and extensive, and not 
limited to individual industries.  
Question 24  
A. For the Xinjiang Uygur Autonomous Region Program 1, please specify which eligible 
industries constitute "strategic emerging industries" in this region.  G/SCM/Q2/CHN/128  
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  Reply : 
According to the Classification of Strategic Emerging Industries (2018)  issued by the National B ureau 
of Statistics, strategic emerging industries include 9 categories, i.e. new -generation information 
technology, new energy, new materials, biotechnology, high -end equipment manufacturing, new 
energy vehicles, energy conservation and environmental prot ection, digital creativity, and related 
service industries.  
Question 25  
A. For the Shenzhen City of Guangdong Province Programs 6 and 7, are the funds 
targeted at certain industries with heavy pollution (e.g., steel)? If so, please specify 
which industries.  
Reply: 
Shenzhen City of Guangdong Province Programs 6 and 7 are not funds targeted at certain industries 
with heavy pollution (e.g., steel).  
Program 6 (according to the Detailed Rules for the Implementation of Longhua District)  mainly 
supports programs with  energy conservation and emission reduction benefits, such as new energy 
charging infrastructure and new energy development and utilization. From the actual situation of 
supported projects, heavy pollution industries such as steel are not involved.  
Progra m 7 (according to the Measures for the Administration of Guangming District)  mainly supports 
technological transformation, industrialization and promotion, subject exhibitions, and energy 
management platform projects in the fields of energy conservation an d circular economy. From the 
actual situation of supported programs, the supported industries involve many industries and fields 
such as electronic devices, optical instruments, dairy products, biological pharmaceutical products, 
paper products, sewage tre atment and recycling, information technology consulting services, etc. 
There are no steel industry enterprises in this district, so there are no heavy pollution industries 
such as steel supported by this program.  
Question 26  
A. Please explain how "green and h igh-quality development" is defined for purposes of 
Fujian  Province Programs 1, 2, and 4.  
Reply : 
The green and high -quality development involved in the above programs mainly refers to the 
coordinated, mutually reinforcing and integrated development of econ omic and social development 
and ecological environment protection through carrying out basic scientific research and 
development of green fishery aquaculture, evaluation of the effect of aquatic organism proliferation 
and releasing, rescue of aquatic wild animals and other projects.  
Question 27  
A. Under Fujian Province Program 3 (Special Fund for Marine Economic Development), 
what sort of industries, projects, and activities are targeted by this program? Please 
explain how the fund is not contributing to fishing or fishing -related activities that 
lead to the creation of new overcapacity or overfishing in the fishing industry.  
Reply : 
According to the Measures for the Administration of Special Fund for Marine Economic Development 
in Fujian Pr ovince , the special funds are divided into the part transferred to lower levels and those 
retained in the province.  
The part transferred to lower levels is used as a special fund for the construction of demonstration 
counties for marine industry developmen t to support projects related to the construction of marine G/SCM/Q2/CHN/128  
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  fishery public service system, innovation of marine fishery economic management system and 
promotion of comprehensive environmental improvement in aquaculture areas; marine fishery 
enterprises and  institutions implement fishery transformation and upgrading projects such as 
innovative development of seed industry; village -level organizations organize infrastructure, public 
services and industrial projects for beautiful fishing villages. The part ret ained by the province is 
used to support projects declared by the Central People's Government stationed in Fujian and 
provincial institutions, also support the development and application of key technologies in the 
marine industry and build smart oceans. T he objects and contents supported by special funds will 
not lead to the creation of new overcapacity or overfishing in the fishing industry.  
Question 28  
A. Under Shandong Province Program 3 (Subsidy for Offshore Wind and Floating 
Offshore Photovoltaic Projec ts), who is constructing these offshore wind power 
projects? Are the enterprises that benefit from this program state -owned 
enterprises? If not, please explain who the recipients of this program are.  
Reply : 
Regarding offshore wind power projects: offshore  wind power projects completed and connected to 
the grid from 2022 to 2024. According to the ownership of the sea area where the project is located, 
the willingness of enterprises to cooperate and other conditions, related leading development 
enterprises m ay solely or establish investment consortia to develop and construct these projects. 
The established investment consortium consists of state -owned enterprises, private enterprises, etc. 
For example, Yantai Laizhou Offshore Wind Power and Marine Ranch Co -development Research and 
Experimental Project was jointly developed and constructed by CGN New Energy Holdings Co., Ltd. 
and Laizhou Blue Marine Environment Technology Co., Ltd. Huaneng Offshore Wind Power Project 
at the North BW Site of Shandong Peninsula w as jointly constructed by China Huaneng Group Co., 
Ltd. and Yantai Wanhua Chemical International Co., Ltd.  
Regarding biomass power generation: non -competitive configuration projects with all units 
connected to the grid but not yet included in the scope of subsidies of Central People's Government 
from January 20, 2020 (inclusive) to December 31, 2021 (inclusive); competitive configuration 
projects approved and under construction before the end of 2021 and with all units connected to the 
grid before June 30, 2023 (inclusive).  
Question 29  
A. For Shandong Province Program 4 (Subsidy for Biomass Power Projects), please 
explain what constitutes a biomass power project and which "eligible enterprises" 
are involved in their development.  
Reply : 
The biomass power generat ion project is a type of renewable energy generation project, which 
utilizes biomass energy to generate electricity. It mainly includes agricultural and forestry biomass 
power generation, waste incineration power generation and biogas power generation. Acc ording to 
relevant regulations, subsidy funds for all grid -connected projects of units after September 11, 2020 
(inclusive) should be shared between central and local people's governments. The subsidy targets 
in biomass power generation include non -competi tive configuration projects with all units connected 
to the grid but not yet included in the scope of subsidies of Central People's Government from 
January 20, 2020 (inclusive) to December 31, 2021 (inclusive); competitive configuration projects 
approved a nd under construction before the end of 2021 and with all units connected to the grid 
before June 30, 2023 (inclusive). From 2021 to 2022, a total of 34 biomass power generation 
projects are planned to be included in the list of subsidy projects in Shandon g Province.  
Question 30  
A. For Shandong Province Program 8 (Reward and Subsidy for Restructuring of 
High  Energy -Consuming Industries), please specify which "eligible enterprises" 
constitute "high energy -consuming industries."  G/SCM/Q2/CHN/128  
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  Reply : 
Specific subsidized enter prises have been shut down.  
Question 31  
A. For Henan Province Program 3 (Fund for Energy Conservation and Emission 
Reduction), are the funds targeted at certain industries with heavy pollution (e.g., 
steel)? If so, please specify which industries are eligible for these grants.  
Reply : 
The funds are mainly used for comprehensive energy -saving renovation of public institutions at the 
provincial level, the construction of venous industrial parks in cities and counties, the construction 
of energy -saving and  environmental protection demonstration bases and the circular transformation 
of industrial clusters. It is not targeted at heavily polluting industries, e.g. steel.  
Question 32  
A. What type of commercial enterprises are being subsidized under Hubei Province 
Program 1 (Special Fund to Alleviate Poverty)? If no commercial enterprises receive 
subsidies under this program, why is a program provided to "poverty -stricken" 
communities included in the notification?  
Reply : 
The fund is mainly used to support targeted p overty alleviation, targeted difficulty relief, provincial 
targeted poverty alleviation transfer payments for rural subsistence allowance, and provincial 
integrated agricultural development projects in contiguous poverty -stricken areas. It focuses on 
cultivating and strengthening characteristic industries in poverty -stricken areas (technical support 
and personnel training, publicity and promotion of agricultural industries), improving the conditions 
of small -scale public welfare production and living facili ties (improving agricultural irrigation, road 
hardening and dangerous house renovation in poverty -stricken areas), enhancing the 
self-development and risk resistance ability of the impoverished population, and using the poverty 
alleviation fund based on ho usehold policies and local conditions. The program clearly  prohibits 
poverty alleviation funds from being used to "compensate for enterprises' losses".  
Question 33  
A. For Hunan Province Program 1 (Special Fund for Promotion and Application of New 
Energy Vehic les), what constitutes an eligible enterprise? Is eligibility contingent 
on exportation of new energy vehicles?  
Reply : 
The Program involves the following four situations:  
1. The targets of the purchase subsidy fund are consumers. When selling new energy ve hicle 
products, new energy vehicle manufacturers or sellers shall make settlement with the consumers 
based on the prices after subsidies are deducted.  
2. The fund for promotion and subsidy of "green public transportation" is targeted at local 
governments o f 14 cities, prefectures and pilot counties. The fund is coordinated for the promotion 
of new energy vehicles, charging infrastructure and related supporting facilities.  
3. The provincial award and subsidy funds for industrial development are distributed t o new energy 
vehicle enterprises, automotive battery producers and operating enterprises focusing on promoting 
new energy vehicles. Reward funds are used by these enterprises for advancing technological 
transformation, promoting active innovation, enhancin g technology and reducing costs; urging 
operating enterprises to actively develop new centralized promotion models, such as hourly leasing, 
specialized vehicle operation and taxi operation.  G/SCM/Q2/CHN/128  
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  4. The fund for construction and operation of charging (swapping) infrastructure is targeted at 
provincial party and government agencies and municipal and prefectural governments (not 
duplicated) and can be used to reward owners and operators of charging (swapping) infrastructure 
within the province.  
The above policies do not involve the export of new energy vehicles. For specific information, please 
refer to:  
http://www.hunan.gov.cn/szf/hnzb/2016 /2016nd20q/szfbmwj_98782/201611/t20161104_470168
6.html . 
Question 34  
A. For Guangxi Zhuang Autonomous Region Program 3 (Subsidy for Charging 
Infrastructure and Supporting Operation Services for New Energy Vehicles), does 
the construction and operation of charging piles and charging sockets result in an 
exportable good or service? Please explain which industries are involved in these 
activities.  
Reply : 
The scope of this Program is: construction and operation subsidies for charging piles and sockets 
built and put into operation in Guangxi Autonomous Region from October 1, 2019 to 
December  31, 2020 and providing public services to the society, with the subsidy period from 
October 1, 2019 to September 30, 2022; the subsidy tar gets are charging infrastructure construction 
organizations (enterprises) and operation organizations (enterprises), involving such industries as 
transportation, logistics, electricity, energy services, automobile sales and maintenance, cultural 
tourism an d property services. Therefore, this Program is only applicable to the organizations 
(enterprises) established and put into operation and providing public services in Guangxi, not result 
in exportable goods or services.  
Question 35  
A. For Sichuan Province Pr ogram 12 (Fund for Energy Conservation Emission Reduction 
and Low  Carbon Development), please explain which industries are eligible for this 
program, and what constitutes "low carbon development."  
Reply : 
Low carbon development is a sustainable development model characterized by low energy 
consumption, low pollution and low emissions. It is of great significance to sustainable development 
of the economy and the society. It is mainly to reduce resource consumption and environmental 
pollution, and protect and restore the ecology through green and low -carbon transformation of 
production and lifestyle, so as to reduce carbon dioxide emissions and promote economic and social 
development.  
Question 36  
A. For the program entitled "Preferential tax policies for enterprises transferring 
technology," (Central Government Program 5) how does an enterprise demonstrate 
the transferring of technology to become eligible for the subsidy?  
Reply : 
At present, enterpris es enjoy the preferential treatment of enterprise income tax for technology 
transfer through the method of "self -discrimination, enjoyment declaration and retention of relevant 
information for future reference". Enterprises should judge whether they meet t he conditions for 
preferential treatment based on their business situation and relevant tax regulations. The eligible 
enterprises should enjoy preferential taxes by filling out the enterprise income tax declaration form 
according to regulations.  G/SCM/Q2/CHN/128  
- 15 - 
  B. What forms  of technology transfer are eligible for the subsidy?  
Reply : 
The preferential corporate income tax policies may be applicable for the incomes obtained by 
residents and enterprises when transferring the ownership of their technologies within the prescribed  
scope, global exclusive licensing rights for more than 5 years (inclusive) and global non -exclusive 
licensing rights for more than 5 years (inclusive).  
C. Are there limitations on what types of enterprises may receive the transferred 
technology?  
Reply : 
The p referential corporate income tax policies may be applicable for the incomes obtained by 
residents and enterprises when transferring the ownership of their technologies within the prescribed 
scope, global exclusive licensing rights for more than 5 years (in clusive) and global non -exclusive 
licensing rights for more than 5 years (inclusive).  
Question 37  
A. What advanced technology service enterprises are eligible for the program entitled 
"Preferential tax policies for advanced technology service enterprises" (Ce ntral 
Government Program 8)?  
Reply : 
Advanced technology service enterprises eligible for "preferential tax policies for advanced 
technology service enterprises " must meet the following conditions:  
 
(1) Corporate enterprises registered within China;  
(2) Engage in one or more of advanced technology service businesses listed in the Scope of 
Accreditation for Technologically Advanced Service Business (Trial), adopting advanced technologies 
or having powerful research and development capabilities;  
(3) Employees with college degrees or above account for more than 50% of total number of 
employees in the enterprise;  
(4) The income from advanced technology services listed in the Scope of Accreditation for 
Technologically Advanced Service Business (Trial) ac counts for more than 50% of total income of 
the enterprise for the year;  
(5) The income from offshore service outsourcing must not be less than 35% of total income of the 
enterprise for the year. The income from offshore service outsourcing refers to the i ncome obtained 
by the enterprise from the overseas organizations by rendering the services of information 
technology outsourcing (ITO), business process outsourcing (BPO) and knowledge process 
outsourcing (KPO) specified in the Scope of Accreditation for T echnologically Advanced Service 
Business (Trial) to such overseas organizations through the enterprise itself or its directly 
subcontracted enterprises, in accordance with the commission contract signed with such overseas 
organizations.  
In addition, the co rporate income tax can be levied at a reduced rate of 15% for advanced technology 
service enterprises (services trade) recognized. Among them, the scope of advanced technology 
service business that enterprises must meet shall be in accordance with the Scop e of Accreditation 
for Technologically Advanced Service Business (Services Trade), and other necessary conditions and 
recognition management matters shall be executed in accordance with the above conditions.  G/SCM/Q2/CHN/128  
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  B. How is an "advanced technology service enterpris e" defined for the purposes of this 
program?  
Reply : 
Advanced technology service enterprises refer to the enterprises meeting the following conditions:  
 
(1) Corporate enterprises registered within China;  
(2) Engage in one or more of advanced technology serv ice businesses listed in the Scope of 
Accreditation for Technologically Advanced Service Business (Trial), adopting advanced technologies 
or having powerful research and development capabilities;  
(3) Employees with college degrees or above account for more  than 50% of total number of 
employees in the enterprise;  
(4) The income from advanced technology services listed in the Scope of Accreditation for 
Technologically Advanced Service Business (Trial) accounts for more than 50% of total income of 
the enterpri se for the year;  
(5) The income from offshore service outsourcing must not be less than 35% of total income of the 
enterprise for the year. The income from offshore service outsourcing refers to the income obtained 
by the enterprise from the overseas organ izations by rendering the services of information 
technology outsourcing (ITO), business process outsourcing (BPO) and knowledge process 
outsourcing (KPO) specified in the Scope of Accreditation for Technologically Advanced Service 
Business (Trial) to such  overseas organizations through the enterprise itself or its directly 
subcontracted enterprises, in accordance with the commission contract signed with such overseas 
organizations.  
In addition, the corporate income tax can be levied at a reduced rate of 15 % for advanced technology 
service enterprises (services trade) recognized. Among them, the scope of advanced technology 
service business that enterprises must meet shall be in accordance with the Scope of Accreditation 
for Technologically Advanced Service Business (Services Trade), and other necessary conditions and 
recognition management matters shall be executed in accordance with the above conditions.  
Question 38  
A. For the program entitled "Preferential tax treatment for enterprises with 
comprehensive util ization of resources," (Central Government Program 11) what 
are the "resources specified in the Catalogue of Comprehensive Use of Resources 
for Preferential Enterprise Income Tax Treatment?"  
Reply : 
According to the Announcement on Publication of the 'Catalogue for Enterprise Income Tax 
Preferences for Environmental Protection and Energy and Water Saving Programs (2021)' and the 
'Catalogue of Comprehensive Use of Resources for Preferential Enterprise Income Tax 
Treatm ent (2021)'  issued by the Ministry of Finance, the enterprises engaged in comprehensive 
utilization of resources within the scope of the Catalogue of Comprehensive Use of Resources for 
Preferential Enterprise Income Tax Treatment (2021) can enjoy enterpris e income tax preferential 
policies in accordance with policy regulations. Relevant catalogues can be found on the official 
website of the Ministry of Finance.  G/SCM/Q2/CHN/128  
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  Question 39  
A. We note that while China has made extensive use of municipal - and provincial -level 
subsidy programs to promote purchases of electric vehicles, these programs are not 
included in China's notification .3 Please provide a detailed description of all 
subsidies provided to producers of electric vehicles and all incentives to promote the 
purchas e of electric vehicles in the following localities: (1) Beijing; (2) Shanghai; 
(3) Chongqing; (4) Fujian; and (5) Hunan.  
Reply : 
1. The subsidy notification of China truthfully reports the subsidy projects for new energy vehicles 
at the local level, such as Programs 2 -5 of Beijing, Program 4 of Shanghai, Program  5 of Jiangsu, 
Program 1 of Hunan, Program  1 of Hainan and Program  5 of Shaanxi. Therefore, the wording of 
"these programs are not included in the notification of China" in this Question is inconsistent with 
the facts.  
2. Local policies encouraging the purchase of electric vehicles, including relevant policies of Beijing 
cited in the questions of the United States, benefit consumers purchasing new energy vehicles, but 
are not directly used to subsidize enterprises. For example, the Implementation Rules for Promoting 
Automobile Consumption Subsidies in Shanghai (HFGGF [2022] No.  4) 
(https://www.shanghai.gov.cn/202215gfxwj/20220827/64cc5fa61c664ada8dac05adae919a03.html ), 
which is an inclusive supp ort measure and mainly aims at promoting the consumption of new energy 
vehicles and providing support to individual users. This type of policy is not specific and are not 
subject to notification requirements.  
 
__________  
 
3 For example, information on the programs in Beijing are detailed in 
http://bj.people.com.cn/n2/2023/0302/c14540 -40321060.html  