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WT/TPR/S/415
15 September 2021
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Trade Policy Review Body
TRADE POLICY REVIEW
REPORT BY THE SECRETARIAT
CHINA
This report, prepared for the eighth Trade Policy Review of China, has been drawn up by the WTO
Secretariat on its own responsibility. The Secretariat has, as required by the Agreement establishing
the Trade Policy Review Mechanism (Annex 3 of the Marrakesh Agreement Establishing the World
Trade Organization), sought clarification from China on its trade policies and practices.
Any technical questions arising from this report may be addressed to Masahiro Hayafuji
(tel. 022 739 5873), Arne Klau (tel. 022 739 5706), Katie Waters (tel. 022 739 5067), Michael Kolie
(tel. 022 739 5931), and Verena Hess-Bays (tel. 022 739 5489).
Document WT/TPR/G/415 contains the policy statement submitted by China.
Note: This report covers developments up until mid-April 2021, in accordance with the work
programme initially agreed with China. This report is subject to restricted circulation and press
embargo until the end of the first session of the meeting of the Trade Policy Review Body on China.
This report was drafted in English.
WT/TPR/S/415 • China
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CONTENTS
SUMMARY ...................................................................................................................... 10
1 ECONOMIC ENVIRONMENT ........................................................................................ 16
1.1 Main Features of the Economy .....................................................................................16
1.2 Recent Economic Developments ...................................................................................18
1.2.1 Growth and impact of COVID‑19 ................................................................................18
1.2.2 Monetary and exchange rate policy ............................................................................19
1.2.3 Fiscal policy ............................................................................................................21
1.2.4 Structural measures .................................................................................................22
1.2.5 Balance of payments ................................................................................................22
1.3 Developments in Trade and Investment ........................................................................24
1.3.1 Trends and patterns in merchandise and services trade ................................................24
1.3.2 Trends and patterns in FDI .......................................................................................27
2 TRADE AND INVESTMENT REGIMES........................................................................... 31
2.1 General Framework ....................................................................................................31
2.2 Trade Policy Framework and Objectives .........................................................................32
2.2.1 Institutional framework ............................................................................................32
2.2.2 Trade policy formulation and objectives ......................................................................33
2.3 Trade Agreements and Arrangements ...........................................................................34
2.3.1 WTO ......................................................................................................................34
2.3.2 Regional and preferential agreements ........................................................................34
2.3.3 Other agreements and arrangements .........................................................................36
2.4 Investment Regime ....................................................................................................36
2.4.1 Regulatory framework and market access ...................................................................36
2.4.2 Examination and approval procedures ........................................................................41
2.4.3 Incentives to foreign direct investments .....................................................................43
2.4.4 Bilateral investment and tax agreements ....................................................................44
3 TRADE POLICIES AND PRACTICES BY MEASURE ........................................................ 45
3.1 Measures Directly Affecting Imports ..............................................................................45
3.1.1 Customs procedures, valuation, and requirements .......................................................45
3.1.1.1 Preshipment inspection ..........................................................................................48
3.1.1.2 Customs valuation ................................................................................................48
3.1.1.3 Trade facilitation ...................................................................................................48
3.1.2 Rules of origin .........................................................................................................50
3.1.3 Tariffs ....................................................................................................................51
3.1.3.1 Applied MFN tariffs ................................................................................................51
3.1.3.2 Tariff rate quotas (TRQs) .......................................................................................53
3.1.3.3 Bound tariffs ........................................................................................................53
3.1.3.4 Preferential rates ..................................................................................................53
3.1.3.5 Tariff exemptions or concessions.............................................................................55
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3.1.4 Other charges affecting imports .................................................................................55

3.1.4.1 Value added tax (VAT) ...........................................................................................55
3.1.4.2 Consumption (excise) tax ......................................................................................56
3.1.4.3 Automobile Purchase Tax .......................................................................................57
3.1.4.4 Port construction fees ............................................................................................58
3.1.5 Import prohibitions, restrictions, and licensing ............................................................58
3.1.5.1 Import prohibitions ...............................................................................................58
3.1.5.2 Import licensing requirements ................................................................................60
3.1.5.2.1 Automatic import licensing requirements ...............................................................61
3.1.5.2.2 Non-automatic import licensing requirements ........................................................62
3.1.6 Anti-dumping, countervailing, and safeguard measures ................................................62
3.1.6.1 Anti-dumping measures .........................................................................................62
3.1.6.2 Countervailing measures ........................................................................................65
3.1.6.3 Safeguard measures .............................................................................................66
3.2 Measures Directly Affecting Exports ..............................................................................67
3.2.1 Customs procedures and requirements .......................................................................67
3.2.2 Taxes, charges, and levies ........................................................................................68
3.2.3 Export prohibitions, restrictions, and licensing .............................................................69
3.2.4 Export support and promotion ...................................................................................72
3.2.5 Export finance, insurance, and guarantees ..................................................................73
3.3 Measures Affecting Production and Trade.......................................................................75
3.3.1 Incentives ...............................................................................................................75
3.3.2 Standards and other technical requirements ...............................................................79
3.3.2.1 Overview .............................................................................................................79
3.3.2.2 Product certification ..............................................................................................82
3.3.2.3 Labelling and packaging .........................................................................................83
3.3.3 Sanitary and phytosanitary requirements....................................................................84
3.3.3.1 Legal, institutional, and policy framework ................................................................84
3.3.3.2 SPS measures ......................................................................................................86
3.3.3.3 Inspection and quarantine ......................................................................................88
3.3.3.4 Genetically modified organisms (GMOs) ...................................................................88
3.3.4 Competition policy and price controls .........................................................................89
3.3.4.1 Competition policy ................................................................................................89
3.3.4.1.1 Legislative and institutional framework .................................................................89
3.3.4.1.2 Monopoly agreements .........................................................................................91
3.3.4.1.3 Dominant market positions ..................................................................................91
3.3.4.1.4 Mergers and acquisitions .....................................................................................92
3.3.4.1.5 Administrative monopoly .....................................................................................93
3.3.4.1.6 Enforcement ......................................................................................................93
3.3.4.1.7 International cooperation ....................................................................................94
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3.3.4.2 Price controls........................................................................................................94

3.3.5 State trading, state-owned enterprises, and privatization .............................................97
3.3.6 Government procurement .........................................................................................99
3.3.6.1 Overview .............................................................................................................99
3.3.6.2 Legal and institutional framework ......................................................................... 100
3.3.6.3 Procurement methods and e-procurement.............................................................. 103
3.3.6.4 Other policy considerations in government procurement .......................................... 104
3.3.6.5 COVID‑19-related government procurement measures ............................................ 105
3.3.6.6 Supplier complaint mechanism ............................................................................. 106
3.3.6.7 Accession to the GPA and other international cooperation ........................................ 106
3.3.7 Intellectual property rights ...................................................................................... 106
3.3.7.1 Overview ........................................................................................................... 106
3.3.7.2 Institutional reforms and IP-related policies ........................................................... 107
3.3.7.3 International context ........................................................................................... 108
3.3.7.4 Copyright and related rights ................................................................................. 108
3.3.7.5 Industrial property .............................................................................................. 109
3.3.7.5.1 Trademarks ..................................................................................................... 109
3.3.7.5.2 Geographical indications ................................................................................... 110
3.3.7.5.3 Patents ........................................................................................................... 111
3.3.7.5.4 Utility models .................................................................................................. 113
3.3.7.5.5 Industrial designs ............................................................................................. 114
3.3.7.5.6 Layout-designs of integrated circuits .................................................................. 114
3.3.7.5.7 New plant varieties ........................................................................................... 114
3.3.7.5.8 Undisclosed information and trade secrets ........................................................... 115
3.3.7.6 Enforcement....................................................................................................... 116
3.3.7.6.1 Overview ........................................................................................................ 116
3.3.7.6.2 Administrative procedures ................................................................................. 117
3.3.7.6.3 Judicial measures ............................................................................................. 118
3.3.7.6.4 Customs measures ........................................................................................... 119
3.3.7.6.5 Criminal procedures.......................................................................................... 119
4 TRADE POLICIES BY SECTOR ................................................................................... 120
4.1 Agriculture, Forestry, and Fisheries ............................................................................. 120
4.1.1 Overview .............................................................................................................. 120
4.1.2 Agriculture ............................................................................................................ 120
4.1.2.1 Features and market development ........................................................................ 120
4.1.2.2 Legal and institutional framework ......................................................................... 123
4.1.2.3 Policy objectives and reforms ............................................................................... 124
4.1.2.4 Policy instruments ............................................................................................... 125
4.1.2.4.1 Border measures .............................................................................................. 125
4.1.2.4.2 Measures affecting exports ................................................................................ 126
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4.1.2.4.3 Internal measures ............................................................................................ 127

4.1.2.4.3.1 Support measures ......................................................................................... 127
4.1.2.4.3.2 Price controls and market price support systems ............................................... 129
4.1.2.4.3.3 Other measures ............................................................................................ 130
4.1.2.4.4 Levels of support.............................................................................................. 130
4.1.3 Fisheries ............................................................................................................... 133
4.1.3.1 Features and market developments ....................................................................... 133
4.1.3.2 Legal, institutional, and policy framework .............................................................. 134
4.1.3.3 Government support to the fisheries sector ............................................................ 136
4.1.3.4 Fisheries conservation measures ........................................................................... 136
4.2 Mining and Energy .................................................................................................... 137
4.2.1 Mining .................................................................................................................. 137
4.2.2 Energy ................................................................................................................. 140
4.2.2.1 Overview including environmental policy ................................................................ 140
4.2.2.2 Coal .................................................................................................................. 142
4.2.2.3 Oil..................................................................................................................... 143
4.2.2.4 Gas ................................................................................................................... 144
4.2.2.5 Electricity ........................................................................................................... 144
4.3 Manufacturing .......................................................................................................... 148
4.3.1 Recent developments ............................................................................................. 148
4.3.2 Selected subsectors ............................................................................................... 149
4.3.2.1 Automobiles, automotive parts, and components .................................................... 149
4.3.2.2 Machinery and equipment .................................................................................... 151
4.3.2.3 Iron and steel ..................................................................................................... 152
4.3.2.4 Electronic, IT, and integrated circuits..................................................................... 153
4.3.2.5 Shipbuilding ....................................................................................................... 154
4.4 Services .................................................................................................................. 155
4.4.1 Financial services ................................................................................................... 155
4.4.1.1 Overview ........................................................................................................... 155
4.4.1.2 Reform of the financial supervision framework ........................................................ 157
4.4.1.3 Recent regulatory developments ........................................................................... 158
4.4.1.3.1 Overview ........................................................................................................ 158
4.4.1.3.2 Regulatory developments in banking .................................................................. 158
4.4.1.3.2.1 Developments in licensing of foreign banks ....................................................... 158
4.4.1.3.2.2 Developments in banking prudential regulations and measures to tackle other
systemic risks .................................................................................................................. 159
4.4.1.3.2.3 Other measures in banking ............................................................................. 160
4.4.1.3.3 Regulatory developments in insurance ................................................................ 161
4.4.1.3.3.1 Developments in licensing requirements ........................................................... 161
4.4.1.3.3.2 Developments in prudential regulations ............................................................ 162
4.4.1.3.4 Recent developments in securities activities ........................................................ 162
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4.4.1.3.4.1 Foreign participation ...................................................................................... 162

4.4.1.3.4.2 Measures to improve governance and prevent risks ........................................... 163
4.4.1.3.4.3 Foreign activities of Chinese companies ............................................................ 164
4.4.1.3.5 Developments in pension fund management ........................................................ 165
4.4.1.3.6 Measures to ease cross-border transactions and promote CNY internalization .......... 165
4.4.1.3.7 Developments in the fintech industry .................................................................. 165
4.4.2 Telecommunications ............................................................................................... 167
4.4.2.1 Overview ........................................................................................................... 167
4.4.2.2 Regulatory framework ......................................................................................... 168
4.4.2.2.1 Developments in 5G ......................................................................................... 169
4.4.2.2.2 Facility sharing ................................................................................................ 169
4.4.2.2.3 Number portability ........................................................................................... 170
4.4.2.2.4 Spectrum management ..................................................................................... 170
4.4.2.2.5 Cloud computing .............................................................................................. 170
4.4.2.2.6 Cybersecurity .................................................................................................. 170
4.4.2.2.7 E-commerce .................................................................................................... 172
4.4.3 Transport.............................................................................................................. 174
4.4.3.1 Maritime transport .............................................................................................. 175
4.4.3.2 Air transport....................................................................................................... 177
5 APPENDIX TABLES .................................................................................................. 181
CHARTS
Chart 1.1 Product composition of merchandise trade by main HS section, 2016 and 2020 ...........25
Chart 1.2 Direction of merchandise trade, 2016 and 2020 .......................................................26
Chart 1.3 Foreign direct investment, 2000-19........................................................................28
Chart 2.1 Number of restrictive measures in China's Special Administrative Measures
determining access to foreign investment, 2017-20................................................................38
Chart 3.1 Distribution of MFN applied tariff rates, 2015, 2017, and 2021 ..................................52
Chart 3.2 Average applied tariff rates, by HS section, 2017 and 2021 .......................................53
Chart 3.3 Import licensing by HS section, 2020 .....................................................................61
Chart 3.4 Anti-dumping measures in force, by product, 31 December 2020...............................65
Chart 3.5 Main elements contained in SPS measures notified by China, 1 January 2018-
13 April 2021 ....................................................................................................................87
Chart 3.6 Exports and imports of fees for the use of IP, 2010-19 ........................................... 107
Chart 3.7 Patent applications, 2010-19 ............................................................................... 112
Chart 3.8 Patent grants, 2010-19....................................................................................... 112
Chart 3.9 Patent grants by top fields of technology, 2019 ..................................................... 113
Chart 4.1 Value of production of agriculture and animal husbandry, 2009-19 .......................... 121
Chart 4.2 Volume of production, 2009-19 ........................................................................... 121
Chart 4.3 Green and Amber Box support, 2011-16 ............................................................... 131
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Chart 4.4 OECD measurement of support, 2010-19 .............................................................. 132

Chart 4.5 Total consumption of energy and its composition, 2015 and 2019 ............................ 141
Chart 4.6 Total energy consumption by sector, 2015 and 2018 .............................................. 141
Chart 4.7 Structure of electricity production and consumption, 2018 ...................................... 145
Chart 4.8 Installed generation capacities by primary energy, 2019 ......................................... 146
Chart 4.9 International passenger flights, January to December, 2019 and 2020 ..................... 178
Chart 4.10 Domestic passenger flights, January to December, 2019 and 2020 ......................... 178
TABLES
Table 1.1 Selected macroeconomic indicators, 2015-20 ..........................................................16

Table 1.2 GDP by sector, 2015-20 ........................................................................................19
Table 1.3 Balance of payments, 2015-20 ..............................................................................23
Table 1.4 Composition of trade in services, 2015-20 ..............................................................27
Table 1.5 Inward foreign direct investment by source, 2015-19 ...............................................28
Table 1.6 Inward foreign direct investment by main sectors, 2015-19 ......................................29
Table 1.7 Outward FDI by main destination, 2015-19 .............................................................29
Table 1.8 Outward FDI by main sectors, 2015-19 ..................................................................30
Table 3.1 China's legislation related to customs procedures .....................................................45
Table 3.2 Tariff structure, 2015, 2017, and 2021 ...................................................................51
Table 3.3 Summary analysis of the Chinese preferential tariff, 2020 .........................................54
Table 3.4 VAT rates, December 2020....................................................................................56
Table 3.5 Consumption tax, March 2021 ...............................................................................56
Table 3.6 Import prohibitions notified to the WTO for period 2018-20 .......................................59
Table 3.7 Anti-dumping investigations and measures, January 2018-December 2020 .................64
Table 3.8 Anti-dumping measures in force, by trading partner/region, January 2018-
December 2020 ................................................................................................................64
Table 3.9 Countervailing investigations and measures, 2016-20 ..............................................66
Table 3.10 Countervailing investigations initiated during the review period, as at
31 December 2020.............................................................................................................66
Table 3.11 Export duties by type and HS chapter, 2020 ..........................................................69
Table 3.12 Products subject to export quotas and licensing, 2020 ............................................70
Table 3.13 Overview of SINOSURE short-term export credit insurance policy .............................74
Table 3.14 Overview of SINOSURE medium- and long-term export credit insurance policy ..........75
Table 3.15 Government guidance funds ................................................................................77
Table 3.16 Policy-related funds ............................................................................................78
Table 3.17 Central Government institutions with SPS-related responsibilities, 2021 ....................85
Table 3.18 Main SPS-related laws and regulations, January 2021 .............................................85
Table 3.19 SPS-related STCs raised against China, 1 January 2018-13 April 2021 ......................87
Table 3.20 Department rules related to price controls, 2021 ....................................................95
Table 3.21 Products/services subject to price controls by the Central Government, 2021 ............95
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Table 3.22 Products/services subject to price controls by local governments, 2020 ....................96
Table 3.23 SOEs in China's economy, 2013-19 ......................................................................98
Table 3.24 China's 10 largest state-owned enterprises, 2020...................................................98
Table 3.25 Government procurement by type of purchase, 2017-19 .........................................99
Table 3.26 Government procurement-related laws, regulations, and administrative measures ... 101
Table 3.27 Government procurement by procurement method, 2017-19 ................................. 103
Table 3.28 Copyright collective management organizations – fees and membership ................. 109
Table 3.29 Trademark applications and registrations, 2017-19 .............................................. 110
Table 3.30 Utility models – Applications and registrations, 2017-19........................................ 114
Table 3.31 Industrial designs – Applications and registrations, 2017-19 .................................. 114
Table 3.32 IP enforcement, 2018-20 .................................................................................. 117
Table 3.33 Judicial measures, 2018-19 ............................................................................... 118
Table 4.1 Principal indicators for agriculture, animal husbandry, forestry, and fisheries,
2015-20 ......................................................................................................................... 120
Table 4.2 Agricultural production, 2015-19 .......................................................................... 120
Table 4.3 Agricultural exports and imports, 2015-20 ............................................................ 121
Table 4.4 Main agriculture-related laws, December 2020 ...................................................... 124
Table 4.5 TRQs on agricultural products and their utilization, 2018-19 .................................... 126
Table 4.6 Agricultural products subject to export quotas and licensing in 2020 ........................ 127
Table 4.7 Export quotas for maize, rice, and wheat flour, 2018-20 ......................................... 127
Table 4.8 Central Government tax incentives provided to the agriculture sector, 2018 .............. 128
Table 4.9 Central Government fiscal appropriations for the agriculture sector, 2018 ................. 128
Table 4.10 Minimum procurement prices, 2016-21 ............................................................... 130
Table 4.11 Distribution of the financing of the agricultural insurance scheme between
central and local authorities ............................................................................................. 130
Table 4.12 OECD indicators for support to agriculture in China, 2010-19................................. 132
Table 4.13 Fisheries indicators, 2015-19 ............................................................................. 134
Table 4.14 Fishery exports and imports, 2015-20 ................................................................ 134
Table 4.15 Main mining production, 2017-19 ....................................................................... 137
Table 4.16 Mining industry foreign investment regime, 2017 and 2020 ................................... 139
Table 4.17 China's key trading partners for oil imports, 2018-20 ........................................... 144
Table 4.18 Investment in power generation capacity by source, 2017-19 ................................ 146
Table 4.19 Investment regime for electricity, 2017 and 2020 ................................................ 146
Table 4.20 Action plans for IT and its subsectors, 2016-20 .................................................... 154
Table 4.21 Overview of the regulatory regime for fintech ...................................................... 166
Table 4.22 Telecoms prices as a percentage of GNI per capita, 2019 ...................................... 168
Table 4.23 Value of merchandise goods imported to and exported from China through
different transport modes, 2018-20 .................................................................................... 174
Table 4.24 Ship tonnage tax rates, 2020 ............................................................................. 176
Table 4.25 CAAC policies supporting active response to the COVID‑19 outbreak....................... 179
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BOXES
Box 2.1 Main changes in the 2019 National Negative List for foreign investments and
the 2019 Encouraged Catalogue ..........................................................................................38
the 2020 Encouraged Catalogue ..........................................................................................39
Box 3.1 GACC trade facilitation measures .............................................................................49
Box 3.2 Main laws, regulations, and guidelines dealing with competition policy issues.................90
Box 4.1 Fisheries conservation measures, 2018-20 .............................................................. 137
Box 4.2 Selected indicators of the telecommunications sector, 2020 ....................................... 168
APPENDIX TABLES
Table A1.1 Bilateral debt stocks to China – public and publicly guaranteed (PPG), 2014-19 ....... 181
Table A1.2 Merchandise exports by HS section and major HS chapter/subheading, 2015-20 ..... 182
Table A1.3 Merchandise imports by HS section and major HS chapter/subheading, 2015-20 ..... 183
Table A1.4 China's merchandise exports by destination, 2015-20........................................... 184
Table A1.5 China's merchandise imports by origin, 2015-20 .................................................. 185
Table A2.1 Main notifications under WTO Agreements, 1 January 2018-13 April 2021 ............... 186
Table A2.2 WTO dispute settlement cases involving China, 1 January 2018-13 April 2021 ......... 188
Table A2.3 Industries in which FDI was/is restricted, 2019 and 2020 ...................................... 189
Table A2.4 Industries in which FDI was/is prohibited, 2019 and 2020 ..................................... 191
Table A3.1 MFN applied tariff summary, 2021 ...................................................................... 193

Table A3.2 Active central subsidy programmes notified in 2019 ............................................. 194
Table A3.3 Summary of IPR legislation, as at late-January 2021 ............................................ 196
Table A3.4 Membership in International IPR Conventions, as at January 2021 ......................... 198
Table A3.5 General regulatory framework of new plant varieties protection ............................. 199
Table A4.1 Central Government support to fisheries as notified to the WTO ............................. 200
Table A4.2 Local government support to fisheries as notified to the WTO ................................ 201
Table A4.3 Tariff lines and rates as per the Resource Tax Law ............................................... 204
Table A4.4 Tariff lines and tariff rate range before the implementation of the Resource
Tax Law .......................................................................................................................... 206
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SUMMARY
1. Since China's previous Trade Policy Review in 2018, the country's economy has been a major
driver of global growth. Real GDP growth rates fell from just under 7.0% in 2016-18 to 6.0% in
2019 and 2.3% in 2020. Growth is projected to reach 6.0% again in 2021, as economic activities
are expected to normalize. China's GDP per capita was USD 11,710 in 2020, up from USD 9,976 in
2018. The long-term structural changes in China's economy, away from agriculture and industry
towards services, continued during the review period. Services now make up some 55% of GDP.
Remarkable progress on poverty alleviation has been achieved over the past decades, resulting from
high GDP growth rates and market-oriented reforms.
2. The outbreak of the COVID‑19 pandemic in early 2020 had a major impact on output and
employment. At the beginning of 2020, China's economy contracted by 6.8%. Virtually all sectors
were severely hit by the pandemic, with the notable exceptions of financial services and information
technology. Starting in mid-2020, the economy began to recover, mainly driven by public investment
and international trade. Swift fiscal and monetary policy reactions helped mitigate the economic
impact of the COVID‑19 pandemic, but as a result of the Government's stabilizing measures, financial
stability risks may have increased.
3. Price stability remains the main goal of monetary policy. Inflation rates remained low during
the review period, fluctuating between -0.5% and 3.8%. China has a managed floating exchange
rate regime. The exchange rate of the Chinese yuan (CNY) is determined with reference to a basket
of currencies with a publicly known composition; the CNY's central parity is determined daily as a
"fix". Officially reported foreign exchange reserves held steady during the review period, at around
USD 3.1 trillion. Regulations on capital movements remain in place on inflows and outflows. China's
bilateral lending to the rest of the world, notably to African countries, has increased over the past
years. The CNY is fully convertible for current account transactions and partially convertible for some
capital account transactions. China continued its efforts to further internationalize the CNY. As at
mid-2020, about 2% of global payments were conducted through the CNY.
4. China's current account surplus contracted between 2016 and 2018, but grew again in 2019,
to USD 102.9 billion. Available information for 2020 indicates a widening of the surplus, to
USD 273.9 billion (1.9% of GDP), while for 2021, the authorities predict a narrowing of the current
account surplus. The financial account (excluding reserve assets) posted a strong deficit in 2015, a
surplus between 2016 and 2019, and a deficit in 2020. Direct investment was in surplus in all recent
years except for 2016. The portfolio investment account was in deficit until 2016 and has posted a
surplus since 2017. China's merchandise trade surplus declined between 2016 and 2018, which was
a major driver of its narrowing current account surplus. In 2019 and 2020, the trade surplus grew
again. China's balance of trade in services has traditionally posted a deficit, which grew between
2015 and 2018, but fell in 2019 and 2020.
5. China's merchandise exports increased every year during the review period, to attain a peak
of nearly USD 2.6 trillion in 2020. Exports fell in the first half of 2020 due to the COVID‑19 pandemic,
but grew strongly afterwards due to China being the first manufacturing power to resume operations
after the first wave of global shutdowns, and its role as leading supplier of protective health
equipment and electronics related to working from home. At over 44%, machinery and electrical
equipment continue to represent a very large and rising share in China's merchandise exports. The
United States and the European Union remain China's main destinations for merchandise exports.
Asia remains the most important region for China's merchandise exports, with a share of over 44%
in 2020. Within Asia, Japan and the Republic of Korea are the most important trading partners.
Africa and the Middle East received between 4% and 5% of China's exports, while the share for
Latin America fluctuated around 6%.
6. China's merchandise imports increased sharply between 2016 and 2018, but fell in 2019 and
2020. At about 35%, machinery and electrical equipment make up an important and stable share of
China's imports, followed by mineral products (some 25%). The European Union remains the most
important supplier of goods, while the share of the United States in China's imports fell, from nearly
9% in 2015 to 6.6% in 2020. The share of imports originating in Asia fluctuated at around 47%
between 2016 and 2019, but increased to over 49% in 2020. Africa, Australia, and the Middle East
account for about 4%, 5%, and 7% of China's merchandise imports, respectively.
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7. China's services exports grew from USD 217 billion in 2015 to USD 244 billion in 2019, but
fell to USD 235 billion in 2020. They are mostly composed of various business services,
transportation, and travel. Services imports grew from USD 436 billion in 2015 to USD 506 billion in
2019, but fell to USD 380 billion in 2020. Travel is traditionally by far the most important individual
category.
8. Annual foreign direct investment (FDI) inflows into China continued to grow between 2016
and 2019, although at a much slower pace than in previous periods. Outward FDI, after lagging
behind for many years, overtook inward FDI in 2015. It peaked in 2016 and has fallen sharply every
year since. Manufacturing remains by far the largest sector of FDI inflows into China. The most
important sectors for China's FDI abroad are leasing and business services, and manufacturing.
Investment under the Belt and Road Initiative accounts for some 13% of China's recent outward
FDI; it is mostly concentrated in Central and South East Asia, with a focus on infrastructure projects.
9. During the review period, China continued to aim at expanding international trade and
investments, as outlined in Five-Year Plans and various Administrative Measures. Efforts to address
climate change issues were also noticeable within China's trade policy framework. The main ongoing
actions in this regard included industrial restructuring, energy structure optimization, energy
conservation and efficiency, and the establishment of a carbon emissions trading market.
10. In pursuit of its trade policy objectives, China accords a leading role to the multilateral trading
system and regional trade agreements (RTAs) in which it participates. China is an active Member of
the WTO; it is an observer to the Committee on Government Procurement, and has been negotiating
its accession to the Plurilateral Agreement on Government Procurement since 2007. China is also an
observer to the Plurilateral Agreement on Trade in Civil Aircraft, and a participant in the Information
Technology Agreement. It also participates in Joint Statement Initiatives on e-Commerce;
investment facilitation for development; micro, small, and medium-sized enterprises; and domestic
regulation in services. Between 2018 and mid-April 2021, China was involved in 10 trade disputes
as a complainant and 11 as a respondent. During the review period, China signed new RTAs with
Mauritius, Cambodia, and 14 other countries within the framework of the Regional Comprehensive
Economic Partnership (RCEP) Agreement. By the end of February 2021, China had signed 19 RTAs
with 26 countries and territories. China submitted various notifications to the WTO during the review
period. Nevertheless, some notifications, including those on state trading enterprises and domestic
support, remain outstanding.
11. A new Foreign Investment Law was adopted, with the aim of, inter alia, improving China's
business environment for foreign investors and ensuring that they participate in market competition
on an equal basis. The legislation stipulates that investors are protected against expropriation,
restrictions on cross-border remittances, IPR infringement, and forced transfer of technology.
12. Various negative lists and the Catalogue of Encouraged Industries for Foreign Investment,
which are revised periodically, remain the main instruments used to guide FDI in China. The 2020
version of the Special Administrative Measures on Access to Foreign Investment (National Negative
List) further reduced the number of restrictive measures from 63 in 2017 to 33 in 2020. FDI in the
Pilot Free Trade Zones (PFTZs) is guided by another negative list (PFTZ Negative List). In 2020,
three PFTZs were established, bringing the total to 21. FDI is not allowed in prohibited industries
that are included in either the PFTZ Negative List or the National Negative List; for those in a
restricted industry, investors must comply with the required administrative measures. Projects in
the encouraged category are eligible for preferential treatment. In 2018, China issued the Market
Access Negative List, which lists industries that are prohibited or subject to licensing for investment
and operation within China by market participants of any kind, including state-owned, private,
domestic, or foreign-invested enterprises. Certain FDI projects may be subject to national security
reviews if they are deemed to have an influence on national security. Examination and approval are
required for foreign-invested projects involving fixed asset investment and projects involving
"serious" overcapacity.
13. Various tax incentives are available to foreign-invested enterprises (FIEs) to promote sectors
deemed beneficial to the development of China's economy. Furthermore, several relief measures
were recently taken or announced for foreign investors, as a response to the COVID‑19 pandemic.
- 12 -
14. China has taken various trade-facilitating measures with respect to import registration,
documentation, and inspection requirements, as well as in response to the COVID-19 pandemic. Its
national single window for international trade was extended and, reportedly, the overall customs
clearance time for imports nationwide was reduced.
15. China's simple average applied most-favoured nation (MFN) rate decreased from 9.3% in 2017
to 7.1% in 2021, with tariff-rate reductions in nearly all product categories. The percentage of tariff
lines bearing rates higher than 15% (international tariff peaks) was 4.5% in 2021, significantly lower
than the 13.9% in 2017. Applied MFN tariffs ranged from 0%-65%; the highest tariffs of 65% apply
to 20 agricultural tariff lines. China applies lower tariffs under its preferential trade agreements
(PTAs) and RTAs. The share of duty-free tariff lines in China's RTAs ranges between 0.04% (RTAs
with Hong Kong, China and Macao, China) and 6.6% (Separate Customs Territory of Taiwan, Penghu,
Kinmen and Matsu (Chinese Taipei)). Duty-free lines accounted for 12.6% of all lines. China also
grants preferential tariff treatment to imports from least developed countries (LDCs) that have
established diplomatic relations with China and completed the exchange of diplomatic notes. By
February 2021, China had implemented zero tariffs on 97% of tariff lines for these 41 LDCs.
16. Other charges affecting imports are the value added tax (VAT), the consumption tax, the
Automobile Purchase Tax, and (until recently) port construction fees. During the review period, some
VAT rates were reduced. Port construction fees levied on imported and exported goods were
permanently abolished in January 2021.
17. Some changes were made in the import regime on prohibition and licensing. Since
1 January 2021, imports of all solid waste products have been prohibited, and the previous regime
for allowing imports of certain wastes under licensing conditions has been terminated. Certain
recycling materials for brass, iron-steel materials, copper, and cast aluminium alloys may be
imported if they meet the required standards. Automatic import licensing requirements, in place for
monitoring purposes have been removed on certain items and non-automatic import licensing
requirements were removed for some used mechanical and electrical products.
18. Changes in legislation concerning anti-dumping measures during the review period included
the adoption of the Ministry of Commerce's (MOFCOM) Rules on Interim Review of Dumping and
Dumping Margins (Interim Review Rules) in April 2018 and the entering into force of the Rules on
Questionnaires in Anti-Dumping Investigations and the Rules for Hearing of Anti-Dumping and
Anti-Subsidy Investigations in May 2018. Other than these, the laws and regulations governing
anti-dumping, countervailing, and safeguard measures in China remained largely unchanged during
the review period. Between January 2018 and December 2020, China initiated 34 anti-dumping
investigations and 8 countervailing investigations; it did not initiate any new safeguard
investigations. As at end-December 2020, China was enforcing 113 anti-dumping definitive
measures affecting imports from 16 countries or territories and 6 countervailing measures. Chemical
products continue to account for most anti-dumping measures in force at end-December 2020,
followed by products made of resin, plastic, and rubber.
19. Regarding the export regime, in the wake of the COVID-19 pandemic, the authorities took
steps to further streamline customs procedures, including inspections and quarantine, and reduce
port charges for exporters of medical devices. To ensure the quality of exported medical devices,
reinforced quality control measures were also put in place for enterprises involved in the export of
COVID‑19-related test kits and other medical devices.
20. China charges export taxes on certain products. As at January 2021, 102 tariff lines (at the
8-digit level) were subject to statutory export duties, while 75 tariff lines carried interim duties.
Prohibitions and restrictions are also in place on a variety of export items. Restricted exports may
be subject to quotas or licences. During the review period, 23 new items were added to the list of
technologies subject to export restrictions, while 4 items that were subject to export prohibition and
5 items that were subject to export restriction were removed.
21. During the review period, a new Export Control Law was adopted; it provides for the
establishment of a single framework for restricting exports of controlled items, i.e. dual-use items
(with both civilian and military applications); military products; nuclear products; and goods,
technologies, and services that are related to the maintenance of national security and interests and
the implementation of international obligations such as nuclear non-proliferation.
- 13 -
22. The authorities indicate that China did not maintain or introduce any export subsidies on
agricultural products during the review period. All exporters are generally entitled to VAT rebates.
To promote exports, the Trade Development Bureau of MOFCOM organizes exhibitions in emerging
markets and provides export-oriented training activities. It also maintains the websites of China
Trade Promotion and provides, through various service platforms, background information about
foreign markets.
23. China continued to provide incentives and financial support to different sectors and industries
during the review period. In June 2019, China notified its support programmes for the
period 2017-18. The notification contains information on 79 central-level and 420 subcentral-level
programmes, many of which, however, had expired by the time of the notification. No information
was provided by the authorities on how many of the programmes were still active as at April 2021.
The notifications submitted to the WTO and the replies provided by China to questions asked by
other Members did not enable the Secretariat to have a clear overall picture of China's support
programmes. In particular, the notifications do not contain information on expenditure levels in
certain critical sectors, such as aluminium, electric vehicles, glass, shipbuilding, semiconductors, or
steel. Information on subsidies going beyond the 2019 notification was not made available to the
Secretariat. In addition to the notified programmes, numerous other initiatives are reported to be in
place to support different industries and attract foreign investment. So-called "government guidance
funds" use public resources to make equity investments in industries that the Government considers
important, while numerous policy-related funds finance direct investments to support a particular
policy initiative. Many of these funds seem to be endowed with sums over CNY 100 billion. According
to the authorities, the incentives provided by these funds do not constitute subsidies and are not
required to be notified under the Agreement on Subsidies and Countervailing Measures
(SCM Agreement).
24. Since its previous Review, China introduced or revised various laws and regulations related to
standards and other technical requirements. On 1 January 2018, the revised Standardization Law
entered into force and included new provisions such as those on association standards. According to
the authorities, at end-2020, among the national standards that correspond to the relevant
international standards, 92.4% of mandatory standards (technical regulations) and 91.4% of
voluntary standards were adoptions or adaptations of international standards, compared with 74.3%
and 85.9% at end-2017. Between January 2018 and mid-April 2021, China submitted 344 technical
barriers to trade (TBT) notifications. During this period, in the TBT Committee, 25 specific trade
concerns were raised by Members regarding TBT measures maintained or planned by China.
25. During the review period, there was a substantial reorganization of the agencies responsible
for sanitary and phytosanitary (SPS)-related issues. The main change to the legal framework for
SPS-related issues was the entry into force of the Implementing Regulations of the 2015 Food Safety
Law 2019. During the review period, 13 specific trade concerns were raised in the SPS Committee
on SPS measures maintained by China, of which 8 were raised for the first time. Between
1 January 2018 and mid-April 2021, China submitted 165 notifications to the SPS Committee.
26. In 2018, the State Administration for Market Regulation (SAMR) was established as the
national administrative body for regulating market-related issues, including competition. The
previous functions and personnel of the National Development and Reform Commission (NDRC), the
State Administration for Industry and Commerce (SAIC), and MOFCOM in their respective fields of
competition policy merged into the SAMR. A new Anti-Monopoly Bureau and a new Price Supervision
and Anti-Unfair Competition Bureau were established as the competition agencies within the SAMR.
The State Council also established an Anti-Monopoly Committee to organize, coordinate, and guide
the anti-monopoly work across the country. In 2019, the Anti-Unfair Competition Law was revised
to strengthen the protection of trade secrets. There were no changes to the legislation concerning
price controls during the review period.
27. China's state trading enterprises have the exclusive right to import or export the following
products: wheat, maize, sugar, tobacco, rice, cotton, crude and processed oil, refined coal, chemical
fertilizers, tungsten and tungstate products, antimony, and silver. State ownership remains very
important in China's economy, even in non-strategic, commercially oriented sectors, with
state-owned enterprises (SOEs) still having large market shares. No privatization took place during
the review period; reform of SOEs proceeded almost exclusively in the context of mixed ownership
reform.
- 14 -
28. There have been no major changes to China's legislative and regulatory regime concerning
government procurement since the previous Review, while modifications to relevant laws are
currently under consideration. The total value of government procurement in China was
CNY 3.3 trillion in 2019 (the latest year for which data were made available), accounting for 3.3%
of GDP; important infrastructure projects implemented by SOEs are not covered by the Government
Procurement Law. The majority of procurement takes place at the sub-Central Government level.
29. During 2018 and 2019, China undertook wide-ranging reforms that included its intellectual
property (IP) regime; the infrastructure of IP courts; and amendments to the Trademark Law, the
Patent Law, and the Anti-Unfair Competition Law, which govern trade secrets. As part of these
reforms, in 2018, the State Intellectual Property Office became the China National Intellectual
Property Administration under the SAMR. The IP enforcement regime continued to evolve in response
to the challenges posed by the shift from brick-and-mortar stores to virtual marketplaces and the
implementation of international agreements. For example, copyright surveillance of large-scale
video, music, and literature websites, as well as online storage service providers, was strengthened.
30. While the overall value of production of agriculture and animal husbandry increased steadily
over the review period, China continues to be a net importer of agricultural products. China is
pursuing a rural revitalization strategy. Rural reform initiatives have included amending the Law on
the Contracting of Rural Land to legally upgrade the institutional arrangements on the land
management right on rural contracted land, and steps have been taken to extend a similar approach
to rural homesteads. As part of the Government's restructuring in 2018, the Ministry of Agriculture
(MOA) was renamed the Ministry of Agriculture and Rural Affairs (MARA), and its responsibilities
were expanded, a National Food and Strategic Reserves Administration was created, and the State
Administration of Grain was dissolved. In 2021, the average MFN applied tariff on agricultural
products was 12.7% (14.8% in 2017). China continues to make use of tariff-rate quotas on wheat,
corn, rice, sugar, wool, wool tops, and cotton, which are administered through import licences; fill
rates have fluctuated and were under 50% for wheat, rice, and wool tops in 2019. Little up-to-date
information was available on current government support to the agriculture sector, given that
China's most recent domestic support notification to the WTO covers the period up to 2016, and its
SCM notification to 2018. China continues to implement a minimum purchase price policy for rice
and wheat, with certain price reductions reported in recent years. Likewise, China continues to
maintain reserves of maize, rice, soya beans, and wheat, as well as a subsidized agricultural
insurance scheme providing coverage for natural disasters.
31. China is one of the world's largest fish-producing countries, particularly in aquaculture, and is
a net importer of fish. The simple average MFN tariff on fish and fishery products (WTO definition)
was 6.8% in 2021, with tariffs ranging from 0%-15%. Since 2018, China has revised its fishing
licence rules. No updated data were available on fisheries subsidies from 2019, and on fuel subsidies
to the fisheries sector over the whole review period. However, the authorities indicate that the
Government will shortly issue a new policy to terminate fuel and boat construction subsidies, with
the last of these pay-outs being made at end-2020. Reportedly, the Government has taken measures
to monitor and control fishing vessels, enhance its international compliance capability, and prevent
illegal, unreported, and unregulated fishing activities, and it is taking first steps to introduce a total
allowable catch system.
32. During the review period, some liberalization steps were taken in the mining sector to allow
increased foreign participation; foreign investment prohibitions and restrictions on the exploration
and development of a number of mining products were removed. Foreign investment in the
exploration, exploitation, and processing of rare earths, radioactive minerals, and tungsten is
prohibited. The average MFN applied tariff on mining products was 1.7% in 2021, unchanged
since 2017.
33. China continues to reduce its proportion of coal consumption, in line with objectives set for
green and low-carbon energy development in the 13th Five-Year Plan for Energy Development. Other
measures regarding the promotion of clean energy included the authorities' efforts to fully
operationalize China's carbon emission trading framework, set renewable electricity consumption
quotas as a share of total power consumption in each province, and implement a new environmental
tax policy. The energy sector was further opened to foreign investments during the review period,
through several liberalization measures, such as the removal of the restrictions on the exploration
and development of oil and natural gas (except for oil shale, oil sands, and shale gas).
- 15 -
34. The Made in China 2025 (or China Manufacturing 2025) initiative (launched in 2015) and the
Internet Plus initiative (launched in 2015) remain China's main initiatives to promote its
manufacturing sector. The authorities undertook a series of market-opening measures, such as
lifting of restrictions on the shareholding ratio of foreign investment in commercial vehicle
manufacturing, with a view to promoting the sector's competitiveness. Furthermore, some
manufacturing activities were added to the list of encouraged industries, mainly certain items for
integrated circuits, chip packaging equipment, cloud computing devices, key components of
industrial robots, new energy vehicles, and intelligent vehicles. The average MFN applied tariff on
manufactured products was 7% in 2021 (9.7% in 2017).
35. During the review period, China continued to liberalize its financial sector to allow increased
foreign participation. A new supervision framework was established to address new types of financial
risks, such as shadow banking. Foreign shareholding ratio limits were lifted for commercial banks,
life insurers and insurance asset management companies, securities companies, futures companies,
and fund management companies. Furthermore, foreign investors were allowed to participate in
various segments of China's financial sector, including bond rating and private pension fund
management.
36. In the telecommunications sector, China granted 5G licences to its three major telecom
operators and a broadcasting company. At the same time, the authorities put in place strategic plans
for an integrated development of 5G and industrial Internet. Several regulations, administrative
measures, and technical specifications were adopted or published for public comment, with a view
to fully implementing the 2017 Cybersecurity Law. The E-commerce Law was passed during the
review period to regulate business activities of selling goods and/or providing services through
information networks such as the Internet.
37. The State continues to have major presence in maritime and air transport. Developments in
the maritime transport sector since 2018 have included continued measures to encourage qualified
Chinese-funded international "Flag of Convenience" ships to return to China and a lifting of
restrictions on foreign investment in international shipping and international shipping agency
services in China. As is the case for other economies, the COVID-19 pandemic has had a big impact
on the air transport sector, with international and domestic passenger flights dropping dramatically
from February 2020; only the domestic passenger flight segment has recovered. China has taken
various measures to support the air and maritime sectors in the wake of the COVID-19 outbreak.
- 16 -
1 ECONOMIC ENVIRONMENT
1.1 Main Features of the Economy
1.1. China's GDP per capita rose to USD 11,710 in 2020, up from USD 8,148 in 2016 (Table 1.1).
Real GDP growth rates fell from just under 7% in 2016-18 to 6.0% in 2019 and 2.3% in 2020.
Despite the slowdown in growth rates, China continues to be a major driver of global growth, and
its convergence with advanced economies continues. Rapid economic development over the last
decades, induced by market-oriented reforms, lifted hundreds of millions of people out of poverty.
1.2. China's population stood at an estimated 1.41 billion in 2020.1 While the population is estimated
to peak in 2029, at around 1.44 billion, the working-age population has been shrinking since 2012.2
In 2020, China's newly born population was 12 million, the lowest since 1949. The percentage of
people aged 65 and over has been rapidly rising, from 6.96% in 2000 to 13.50% in 2020.
Urbanization further increased, with around 65% of the population now living in cities. Life
expectancy is currently estimated at 77.3 years.
1.3. China's growth has been accompanied by an increase in income inequality. Despite
unprecedented poverty reduction over the past decades, the income gap between the richest and
the poorest remains significant. According to the National Bureau of Statistics, the Gini index of
income distribution fell from 49.1 in 2008 to 46.2 in 2015, to climb again to 46.5 in 2019. 3 According
to World Bank data, income distribution is more equal, with a Gini index of 43.0 in 2008, falling to
38.5 in 2016.4 With regard to wealth distribution, some academic studies suggest that the top decile
and percentile shares of wealth increased sharply between 1990 and 2015.5 According to the
authorities, official indicators on wealth distribution do not exist.
Table 1.1 Selected macroeconomic indicators, 2015-20

2015 2016 2017 2018 2019 2020
Nominal GDP (CNY billion) 68,885.8 74,639.5 83,203.6 91,928.1 98,651.5 101,598.6
Nominal GDP (USD billion) 11,061.6 11,233.3 12,310.5 13,894.9 14,280.0 14,722.8
Real GDP (CNY billion, 2015 prices) 68,885.8 73,603.6 78,717.0 84,030.3 89,030.5 91,120.5
Real GDP (USD billion, 2015 prices) 11,061.6 11,077.4 11,646.7 12,701.1 12,887.3 13,204.4
GDP per capita (CNY) 50,237.0 54,139.0 60,014.0 66,006.0 70,581.0 ..
GDP per capita (USD) 8,067.0 8,148.0 8,879.4 9,976.8 10,216.7 11,710.0
National accounts
Real GDP (percentage change) 7.0 6.8 6.9 6.7 6.0 2.3
Domestic demand 7.3 7.9 6.8 7.4 5.5 1.5
Consumption 8.3 8.5 7.3 8.1 6.0 -0.8
Investment 6.1 7.2 6.1 6.5 4.5 4.6
Fixed 7.9 7.3 5.9 7.1 5.1 4.3
Contribution to GDP growtha
Consumption 4.9 4.5 3.9 4.3 3.5 -0.5
Investment 1.6 3.1 2.7 2.9 1.7 2.2
Net exports 0.6 -0.8 0.3 -0.5 0.7 0.7
Unemployment rate (%)b 4.1 4.0 3.9 3.8 3.6 ..
Prices and interest rates
Inflation (CPI, percentage change) 1.4 2.0 1.6 2.1 2.9 3.8
Benchmark lending rate (%, end of year) 4.35 4.35 4.35 4.35 4.15 3.85
Benchmark deposit rate (%, end of year) 1.50 1.50 1.50 1.50 1.50 1.50
Exchange rate
CNY per USD (period average) 6.227 6.644 6.759 6.616 6.908 6.899
Nominal effective exchange rate index (percentage 9.7 -5.4 -2.5 1.5 -1.8 -1.2
change)
Real effective exchange rate (REER) indexc 9.8 -4.9 -2.9 1.4 -0.8 1.3
(percentage change)
Monetary indicators
Net domestic credit (percentage change, end- 23.7 20.1 11.3 10.3 10.7 13.3
period)
Broad money, M2 (percentage change, end- 13.3 11.3 9.0 8.1 8.7 10.1
period)
1
The authorities indicate that more accurate figures will be published with the results of the
2020 census, which were only partially available as at April 2021.
2
Information provided by the authorities.
3
National Bureau of Statistics, Statistical Yearbook, various issues.
4
World Bank. Viewed at: https://data.worldbank.org/indicator/SI.POV.GINI.
5
Picketty, T. (2020), Capital and Ideology, Cambridge, Massachusetts: Harvard University Press; and
Piketty, T., Yang. L., and Zucman, G. (2019), "Capital Accumulation, Private Property, and Rising Inequality in
China, 1978-2015", American Economic Review, Vol. 109, No. 7, pp. 2469-2496.
- 17 -
2015 2016 2017 2018 2019 2020

Required reserve ratio (RRR) (% of bank deposits) 17.5 17.0 .. .. .. ..
Excess reserve ratio (% of bank deposits) 2.1 .. .. .. .. ..
d
Fiscal policy (% of GDP)
Financial deficit -3.4 -3.8 -3.7 -4.1 -4.9 ..
Total revenue 22.1 21.4 20.7 19.9 19.2 ..
Tax revenue 18.1 17.5 17.4 17.0 15.9 ..
Total expenditure 25.5 25.2 24.4 24.0 24.1 ..
General government gross debt 41.1 44.2 46.8 50.6 51.6 ..
Saving and investment (source: National Bureau of Statistics)
GDP by expenditure approach (CNY billion) 69,209.4 74,598.1 82,898.3 91,577.4 99,070.8 ..
Final consumption expenditure (CNY billion) 37,192.1 41,080.6 45,651.8 50,613.5 55,263.2 ..
Households 26,020.2 28,866.8 32,069.0 35,412.4 38,718.8 ..
Government 11,171.8 12,213.8 13,582.9 15,201.1 16,544.4 ..
Gross capital formation (CNY billion) 29,782.7 31,819.9 35,788.6 40,258.5 42,667.9 ..
Net exports of goods and services (CNY billion) 2,234.6 1,697.6 1,457.8 706.0 1,139.8 ..
Savings (CNY billion) 31,354.1 33,196.5 37,405.9 40,805.9 43,807.7 ..
Savings (% of GDP by expenditure) 45.3 44.5 45.1 44.6 44.2 ..
Investment (% GDP by expenditure) 43.0 42.7 43.2 44.0 43.1 ..
Savings-investment gap (% of GDP by 2.3 1.8 1.9 0.6 1.2 ..
expenditure)
Saving and investment (source: IMF)
Gross national savings (% of GDP) 45.8 44.5 44.8 44.1 44.1 45.0
Gross investment (% of GDP) 43.0 42.7 43.2 44.0 43.1 43.1
Savings-investment gap (% of GDP) 2.8 1.8 1.6 0.1 1.0 1.9
External sector (% of GDP, unless otherwise indicated)
Current account balance 2.6 1.7 1.5 0.2 0.7 1.9
Net merchandise trade 5.2 4.4 3.9 2.7 2.8 3.5
Value of exports 19.4 17.7 18.0 17.4 16.7 17.0
Value of imports 14.2 13.4 14.1 14.7 14.0 13.5
Services balance -2.0 -2.1 -2.1 -2.1 -1.8 -1.0
Capital account 0.0 -0.0 -0.0 -0.0 -0.0 -0.0
Financial account (excluding reserve assets) -0.8 0.2 0.1 1.1 0.2 -0.7
Direct investment, net 0.6 -0.4 0.2 0.7 0.4 0.7
Reserve assets 3.1 3.9 -0.7 -0.1 0.1 -0.2
Merchandise exportse (percentage change) -4.5 -7.2 11.4 9.1 -1.3 4.6
Merchandise importse (percentage change) -13.4 -4.2 16.0 17.1 -2.1 -0.6
Service exportse (percentage change) -0.8 -4.1 2.2 9.6 4.6 -3.7
Service importse (percentage change) 0.7 1.3 6.9 11.4 -3.8 -24.7
Gross official reservesf (USD billion; end-period) 3,406.1 3,097.8 3,235.9 3,168.0 3,222.9 3,356.5
Foreign currency reserves (USD billion; end- 3,330.4 3,010.5 3,139.9 3,072.7 3,107.9 3,216.5
period)
Total external debt (USD billion; end-period) 1,383.0 1,415.8 1,758.0 1,982.8 2,057.3 2,132.4
Debt service ratiog 5.0 6.1 5.5 5.5 .. ..
.. Not available.
a Refers to the growth of GDP multiplied by the respective contribution share.
b Registered unemployment in urban areas.
c A positive increase in the REER means an appreciation of the CNY relative to the other major
currencies in the index.
d Including central and local governments.
e Growth rates on merchandise and services trade are based on USD.
f Including foreign currency reserves, IMF reserve position, special drawing rights, and gold.
g Debt service ratio refers to the ratio of the payment of principal and interest of foreign debts to the
foreign exchange receipts from foreign trade and non-trade services of the current year.
Source: National Bureau of Statistics; State Administration of Foreign Exchange; People's Bank of China; and
the IMF.
1.4. Since the global financial crisis in 2008, China has experienced a marked slowdown in growth
of total factor productivity (TFP), according to a World Bank study; the authorities indicate that no
estimates of TFP were conducted by the Government, and they do not agree with this assessment.6
Aggregate TFP growth is reported to have slowed from 2.8% in 1998-2008 to 0.7% in 2009-18. In
2017, signs of improving labour productivity and TFP growth emerged, but both remain significantly
lower than their pre-crisis levels. According to this study, it would also appear that the allocation of
a larger share of credit and investment to infrastructure and housing led to lower returns on capital,
a rapid build-up in debt, and higher risks to growth. Also, an academic study suggests that the
resurgence in the state sector following the global financial crisis may have contributed to larger
Brandt, L., Litwack, J., et al. (2020), China's Productivity Slowdown and Future Growth Potential,
6
World Bank Policy Research Working Paper 9298.

- 18 -
entry barriers for non-state firms and, hence, lower non-state sector growth.7 The authorities do not
agree with these views.8
1.5. Under its 14th Five-Year Plan for Economic and Social Development (2021-25), China aims to
achieve "sustained and healthy" economic development in 2021-25, with a focus on higher quality
growth.9 While not suggesting specific GDP growth targets, the Plan lays out a 15-year goal to raise
per capita GDP levels to those of a moderately developed country by 2035, while strengthening
China's technological capacities, developing a robust domestic market, and reaffirming a significant
green transformation of production and lifestyles.
1.2 Recent Economic Developments
1.2.1 Growth and impact of COVID‑19
1.6. The COVID‑19 pandemic has posed an unprecedented shock to China's economy. Besides
inflicting human costs, it has had a major impact on output, trade, and employment. At the beginning
of 2020, economic growth fell to its lowest level in 40 years: between the last quarter of 2019 and
the first quarter of 2020, growth fell by almost 13 percentage points, from 5.8% to -6.8%.10 Apart
from financial services and information technology, all sectors were severely hit. Over 100 million
workers were directly affected by the pandemic, by being put on unpaid leave in retention schemes
or reduced-work programmes, exiting the labour market, or becoming unemployed. 11 In May 2020,
the Government abandoned the announcement of the annual GDP target for the first time in more
than 25 years due to factors that are difficult to predict, such as the coronavirus pandemic and
uncertainties around trade.
1.7. Fuelled by a middle class that has been increasing both in number and in average income,
consumption played an important role in sustaining economic growth until 2019, although household
saving rates remained high. Over the same period, investment growth slowed. Starting in mid-2020,
China's economy began to recover from the pandemic, as economic activity normalized. The
recovery was mainly driven by public investment and international trade, whereas private
consumption remained sluggish in the presence of continued uncertainties; the authorities consider
that the recovery in private consumption gained momentum in recent months, as observed in retail
sales of consumer goods.
1.8. Poverty rates fell during the review period. According to the authorities, the incidence of
poverty dropped from 3.1% in 2017 to 1.7% in 2018 and to 0.6% in 2019, using the 2011 poverty
line.12 At the same time, income levels of those over the poverty line or living in poor regions rose
significantly. The authorities also underline the results that were achieved regarding access to basic
education, electricity, healthcare, and improved infrastructure. The authorities further indicate
China's aim to completely eradicate poverty by 2020.
1.9. With regard to the sectoral composition of China's GDP, the long-term structural change away
from industry towards services continued during the review period (Table 1.2). The contribution of
agriculture to GDP fell from 8.7% in 2015 to 7.3% in 2018, before slightly climbing again during the
pandemic. While the share of industry fell, it remains very high by international comparison, at
around 31%. Services now make up 55% of China's GDP, up from 51% in 2015. The fastest-growing
service sectors during the review period include information transmission, software, and information
7
Lardy, N. (2019), The State Strikes Back: The End of Economic Reform in China? Washington, DC:
Peterson Institute for International Economics.
8
According to the authorities, by end-2020, the balance of CNY real estate loans grew by 11.7% year-
on-year, 3.1 percentage points lower than the growth rate of end-2019; according to China's official statistics,
in regard to profit, the growth rate of private companies was higher than that of state-owned enterprises.
9
NDRC. Viewed at: https://www.ndrc.gov.cn/xxgk/zcfb/ghwb/202103/t20210323_1270124.html.
10
Data provided by the authorities.
11
ILO (2020), China – Rapid Assessment of the Impact of COVID‑19 on Employment. The authorities
indicate that in 2020 11.86 million new jobs were created for urban residents, and the average surveyed urban
unemployment rate was 5.6%.
12
It should be noted that China's progress in poverty alleviation is strongly dependent on the poverty
line chosen as a benchmark. According to an academic study, progress is most impressive when using the
1985 poverty line, equivalent to USD 0.98 in 2011 prices. The use of the 2000 (equivalent to USD 1.30 in 2011
prices) or the 2011 (USD 2.29) poverty lines leads to lower poverty reduction. Chen, S. and Ravallion, M.
(2020), Reconciling the Conflicting Narratives on Poverty in China, NBER Working Paper 28147.
- 19 -
technology; and leasing and business services. Nevertheless, the pandemic-related slump was
strong for individual subsectors such as accommodation and food service activities, as well as
wholesale and retail trade.
Table 1.2 GDP by sector, 2015-20

2015 2016 2017 2018 2019 2020
GDP by industry at constant prices (annual percentage change)
Agriculture, forestry and fishing 4.0 3.5 4.1 3.6 3.2 3.1
Industrya 5.7 5.7 6.2 6.1 4.8 2.4
Manufacturing 6.2 5.9 6.5 6.1 4.6 2.3
Construction 7.3 7.7 3.9 4.8 5.2 3.5
Services 8.8 8.1 8.3 8.0 7.2 2.1
Wholesale and retail trade 6.7 7.7 7.8 6.7 5.6 -1.3
Accommodation and food service activities 6.6 7.7 8.2 6.7 5.5 -13.1
Transport, storage and communication 4.4 6.9 9.6 8.3 6.5 0.5
Financial intermediation 16.7 4.8 4.8 4.8 6.6 7.0
Real estate 3.8 8.8 7.0 3.5 2.6 2.9
Information transmission, software and information 13.7 16.9 20.5 27.8 21.7 16.9
technology
Leasing and business services 11.1 13.0 12.0 10.9 8.7 -5.3
Other 8.7 8.0 7.8 7.6 6.9 1.0
Share of main sectors in current GDP (%)
Agriculture, forestry and fishing 8.7 8.4 7.8 7.3 7.5 8.0
Industrya 34.1 32.9 33.1 32.8 31.6 30.8
Manufacturing 29.0 28.1 28.1 27.8 26.8 26.2
Construction 6.9 6.9 7.0 7.1 7.2 7.2
Services 50.8 52.4 52.7 53.3 54.3 54.5
Wholesale and retail trade 9.8 9.9 9.8 9.7 9.7 9.4
Accommodation and food service activities 1.8 1.8 1.8 1.8 1.8 1.6
Transport, storage and communication 4.4 4.4 4.5 4.4 4.3 4.1
Real estate 6.2 6.7 6.9 7.0 7.1 7.3
Information transmission, software and information 2.5 2.7 2.9 3.1 3.4 3.7
technology
Leasing and business services 2.6 2.9 3.0 3.2 3.3 3.1
Otherb 14.7 15.4 15.6 15.9 16.4 16.5
a Including mining and quarrying, manufacturing, and production and supply of electricity.
b Includes scientific research and technical services; water, environment, and public facilities
management; resident services, repairs and other services; education; health and social work;
culture, sports and entertainment; and public management, social security, and social organizations.
Source: National Bureau of Statistics. Viewed at: https://data.stats.gov.cn/english/easyquery.htm?cn=B01.
1.10. Swift fiscal and monetary policy reactions (Section 1.2.2) helped mitigate the economic
impact of the COVID‑19 pandemic and prepare for the recovery. GDP growth was 2.3% in 2020,
which made China the only G-20 economy with a positive growth rate that year. Growth is projected
to be over 6% in 2021, as economic activities continue to normalize and further domestic outbreaks
of COVID-19 remain under control. However, according to the IMF, risks of the projection are tilted
to the downside, with a possible resurgence of the pandemic and a tightening of financial
conditions.13
1.2.2 Monetary and exchange rate policy
1.11. Price stability remains the primary, but not the only, goal of monetary policy. Under the Law
on the People's Bank of China (PBOC), the objective of monetary policy is to maintain the stability
of the value of the currency and thereby promote economic growth. However, the PBOC refrains
from explicit inflation targeting. Overall, monetary policy remained prudent until early 2020.
1.12. In August 2019, the PBOC changed the formation mechanism of China's lending benchmark
rate, the loan prime rate (LPR). With a view to better reflecting market dynamics, the new LPR is
linked to rates set during open market operations, namely the PBOC's medium-term lending facility,
which is determined by broader financial system demand for central bank liquidity. The number of
quotation banks was expanded from national banks to urban commercial banks, rural commercial
13
IMF (2021), People's Republic of China: Staff Report for the 2020 Article IV Consultation, IMF Country
Report No. 21/6. The authorities indicate that they do not agree with various conclusions of recent IMF and
OECD reports.
- 20 -
banks, foreign-invested banks, and private banks. Since August 2019, the new LPR has been
announced on the 20th of every month, in lieu of publishing it on a daily basis.
1.13. With a view to safeguarding financial market stability and providing liquidity to the banking
system during the pandemic, the PBOC expanded its relending facilities to provide targeted support
to manufacturers of medical supplies and daily necessities. Furthermore, the authorities tolerated
rising levels of non-performing loans in heavily impacted regions and sectors, and introduced a
payment moratorium for most micro, small, and medium-sized enterprises (MSMEs) and other
eligible firms until end-2021. Furthermore, the PBOC lowered various policy rates. Non-interest rate
instruments deployed by the PBOC aimed to provide additional support especially to smaller firms.
They included expanding relending facilities, reducing targeted reserve requirement ratios,
increasing bank lending targets, expanding credit support by policy banks, subsidizing local banks'
repayment moratoria, and introducing a zero-interest scheme for uncollateralized lending to MSMEs.
The various measures led to a rapid increase in bank lending and had a significant positive measure
on corporate bond issuance.
1.14. As a result of the Government's stabilizing measures, however, financial stability risks
increased.14 According to the IMF, these risks include a strong increase in private sector debt, a
likely deterioration of credit quality, and intensified pressure on small banks and some local
governments. The authorities consider that the quality of credit assets of commercial banks is
basically stable. The IMF estimates corporate debt to have increased by some 10 percentage points
to 127% of GDP in 2020, while local government debt (excluding local government financing
vehicles) also rose rapidly, to some 25% of GDP.
1.15. The CPI inflation rate was low during the review period. However, in the first half of 2020,
inflation picked up, to increase to 3.8%, mainly caused by increasing food (notably pork) prices due
to the lingering effects of the African swine fever and heavy rains and floods. In November 2020,
the CPI fell by 0.5%, China's first decrease in the CPI since November 2009. The decrease in prices
was caused by a drop in food prices, notably of pork.
1.16. China has a managed floating exchange rate regime. Since 2015, the exchange rate of the
Chinese yuan (CNY) has been determined with reference to a basket of currencies with a publicly
known composition; the CNY's central parity is determined daily as a "fix". The fix takes into account
the previous day's closing rate, and the move of the currency basket overnight. The use of the
counter-cyclical adjustment factor in the daily trading band's central parity formation, which was
introduced in 2017, was phased out in October 2020. Market makers can deviate 2% in either
direction. At the end of 2020, the central parity of the CNY exchange rate was CNY 6.5249 per
US dollar, down from a seasonal high of CNY 7.1690 in May 2020.
1.17. Officially reported foreign exchange reserves have held steady at around USD 3.1 trillion since
mid-2016, signalling that the CNY faced no great appreciation or depreciation pressure during the
review period.
1.18. China continued its efforts during the review period to further internationalize the CNY; for
example, it took measures including bilateral swap agreements15, the pursuit of alternatives to the
SWIFT inter-bank payments system16, and investment in credit rating agencies for sovereign debt.
According to the authorities, China promotes the two-way opening of the capital market, facilitates
foreign investors to invest in CNY assets, optimizes policies on cross-border CNY business, promotes
trade and investment facilitation, and further improves the CNY internationalization infrastructure.
About 70 countries now also use the CNY as reserve currency. Yet as at mid-2020, only about 2%
of global payments were conducted through the CNY.17 It would appear that regulations on capital
movements (see below) constitute a major obstacle for the further internationalization of the CNY.
14
Report No. 21/6.
15
As at January 2021, China entered into bilateral swap agreements with 40 trading partners. The
largest are with Hong Kong, China (CNY 450 billion), the Republic of Korea (CNY 400 billion), the
United Kingdom (CNY 350 billion), and Singapore (CNY 300 billion).
16
China launched the China Inter-bank Payment Service (CIPS) clearing and settlement services system
in 2015. Supervised by the Central Bank, CIPS states that it processed CNY 181.8 billion (USD 28.2 billion) a
day in 2020, with participation of banks from 99 countries and regions.
17
PBOC (2020), 2020 RMB Internationalization Report. According to the Report, more than 70 central
banks and monetary authorities have incorporated the CNY into their foreign exchange reserves.
- 21 -
China's bilateral lending to the rest of the world substantially increased over the past years
(Table A1.1).
1.19. Since 2014, the PBOC has been developing a central bank digital currency, the e-CNY or
e-renminbi. It is designed to be a legal tender combining digital currency and electronic payment
characteristics, thus serving as cash (M0). The e-CNY is currently being tested across several
regions, selected banks, and electronic payment platforms. It is expected to offer a higher degree
of anonymity and lower handling charges than those of existing payment providers, higher
compatibility across platforms, and, by broadening the reach of people with limited access to finance,
to lead to more financial inclusion. The PBOC plans to use the e-CNY for domestic transactions
initially.
1.20. The CNY is fully convertible for current account transactions and partially convertible for some
capital account transactions. Residents and non-residents are permitted to use the CNY for foreign
direct investment.
1.21. Regulations on capital movements, set by the State Administration on Foreign Exchange
(SAFE), remain in place on inflows and outflows. New foreign exchange measures entered into force
on 1 January 2020. The 12 measures introduced various relaxations and simplifications and
extended the scope and application of existing regional pilot schemes.
1.22. "Qualified institutional investors" (overseas institutional investors that have been approved
by the China Securities Regulatory Commission) may invest in China's stock and bond market
through specific channels. Regulations on portfolio inflows have been further liberalized. In
November 2020, the two major inbound foreign investment programmes (Qualified Foreign
Institutional Investors, QFII, and Renminbi Qualified Foreign Institutional Investors, RQFII) were
combined, while applications were simplified, review cycles shortened, data submission
requirements reduced, and some restrictions lifted. Foreign portfolio investment (the market value
of equities held by QFII/RQFII) in China amounted to CNY 1,081 billion in February 2021.
1.2.3 Fiscal policy
1.23. Against the background of dampening of domestic demand and weaker exports, partly
resulting from trade tensions, the authorities resorted to various stimulus measures during the
review period, involving taxes, access to credit, and infrastructure investment; however, according
to an OECD study, the stimulus may increase corporate sector indebtedness and, more generally,
reverse progress in the deleveraging of state-owned enterprises (SOEs).18 The authorities do not
agree with the conclusion of the OECD study. They indicate that the description in the study does
not reflect the facts. For example, they state that the overall debt risk of central SOEs is dropping;
there has been no bond default since 2017, and the average debt ratio of central SOEs decreased
from 66.7% in 2016 to 65.0% in 2019.
1.24. With a view to mitigating the economic impact of the COVID‑19 pandemic, the Government
put in place strong and exceptionally high fiscal support, including an extension of the coverage of
unemployment insurance. The Government also provided various tax relief measures and partially
waived social security contributions by employers to protect employment. With the reopening of the
economy, fiscal policy measures shifted to demand support, including infrastructure investment,
while employment measures remained important.
1.25. According to the IMF, the total amount of discretionary fiscal policy measures implemented
in 2020 was estimated at 4.7% of GDP. Coupled with declining tax revenue, the measures
contributed to a strong increase in the deficit of the Central Government, to some 18.2% of GDP. 19
This is a major increase compared with the period since 2015, when fiscal deficits oscillated between
3% and 5% of GDP. As a result, China's augmented debt20 to GDP ratio increased to some 92%
18
Report No. 21/6; and OECD (2019), OECD Economic Surveys: China 2019.
19
Report No. 21/6.
20
The augmented deficit, as defined by the IMF, includes local government investment vehicles,
government-guided funds, and other off-budget activities.
- 22 -
in 2020. Against the background of narrowing fiscal space and a rapidly ageing population, fiscal
consolidation with appropriate adjustment policies will be important in the medium term.
1.26. Value added tax and other indirect taxes contribute to some 65% of fiscal revenues, whereas
corporate taxes account for around 26% and the personal income tax (PIT) for some 5%. A 2018
reform of the PIT raised the taxable income threshold and introduced a wide range of deductions
that further narrowed the tax base. Customs tariffs and other import duties accounted for about
1.8% of total fiscal revenue in 2018. China's tax to GDP ratio amounted to 17% in 2018, and to
16% in 2019.
1.2.4 Structural measures
1.27. Structural reforms since China's previous Review include the implementation of tariff cuts
(Section 3.1.3), the further opening of the financial sector with a shortening of the negative list for
financial FDI, and the removal of restrictions on the investment quota for foreign institutional
investors (Section 4.4.1).
1.28. Labour market reforms provided for a cautious liberalization of the hukou21 or permit system,
with a view to increasing labour market mobility and improving the allocation of labour. Under the
2019 Urbanization Plan, cities with populations of less than 3 million eliminated all restrictions on
household registration. Moreover, cities with populations between 3 million and 5 million relaxed
restrictions on new migrants and removed limits on key population groups.
1.29. State ownership remains important, even in non-strategic, commercially oriented sectors,
with SOEs still having large market shares. At the same time, reform of SOEs proceeded almost
exclusively in the context of mixed ownership (Section 3.3.5).
1.30. Various regulatory measures were undertaken during the review period in order to ensure
financial stability by enhancing prudential regulations and deleveraging highly indebted corporations
(Section 4.4.1). These measures include the reining-in of shadow banks, tighter rules on informal
lending, the merger of the banking regulator and the insurance regulator into the China Banking and
Insurance Regulatory Commission (CBIRC) in 2018, and ongoing reforms of the comprehensive
national social credit system, which covers firms and individuals.22
1.31. Under the One Belt and One Road Initiative, or the Belt and Road Initiative (BRI) 23, launched
in 2013, the Government seeks to connect nearly 140 countries and regions through rail lines,
pipelines, highways, ports, and other infrastructure. As at March 2021, total expenditure under the
BRI amounted to USD 640 billion. According an OECD study, infrastructure projects of the BRI may
have an impact on the debt burden on recipient countries.24 Nonetheless, the authorities do not
agree with the conclusion of the study. The authorities also underline the trade-enhancing and
mutually beneficiary nature of the projects.
1.2.5 Balance of payments
1.32. China's current account surplus started to decline in 2016, with a surplus of USD 191.3 billion
(1.7% of GDP). In 2018, the surplus narrowed to USD 24.1 billion, but grew again to
USD 102.9 billion in 2019 (Table 1.3). Available information for 2020 indicates a widening of the
surplus, to USD 273.9 billion (1.9% of GDP), caused mainly by lower commodity prices, the collapse
21
Hukou is a household registration system. The authorities state that the registration distinction
between agricultural and non-agricultural households has been abolished, and certain policies differentiating
urban and rural household registrations have been abolished.
22
China's social credit system is composed of databases and initiatives that monitor and assess the
trustworthiness of individuals, companies, and government entities. Each entry is given a social credit score,
with rewards for those who have a high rating, and negative consequences for those with low scores. The
databases are managed by the National Development and Reform Commission (NDRC), the PBOC, and the
country's court system.
23
The BRI is a network of ports, roads, railways, airports, power plants, oil and gas pipelines and
refineries, and free trade zones. It also incorporates the supporting IT, telecom, and financial infrastructure.
On land, it follows the ancient Silk Road connecting Asia with Europe, while at sea, the Maritime Silk Road
connects eastern China to the Middle East, Africa, and Europe.
24
OECD (2019), OECD Economic Surveys: China 2019.
- 23 -
in outbound tourism, and a surge in exports of pandemic-related and other goods. For 2021, the
authorities predict a narrowing of the current account surplus.
Table 1.3 Balance of payments, 2015-20

(USD million)
2015 2016 2017 2018 2019 2020
Current account 293,022 191,337 188,676 24,131 102,910 273,980
Goods and services balance 357,871 255,737 217,010 87,905 131,844 369,673
Trade balance 576,191 488,883 475,941 380,074 392,993 515,000
Exports 2,142,753 1,989,519 2,216,214 2,417,443 2,386,640 2,497,156
Imports 1,566,562 1,500,636 1,740,272 2,037,369 1,993,647 1,982,156
Service balance -218,320 -233,146 -258,932 -292,168 -261,149 -145,327
Exports 217,399 208,404 213,064 233,567 244,359 235,209
Imports 435,719 441,550 471,995 525,735 505,508 380,536
Income -52,199 -54,880 -16,478 -61,365 -39,184 -105,173
Credit 223,816 226,654 289,698 268,496 273,514 241,681
Compensation of employees 33,105 26,883 21,699 18,109 14,258 14,736
Investment income 189,885 199,210 267,303 248,295 257,464 224,393
Other 826 560 697 2,092 1,792 2,552
Debit 276,015 281,533 306,176 329,861 312,699 346,854
Compensation of employees 5,718 6,211 6,762 9,946 11,157 14,360
Investment income 270,139 275,108 299,156 319,616 300,820 331,508
Other 158 215 258 299 722 986
Current transfers -12,649 -9,520 -11,856 -2,410 10,250 9,480
Credit 35,938 30,900 28,168 27,757 25,907 37,607
Debit 48,588 40,420 40,024 30,167 15,657 28,127
Capital account 316 -344 -91 -569 -327 -77
Financial account -91,523 27,594 18,021 153,795 26,598 -105,765
Assets 9,454 -231,985 -423,920 -362,039 -260,532 -626,329
Liabilities -100,977 259,579 441,941 515,835 287,130 520,563
Financial account excluding reserve -434,462 -416,070 109,537 172,682 7,308 -77,759
assets
Direct investment 68,099 -41,675 27,791 92,338 50,260 102,554
Assets -174,391 -216,424 -138,293 -143,027 -136,910 -109,922
Liabilities 242,489 174,750 166,084 235,365 187,170 212,476
Portfolio investment -66,470 -52,271 29,498 106,874 57,948 87,329
Assets -73,209 -102,770 -94,803 -53,507 -89,419 -167,333
Equity securities -39,679 -38,238 -32,847 -17,712 -29,332 -130,996
Debt securities -33,530 -64,531 -61,956 -35,795 -60,087 -36,338
Liabilities 6,739 50,499 124,301 160,381 147,366 254,662
Equity securities 14,964 23,416 36,209 60,668 44,906 64,138
Debt securities -8,226 27,083 88,092 99,713 102,460 190,525
Financial derivates (other than -2,087 -5,384 354 -6,153 -2,355 -11,409
reserves) and employee stock options
Assets -3,420 -6,550 1,538 -4,816 1,393 -6,901
Liabilities 1,333 1,166 -1,185 -1,338 -3,748 -4,508
Other investment -434,004 -316,741 51,894 -20,376 -98,545 -256,234
Assets -82,465 -349,906 -100,847 -141,803 -54,886 -314,166
Other equity -12 -2 40 -1,493 -1,491 -484
Currency and deposits -55,010 -64,280 -57,111 -14,999 -101,750 -130,397
Loans -47,464 -110,267 -43,466 -81,830 25,962 -128,177
Insurance, pension, and -3,198 -266 -47 -573 -1,168 -3,330
standardized guarantee schemes
Trade credits and advances -45,966 -100,800 -19,400 -65,300 36,800 -36,900
Other accounts receivable 69,186 -74,292 19,137 22,392 -13,240 -14,878
Liabilities -351,538 33,165 152,742 121,427 -43,659 57,933
Currency and deposits -122,552 9,062 107,944 51,436 -55,734 77,437
Loans -166,667 -17,361 50,060 32,115 42,540 -35,442
Insurance, pension, and 2,393 -668 657 210 1,803 3,275
standardized guarantee schemes
Trade credits and advances -62,283 16,200 -1,200 40,800 -28,750 7,550
Other accounts payable -2,428 25,932 -4,719 -3,135 -3,517 5,113
Reserve assets 342,939 443,665 -91,516 -18,887 19,291 -28,006
Net errors & omissions -201,816 -218,587 -206,606 -177,358 -129,181 -168,138
Note: In the financial account, a positive value for assets represents a net decrease, while a negative value
represents a net increase. A positive value for liabilities represents a net increase, while a negative
value represents a net decrease.
Source: State Administration of Foreign Exchange. Viewed at: http://www.safe.gov.cn/.
1.33. The financial account (excluding reserve assets) posted a strong deficit in 2015, a surplus
between 2016 and 2019, and a deficit in 2020. Direct investment posted a surplus in all recent years
except for 2016. Projects under the BRI played an important role in outward investments. The
authorities consider that the surplus was due in part to China's endeavours to open the economy.
- 24 -
The deficit on the portfolio investment account declined until 2016 and turned into a surplus in 2017.
In 2020, the surplus amounted to USD 87.3 billion.
1.34. China's declining merchandise trade surplus was a major driver of its narrowing current
account surplus. The merchandise trade surplus fell from USD 576 billion in 2015 to USD 380 billion
in 2018, before climbing again to USD 393 billion in 2019. Available figures for 2020 indicate that
the COVID‑19 pandemic led to a further increase in China's trade surplus, to USD 515 billion; in the
first phase of the pandemic, imports plummeted more quickly than exports, and in the second phase
exports recovered earlier. China's balance of trade in services has traditionally posted a deficit, which
grew between 2015 and 2018, but fell in 2019 and 2020.
1.3 Developments in Trade and Investment
1.3.1 Trends and patterns in merchandise and services trade
1.35. China's merchandise exports increased every year between 2016 and 2019, to attain a peak
of nearly USD 2.6 trillion in 2020 (Chart 1.1 and Table A1.2). In the first half of 2020, export levels
fell due to the COVID‑19 pandemic, but China's share of global manufacturing exports rose to a
record high in the second half of the year. Exports received a boost because China was the
first manufacturing power to resume operations after the first wave of international shutdowns, and
it is the world's bigger producer of protective health equipment, such as masks and surgical gowns,
and electronics related to working from home.
1.36. China's merchandise imports increased sharply between 2016 and 2018, but fell in 2019
and 2020 (Table A1.3). During the pandemic, merchandise imports fell sharply, to USD 931 billion
in the first half of 2020, but the decrease in imports was less pronounced than that for exports.
During the second half of 2020, imports recovered and contributed to sustaining global growth.
1.37. During the review period, the United States and the European Union (EU-27) remained
China's main destinations for merchandise exports (Chart 1.2 and Table A1.4). The European Union's
share in China's exports increased from 13.5% in 2016 to 15.1% in 2020. Within the
European Union, the importance of Germany and the Netherlands as export destinations further
increased. The United States' share fell, from over 19% in 2018 to 17.5% in 2020. Asia remains the
most important region for China's goods exports, with a share of over 44% in 2020. Within Asia,
Japan and the Republic of Korea are the most important trading partners. Africa and the Middle East
received between 4% and 5% of China's exports, while the share for Latin America fluctuated
around 6%.
1.38. On the import side, the European Union is the most important suppliers of goods, with a share
of 12.6% of all imports in 2020 (Table A1.5). The share of the United States in China's imports fell,
from nearly 9% in 2015 to 6.6% in 2020. The share of imports originating in Asia fluctuated around
47% between 2016 and 2019. It increased to over 49% in 2020. Australia's share increased over
time, to 5.6% in 2020. Africa and the Middle East account for 4% and 7% of China's imports,
respectively.
1.39. Machinery and electrical equipment continue to represent a very large and rising share in
China's merchandise exports – over 44% in 2020 (Chart 1.1 and Table A1.2). The share of textiles
and textile articles fell from 12.0% in 2015 to 10.4% in 2019, and up slightly to 10.8% in 2020. The
shares of chemical products and plastics increased during the same period.
1.40. At about 35%, machinery and electrical equipment make up an important and stable share
of China's imports (Table A1.3). The share of mineral products in China's imports increased from
some 17% in 2016 to 25% in 2019, mainly caused by an increase of the share of fuels. Its share
dropped to 22.1% in 2020. Until 2017, China was the leading importer of plastic waste (totalling
USD 3,263 million), but since then it has reduced its imports to USD 49 million in 2018,
USD 0.5 million in 2019, and USD 0.1 million in 2020.25
25
UN Comtrade database.
- 25 -
1.41. According to an academic study, it would appear that the structure of merchandise trade has
been characterized by a rapid expansion of production stages conducted in China. 26 It states that
Chinese firms span more production stages as they grow more productive, larger, and more
experienced.
Chart 1.1 Product composition of merchandise trade by main HS section, 2016 and 2020
Chart 1.1 Product composition of merchandise trade by main HS section, 2016 and 2020
2016 2020
Exports
Chemicals Chemicals
4.7% 5.3%
Other Plastics & rubber Other
14.4% 12.8% Plastics & rubber
3.9%
4.6%
Textiles &
textile articles Textiles &
Misc. manufacturing
Misc. manufacturing 12.1% textile articles
7.7% 10.8%
7.0%
Precision
Precision Base metals
instruments
instruments Base metals & & articles
3.3%
3.5% articles thereof thereof
7.4% Transport 6.8%
Transport
equipment equipment
4.4% 4.3%
Machinery;
Machinery; electrical equipment
electrical equipment 44.4%
42.8%
Total: USD 2,097.6 billion Total: USD 2,590.6 billion
Imports
Vegetables Vegetables
& cereals & cereals
Other 3.4% Other
3.5%
10.2% 11.8%
Precision Petroleum & Precision Petroleum &
instruments mineral products instruments mineral products
6.1% 17.4% 5.1% 22.1%
Transport
Transport equipment
equipment 4.2%
6.1% Chemicals
6.9%
Chemicals
Plastics & rubber 7.3%
4.7%
Precious stones Plastics & rubber
& metals 4.2%
Machinery; 5.0% Machinery;
electrical equipment Base metals & Base metals &
electrical equipment
35.3% articles thereof articles thereof
36.0%
5.0% 5.7%
Source: UNSD,
Source: Comtrade
UN Comtrade database.
database.
Chor, D., Manova, K., and Yu, Z. (2020), Growing Like China: Firm Performance and Global
26
Production Line Position, NBER Working Paper No. 27795, September 2020.
- 26 -
Chart 1.2
Direction of merchandise trade, 2016 and 2020
Chart 1.2 Direction of merchandise trade, 2016 and 2020
2016 2020
Exports (f.o.b.)
Japan Hong Kong, China Japan Hong Kong, China

6.2% 13.7% 10.5%
Middle East 5.5%
Middle East
4.2% Korea, Rep. of
4.6% Korea, Rep. of
Africa 4.3%
Africa 4.5%
4.3%
4.3% Viet Nam
Viet Nam 2.9% CISa 4.4%
a
CIS 2.7% 2.9%
Asia/Oceania
Other Europe 45.6% Other Europe Asia/Oceania
4.0% 4.3% 44.2%
Other Asia/ Other Asia/

Oceania Oceania
EU-27 18.4% EU-27 19.4%
13.5%
15.1%
Other America Other America

6.7% 7.4% United States
United States
18.4% 17.5%
Imports (c.i.f.)
Viet Nam
Chinese Taipei Korea, Rep. of 3.8%
Korea, Rep. of Chinese Taipei
8.7% 8.4%
10.0% 9.8%
Australia
4.5% Japan Australia
Japan 8.5%
Malaysia 5.6%
9.2%
3.1%
Malaysia
Asia/Oceania Asia/Oceania
Middle East Middle East 3.6%
47.8% Other Asia/ 49.4%
5.4% Oceania 6.0%
12.3% Other Asia/
Africa 3.5%
Africa 3.5% Oceania
a 9.7%
CISa 2.9% CIS 3.7%
Other Europe Chinab Other Europe Chinab

4.3% 8.1% 2.8% 6.1%
EU-27 EU-27 United States

11.9% United States 12.6% 6.6%
Other Brazil
Other Brazil 8.5%
2.9% America 4.1%
America
5.0%
4.7%
a Commonwealth of Independent States, including certain associate and former member states.
bb Includes
Includes goodsgoods thatbeen
that have haveexported
been exported fromand
from China China and thereafter
thereafter re-imported
re-imported into China.into China.
Source: UN Comtrade database.
Source: UN Comtrade database.
1.42. Services exports grew from USD 217 billion in 2015 to USD 244 billion in 2019, but fell to
USD 235 billion in 2020. They are mostly composed of various business services, transportation,
and travel (Table 1.4). The relative importance of communication, computer, information,
maintenance, repair, and other business services grew, while the shares of manufacturing services
and travel decreased over time.
- 27 -
Table 1.4 Composition of trade in services, 2015-20

2015 2016 2017 2018 2019 2020
Total credit (USD billion) 217.4 208.4 213.1 233.6 244.4 235.2
% of total credit
Manufacturing services on physical inputs 9.4 8.9 8.5 7.5 6.4 5.6
Maintenance and repair services 1.7 2.5 2.8 3.1 4.2 3.3
Transportation 17.8 16.2 17.5 18.1 18.9 24.1
Travel 20.7 21.3 18.1 17.3 14.7 6.0
Construction 7.7 6.1 5.7 5.8 5.9 5.4
Insurance and pension 2.3 1.9 1.9 2.1 2.0 2.3
Financial services 1.1 1.5 1.6 1.4 1.6 1.8
Charges for the use of intellectual property 0.5 0.6 2.3 2.4 2.7 3.6
Communication, computer & information 11.3 12.2 12.6 12.9 14.3 16.5
Other business services 26.9 27.8 27.8 28.3 28.3 29.9
Personal, cultural & recreational services 0.3 0.4 0.4 0.4 0.4 0.4
Government goods and services 0.5 0.6 0.8 0.8 0.6 1.1
Total debit (USD billion) 435.7 441.5 472.0 525.7 505.5 380.5
% of total debit
Manufacturing services on physical inputs 0.04 0.04 0.04 0.1 0.1 0.1
Maintenance and repair services 0.3 0.4 0.5 0.5 0.7 0.9
Transportation 19.6 18.2 19.8 20.8 20.8 24.9
Travel 57.3 56.6 54.6 52.7 50.4 34.3
Construction 2.3 1.9 1.8 1.6 1.8 2.1
Insurance and pension 2.0 2.9 2.4 2.2 2.2 3.2
Financial services 0.6 0.5 0.3 0.4 0.5 0.9
Charges for the use of intellectual property 5.1 5.4 6.1 6.8 6.8 9.9
Communication, computer & information 2.6 2.9 4.1 4.5 5.3 8.7
Other business services 9.1 9.8 9.0 8.9 9.9 13.3
Personal, cultural & recreational services 0.4 0.5 0.6 0.6 0.8 0.8
Government goods and services 0.6 0.7 0.7 0.9 0.7 0.9
Source: Information provided by the authorities.
1.43. According to the authorities, in 2019, China's major trading partners for trade in services were
Hong Kong, China; the United States; Japan; Singapore; Germany; and the United Kingdom.
1.44. Services imports grew from USD 436 billion in 2015 to USD 506 billion in 2019, but fell to
USD 380 billion in 2020. Travel is traditionally by far the most important individual category, though
its share had already declined before the pandemic, followed by transport services and business
services. While the contribution of travel and construction services decreased, the relative
importance of telecommunications, computer and information services, and of charges for the use
of intellectual property grew over time.
1.3.2 Trends and patterns in FDI
1.45. Foreign investment into China continued to grow between 2016 and 2019, although at a much
slower pace than in previous periods (Chart 1.3). China's inward FDI stock amounted to
USD 1.8 trillion in 2019. Outward FDI, after lagging behind for many years, overtook inward FDI
in 2015. It peaked in 2016 and has fallen sharply every year since. The total stock of China's outward
FDI amounted to USD 2.1 trillion in 2019.
1.46. Hong Kong, China is by far the most important source for FDI into China (Table 1.5). Other
important sources include Singapore, the Republic of Korea, the British Virgin Islands, Japan, and
the United States.
1.47. The manufacturing sector remains by far the largest recipient of FDI into China, followed by
real estate and leasing and business services (Table 1.6). Sectors such as agriculture, mining, and
construction are of limited importance for FDI.
- 28 -
Chart 1.3 Foreign direct investment, 2000-19

(USD
Chartbillion)
1. Foreign direct investment, USD billion
2,500 250
2,000 200
1,500 150
1,000 100
500 50
0 0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Left-hand scale: Right-hand scale:

FDI inward stock FDI outward stock FDI inflow FDI outflow
Source: UNCTAD,
Source: UNCTAD, World Investment
World Report
Investment 2020. 2020.
Report ViewedViewed
at: at:
https://unctad.org/en/Pages/DIAE/World%20Investment%20Report/Annex-Tables.aspx.
https://unctad.org/en/Pages/DIAE/World%20Investment%20Report/Annex-Tables.aspx.
Table 1.5 Inward foreign direct investment by source, 2015-19

(USD billion)
2019
2015 2016 2017 2018
% of total FDI
Total 126.27 126.00 131.04 134.97 138.14
Hong Kong, China 86.39 81.47 94.51 89.92 96.30 69.7
Singapore 6.90 6.05 4.76 5.21 7.59 5.5
Korea, Republic of 3.20 4.75 3.67 4.67 5.54 4.0
British Virgin Islands 7.39 6.74 3.99 4.71 4.96 3.6
Japan 3.20 4.75 3.26 3.80 3.72 2.7
United States 2.09 3.10 2.65 2.69 2.69 1.9
Cayman Islands 2.09 3.10 2.18 4.07 2.56 1.9
Netherlands 0.75 0.56 2.17 1.27 1.80 1.3
Macao, China 0.89 0.82 0.64 1.28 1.74 1.3
Germany 1.44 1.39 1.54 3.67 1.66 1.2
Separate Customs 1.56 2.39 1.77 1.39 1.59 1.1
Territory of Taiwan,
Penghu, Kinmen and
Matsu (Chinese Taipei)
Samoa 7.63 8.08 1.23 1.55 1.19 0.9
United Kingdom 0.00 0.00 1.00 2.48 0.86 0.6
France 1.22 0.87 0.79 1.01 0.79 0.6
Switzerland 0.22 0.55 0.46 0.60 0.64 0.5
Bermuda 0.71 0.46 1.34 2.17 0.48 0.4
Other 0.60 0.96 5.06 4.47 4.03 2.9
Note: Figures refer to foreign capital actually used.

Source: WTO Secretariat calculations based on data from the National Bureau of Statistics. Viewed at:
https://data.stats.gov.cn/english/easyquery.htm?cn=C01.
- 29 -
Table 1.6 Inward foreign direct investment by main sectors, 2015-19

(USD billion)
2019
2015 2016 2017 2018
% of total FDI
Total 126.27 126.00 131.04 134.97 138.14 100.0
Agriculture, forestry and fishery 1.53 1.90 1.07 0.80 0.56 0.4
Mining 0.24 0.10 1.30 1.23 2.19 1.6
Manufacturing 39.54 35.49 33.51 41.17 35.37 25.6
Electricity, gas and water 2.25 2.15 3.52 4.42 3.52 2.6
Construction 1.56 2.48 2.62 1.49 1.22 0.9
Transport, storage and post 4.19 5.09 5.59 4.73 4.53 3.3
Hotels and catering service 0.43 0.37 0.42 0.90 0.97 0.7
Information transmission, computer 3.84 8.44 20.92 11.66 14.68 10.6
and software
Real estate 28.99 19.66 16.86 22.47 23.47 17.0
Scientific research, technical services 4.53 6.52 6.84 6.81 11.17 8.1
and geological prospecting
Water conservancy, environment and 0.43 0.42 0.57 0.47 0.52 0.4
public facilities
Other 1.68 1.11 1.68 1.46 1.67 1.2
Note: Figures refer to foreign capital actually used.

1.48. China continues to be a significant investor abroad, although annual outward flows have
dropped considerably since 2017. The most important destinations are Hong Kong, China; the British
Virgin Islands; Singapore; the United States; and Indonesia (Table 1.7). Projects under the BRI play
an important role for outward investment. The most important sectors for China's FDI abroad are
leasing and business services, manufacturing, financial intermediation, and wholesale and retail
trade (Table 1.8).
1.49. According to the authorities, investment under the BRI accounts for some 13% of China's
recent outward FDI. It accounts for a wide geographical dispersion of the FDI stock. Investments
are mostly concentrated in Central and South East Asia, mainly with a focus on infrastructure
projects.
Table 1.7 Outward FDI by main destination, 2015-19

(USD billion)
2019
2015 2016 2017 2018
% of total FDI
Total 145.67 196.15 158.29 143.04 136.91 100.0
Hong Kong, China 89.79 114.23 91.15 86.87 90.55 66.1
British Virgin Islands 1.85 12.29 19.30 7.15 8.68 6.3
Singapore 10.45 3.17 6.32 6.41 4.83 3.5
United States 8.03 16.98 6.43 7.48 3.81 2.8
Indonesia 1.45 1.46 1.68 1.86 2.22 1.6
Australia 3.40 4.19 4.24 1.99 2.09 1.5
Viet Nam 0.56 1.28 0.76 1.15 1.65 1.2
Germany 0.41 2.38 2.72 1.47 1.46 1.1
Thailand 0.41 1.12 1.06 0.74 1.37 1.0
United Kingdom 1.85 1.48 2.07 1.03 1.10 0.8
Japan 0.24 0.34 0.44 0.47 0.67 0.5
Macao, China 1.08 0.82 -1.02 0.81 0.59 0.4
Cayman Islands 10.21 13.52 -6.61 5.47 -4.36 -3.2
Other 14.61 21.73 29.09 19.11 21.68 15.8
- 30 -
Table 1.8 Outward FDI by main sectors, 2015-19

(USD billion)
2019
2015 2016 2017 2018
% of total FDI
Total 145.67 196.15 158.29 143.04 136.91 100.0
Agriculture, forestry and fishery 2.57 3.29 2.51 2.56 2.44 1.8
Mining 11.25 1.93 -3.70 4.63 5.13 3.7
Manufacturing 19.99 29.05 29.51 19.11 20.24 14.8
Electricity, gas and water 2.14 3.54 2.34 4.70 3.87 2.8
Construction 3.74 4.39 6.53 3.62 3.78 2.8
Transport, storage and post 2.73 1.68 5.47 5.16 3.88 2.8
Hotels and catering service 0.72 1.63 -0.19 1.35 0.60 0.4
Information transmission, computer 6.82 18.66 4.43 5.63 5.48 4.0
and software
Real estate 7.79 15.25 6.80 3.07 3.42 2.5
Scientific research, technical services 3.35 4.24 2.39 3.80 3.43 2.5
and geological prospecting
Water conservancy, environment and 1.37 0.85 0.22 0.18 0.27 0.2
public facilities
Other 3.49 10.06 2.62 4.49 3.07 2.2
- 31 -
2 TRADE AND INVESTMENT REGIMES
2.1 General Framework
2.1. China's general legal and institutional framework has remained largely unchanged since the
previous Review.1 China's legislature comprises the National People's Congress (NPC) and its
Standing Committee.2 The State Council (the Central Government) is the executive body and the
highest organ of state administration.3 China's judicial system consists of the Supreme People's
Court, local People's Courts at different levels, and special courts dealing with, inter alia, intellectual
property4, military, financial, and maritime issues.
2.2. During the review period, China proceeded with the reform of its judicial system, which was
initiated in 1999 through a Five-Year Reform Program for People's Courts. The fifth cycle of such
reforms was launched in May 2019 to cover the period 2019-23. The main objectives include the
enforcement of judicial accountability. In this regard, in December 2018, the Supreme People's Court
promulgated the Opinions on the Further and Full Implementation of the Judicial Accountability
System; in addition, the Opinions on Deepening the Comprehensive Supportive Reforms of the
Judicial Accountability System were issued in July 2020. They aim to enhance the mechanisms of
trial supervision and management and the uniform application of law, as well as improving the
supportive mechanism for judicial personnel.
2.3. Steps were also taken in recent years to further modernize the judicial specialization for issues
related to e-commerce. In addition to the Hangzhou Internet Court, which was established on
18 August 2017, the Beijing Internet Court and the Guangzhou Internet Court were established on
9 September 2018 and 28 September 2018, respectively. They aim to handle 11 types of Internet-
related cases, including contracts for financial loans, the purchase of goods, services, online disputes
about torts, and copyright infringements. The authorities state that the three Internet Courts had
dealt with 248,258 Internet-related cases by end-December 2020.
2.4. In the hierarchy of China's domestic legislation, the Constitution prevails over any other law or
statute, followed by laws and administrative regulations (issued by the State Council); local,
autonomous, and separate regulations; departmental rules (enacted by ministries at the Central
Government level or bodies directly under the State Council exercising regulatory functions); and
local rules (enacted by the People's Government at the provincial, autonomous region, or municipal
level directly under the State Council and the People's Government of cities with districts or
autonomous prefectures).
2.5. In order to regulate actions taken by various public bodies, including local governments, and
prevent the introduction of policy measures that eliminate or restrict competition, on 1 June 2016,
the State Council published the Opinions on Establishing a Fair Competition Review System in the
Development of the Market System in an effort to restrain regional authorities from adopting policies
and practices that may impede competition. According to the authorities, since the establishment of
the system, all regions and departments have reviewed new policy measures concerning the
economic activities of market entities in accordance with the requirements.
2.6. In principle, all trade-related rules formulated by the authorities at all levels must comply with
international trade agreements to which China is a party, including the Marrakesh Agreement
1
WTO document WT/TPR/S/375/Rev.1, 14 September 2018.
2
The NPC meets in session once a year. The deputies elect the members of its Standing Committee,
which has the power to interpret the Constitution and other laws, and enact and amend laws, except for those
enacted by the NPC. When the NPC is not in session, the Standing Committee may also exercise the following
functions: amend laws enacted by the NPC; review and approve adjustments to the national economic and
social development plans or to the state budget; and appoint Ministers. The NPC elects the President and the
Vice President of China. The President promulgates the legislation adopted by the NPC or its Standing
Committee. In accordance with the Constitution, the President, in pursuance of the decisions of the Standing
Committee of the NPC, ratifies or abrogates treaties and important agreements concluded with foreign States.
The President appoints the Premier and other members of the State Council, i.e. Vice Premiers, State
Councillors, Ministers, the Auditor-General, and the Secretary-General, in line with the decisions of the NPC
and its Standing Committee.
3
Led by the Premier, the State Council is composed of Vice Premiers, State Councillors, Ministers in
charge of ministries and Ministers in charge of commissions, the Auditor-General, and the Secretary-General.
4
Intellectual property courts are established in Beijing, Shanghai, Guangzhou, and Haikou.
- 32 -
Establishing the World Trade Organization and its follow-up agreements, China's accession protocol,
and China's Working Party Report.5 Draft laws and regulations at the ministerial and departmental
levels are published online in Chinese for not less than a 30-day period for public comments6, except
when, as per a decision of the State Council, laws and regulations need to be kept confidential.
Public comments can be submitted through the Ministry of Justice website. 7 The China Foreign Trade
and Cooperation Economic Gazette, issued by the Ministry of Commerce (MOFCOM), publishes
China's trade-related laws, regulations, and rules.8
2.7. Administrative decisions may be appealed within a statutory time-limit. Appeals can be made
to a department at higher level than the one that made the decision. Several independent
administrative reconsideration commissions are currently established on a pilot basis.
2.8. Pursuant to the Regulations on the Implementation of the Foreign Investment Law (FIL),
MOFCOM established a Complaint Coordination Mechanism for Foreign-invested Enterprises (FIEs)
within relevant ministries or departments of the State Council. It coordinates and facilitates the work
related to complaints of FIEs at the Central Government level, and it guides and supervises local
authorities in their handling of complaints. The Measures for Complaints by Foreign-invested
Enterprises further provide that MOFCOM shall be responsible for handling issues in three categories:
(i) complaints related to the administrative actions of relevant departments of the State Council,
provincial People's Governments, and their staff; (ii) proposals to improve relevant policies and
measures by the departments of the State Council and provincial People's Governments; and
(iii) complaints with a significant national or international bearing, for which MOFCOM established
the National Complaint Centre for FIEs (temporarily administered by the Investment Promotion
Agency).
2.2 Trade Policy Framework and Objectives
2.2.1 Institutional framework
2.9. The National Development and Reform Commission (NDRC) oversees China's macroeconomic
planning. It is responsible for formulating and implementing strategies for national economic and
social development and coordinating major economic operations. 9 The NDRC is also responsible for
conducting research and setting objectives and policies on economic reforms, such as those included
in the Five-Year Plans for Economic and Social Development. Each year, it submits a plan for national
economic and social development to the NPC on behalf of the State Council.
2.10. MOFCOM is mainly responsible for the coordination and implementation of trade-related
investment and economic cooperation policies. In particular, regarding domestic and international
trade, foreign investment, and international economic cooperation, its responsibilities include:
(i) formulating strategies, guidelines, and policies; and (ii) drafting laws, regulations, and
departmental rules.10 Other Ministries involved in trade policy formulation and implementation
include those in charge of: agriculture, ecology and environment, finance, industry and information
technology, and transportation.
2.11. On 7 March 2018, the NPC approved the Plan to Deepen Reforms of Party and State
Institutions. The Plan sought to reorganize existing ministries and agencies that comprise the State
Council. In the context of the restructuring, some functions of MOFCOM were transferred to other
agencies. For example, the newly established State Administration for Market Regulation (SAMR)
assumes responsibility for anti-monopoly law enforcement from the NDRC, MOFCOM, and the former
State Administration for Industry and Commerce (SAIC). The SAMR also took over the functions of
the Office of the Anti-Monopoly Commission of the State Council and the National Leading Group on
5
State Council, Guo Ban Fa No. 29, 2014, Notice of the General Office of the State Council on Further
Enhancing the Compliance of Trade Policies.
6
In accordance with Regulations on Procedures of the Rules Formulating, and on the Procedures for the
Formulation of Administrative Regulations (amended in December 2017).
7
Ministry of Justice. Viewed at: http://www.chinalaw.gov.cn.
8
China Foreign Trade and Cooperation Economic Gazette, No. 46, 2015. Viewed at:
http://english.mofcom.gov.cn/article/policyrelease/gazette/201509/20150901125925.shtml.
9
NDRC, Main Functions of the NDRC, 17 December 2008. Viewed at:
https://en.ndrc.gov.cn/mfndrc_8237/200812/t20081217_1193980.html.
10
MOFCOM, Mission, 7 December 2010. Viewed at:
http://english.mofcom.gov.cn/column/mission2010.shtml.
- 33 -
the Fight against IPR Infringement and Counterfeiting, as well as MOFCOM's law enforcement
functions concerning the Anti-Monopoly Law. MOFCOM's responsibilities with respect to foreign aid
were assigned to the China International Development Cooperation Agency, and its function of
administering sugar reserves is now assigned to the National Food and Strategic Reserves
Administration. The CBIRC also took over MOFCOM's previous functions of formulating business
operation and regulatory rules for pawn shops, financial leasing companies, and commercial
factoring enterprises. The supervisory structure of financial services also underwent a significant
change during the review period (Section 4.4.1).
2.2.2 Trade policy formulation and objectives
2.12. China's trade policy objectives have remained largely unchanged since the previous Review;
China seeks to further liberalize its trade and investment regime to reshape its economy. The
13th Five-Year Plan for Economic and Social Development (2016-20), which was issued in
December 2016, lays out objectives to expand trade and increase outbound and inbound
investment.11 Reflecting China's broader industrial and economic goals, the Plan aims to widen
market access for foreign investment by, inter alia, loosening foreign investment restrictions in
various sectors such as manufacturing and finance, as recently reflected in the negative lists for
foreign investments (Section 2.4). The 14th Five-Year Plan for Economic and Social Development
(2021-25) was adopted by the National People's Congress on 11 March 2021.
2.13. Trade policy objectives are also outlined in sectoral and provincial Five-Year Plans and various
Administrative Measures (such as negative lists and catalogues) that provide guidance to the
implementation of the overall policies, such as on products that are subject to licences or export
duties; industries that can benefit from preferential treatment; and sectors in which investment is
encouraged, permitted, or restricted.
2.14. The Government continues to promote its vision to expand international trade, and outward
direct investment is considered one way to promote trade. Consequently, the Government continues
to proceed with the Belt and Road Initiative (BRI), which aims to, inter alia, promote
intergovernmental cooperation; improve roads, energy, and information infrastructure; remove
trade and investment barriers; deepen financial cooperation; and promote cultural and educational
exchanges.
2.15. In November 2019, the State Council issued the Guiding Opinions on Promoting High-quality
Trade Development, which reiterate the authorities' intention to promote high-quality trade
development through, inter alia, innovation in science and technology, improved trade structure,
and two-way investments.
2.16. The Pilot Free Trade Zones (PFTZs) programme was adopted as a testing ground for
nationwide investment liberalization and streamlined regulations; the authorities consider that the
PFTZs play an important role in optimizing China's business environment, and serve to stimulate
open development and cooperation of trade and investment. The PFTZs offer preferential policies for
the import, handling, manufacturing, and exporting of goods, via, inter alia, tax incentives, free flow
and exchange of capital, and fast-tracked procedures for investment.
2.17. Since 2013, China has established an increasing number of PFTZs. In 2020, three PFTZs were
established in Beijing, Anhui, and Hunan, while the area of the Zhejiang PFTZs was expanded. This
brought the total to 21, including the existing 18 PFTZs (in Chongqing, Fujian, Guangdong, Guangxi,
Hainan, Hebei, Heilongjiang, Henan, Hubei, Jiangsu, Liaoning, Shaanxi, Shandong, Shanghai,
Sichuan, Tianjin, Yunnan and Zhejiang).
2.18. In pursuing its trade policy objectives, China recognizes the leading role of the multilateral
trading system (MTS), trade and investment liberalization and facilitation, and the expansion of its
regional trade agreements (RTAs), which the authorities view as a complement to the MTS. 12
11
NDRC, The 13th Five-Year Plan for Economic and Social Development of the People's Republic of
China (2016-2020). Viewed at:
https://en.ndrc.gov.cn/policyrelease_8233/201612/P020191101482242850325.pdf.
12
WTO document WT/TPR/G/375, 13 July 2018.
- 34 -
2.19. During the review period, as reflected in several measures, China attached great importance
to addressing climate change issues. The authorities indicate that the country implements an active
national strategy on climate change and has achieved positive results through a series of measures,
such as industrial restructuring, energy structure optimization, energy conservation and efficiency
improvement, the establishment of a carbon emissions trading market, and expanding the forest
carbon sink. They also expect that China will reach a peak in carbon dioxide emissions before 2030
and carbon neutrality before 2060.
2.3 Trade Agreements and Arrangements
2.3.1 WTO
2.20. China has been a WTO Member since 11 December 2001. At the Trade Policy Review Body,
its trade policies have been reviewed seven times; the previous Review took place in July 2018.
China is an observer to the Committee on Government Procurement and has been negotiating its
accession to the Plurilateral Agreement on Government Procurement (GPA) since 2007. On
21 October 2019, China introduced to the parties to the Agreement its sixth revised market access
offer in the context of its negotiations to join the GPA (Section 3.3.6). China is an observer to the
Plurilateral Agreement on Trade in Civil Aircraft. China is also a participant in the Information
Technology Agreement.
2.21. The authorities state that China attaches great importance to and supports the work related
to e-commerce within the WTO framework; it joined the Friends of e-Commerce for Development
(FED) in September 2017. China also participates in the Joint Statement Initiatives on electronic
commerce; investment facilitation for development; micro, small, and medium-sized enterprises;
and domestic regulation in services.
2.22. During the review period, China submitted various notifications to the WTO (Table A2.1).
Nevertheless, some notifications, including those on state trading enterprises and domestic support,
remain outstanding. According to the authorities, China is preparing new notifications.
2.23. Under the WTO dispute settlement system, between 2018 and 13 April 2021, China was
involved in 10 disputes as a complainant and 11 as a respondent (Table A2.2). China was involved
as a third party in 38 disputes brought to the Dispute Settlement Body during the same period.
2.3.2 Regional and preferential agreements
2.24. The authorities state that China is committed to creating a global network of RTAs to further
consolidate economic and trade ties between the country and its trading partners and reinforce
two-way trade and investment; such efforts have accelerated the pace to open relevant industries
and enhanced the competitiveness of their respective enterprises. China considers its network of
RTAs as means to complement the MTS and further promote free trade rules.
2.25. By the end of February 2021, China had signed 19 RTAs with 26 countries and territories. 13
On 12 November 2018, the Protocol to Update the Free Trade Agreement between China and
Singapore was signed; it entered into force on 16 October 2019. The Protocol revised the original
agreement in six areas (i.e. the rules of origin, customs procedures and trade facilitation, trade
remedies, trade in services, investment, and economic cooperation); furthermore, it added
e-commerce, competition policy, and environment to the Agreement.
2.26. On 28 April 2019, the Protocol to Update the Free Trade Agreement between China and
Pakistan was signed; it entered into force on 1 December 2019. It made revisions to the original
agreement in terms of, inter alia, market access and the schedule of tariff concessions of trade in
goods, rules of origin, trade remedy, and investment; it also added a chapter on customs
cooperation. The tariff reduction arrangement was implemented on 1 January 2020. It is set to
increase the proportion of bilateral duty-free lines to 75% (from the original 35%). Both sides
immediately eliminated tariffs on 45% of the tariff lines, and China committed to gradually eliminate
13
MOFCOM, China FTA Network. Viewed at:
http://fta.mofcom.gov.cn/list/rcepen/enrcepnews/1/encateinfo.html.
- 35 -
tariffs on 15% of the tariff lines in 5 years and another 15% in 10 years. In addition, tariff rates
were cut by 20% on other products that account for 5% of China's tariff lines.
2.27. The China-Mauritius Free Trade Agreement was signed on 17 October 2019; it entered into
force on 1 January 2021. It covers topics such as trade in goods, trade in services, investment, and
economic cooperation. China and Mauritius pledged to eventually reach zero tariffs on 96.3% and
94.2% of traded items, respectively. As for China, the duties applicable on 87.6% of these tariff
lines will be eliminated with immediate effect upon the entry into force, while the remaining tariffs
will be eliminated over a seven-year period. The Agreement also covers more than 40 services
sectors, including financial, telecommunications, ICT, professional, construction, and health. The
two sides are committed to liberalize more than 100 subsectors.14
2.28. The China-Cambodia Free Trade Agreement was signed on 12 October 2020. It has not yet
entered into force. The Agreement includes provisions on trade in goods, rules of origin, customs
procedures and trade facilitation, sanitary and phytosanitary measures, trade in services, investment
cooperation, cooperation under the BRI, e-commerce, economic and technical cooperation,
transparency, administrative and institutional provisions, and dispute settlement. It has annexes on
Schedules of Specific Commitments on trade in services, in which the two sides are committed to
liberalize some of their services sectors. China and Cambodia pledged to eventually eliminate tariffs
on 97.53% and 90% of the tariff lines, respectively. In particular, the duties applicable on 97.44% of
tariff lines from China, and 87.5% of tariff lines from Cambodia, will be eliminated upon the entry
into force of the Agreement, while the remaining tariffs on 0.09% and 2.5% of the tariff lines will be
eliminated over 5 to 20 years.
2.29. On 15 November 2020, China and 14 other countries signed the Regional Comprehensive
Economic Partnership (RCEP) Agreement.15 The Agreement has provisions on trade in goods; rules
of origin; customs procedures and trade facilitation; sanitary and phytosanitary measures;
standards, technical regulations, and conformity assessment procedures; trade remedies; trade in
services; temporary movement of natural persons; investment; intellectual property; e-commerce;
competition; small and medium-sized enterprises (SMEs); economic and technical cooperation;
government procurement; institutional provisions; and dispute settlement. It has four market access
annexes (schedules of tariff commitments, schedules of specific commitments for services,
schedules of reservations and non-conforming measures for services and investment, and schedules
of specific commitments on temporary movement of natural persons).16 In general, tariffs on 90%
of tariff lines will be eliminated; regarding trade in services, some participating signatories made
commitments in over 100 sectors/subsectors. In addition, participating countries adopt a negative
list approach to make commitments on investment in non-services sectors. The RCEP Agreement
will take effect 60 days after its ratification by at least six Association of Southeast Asian Nations
(ASEAN) and three non-ASEAN signatories.
2.30. On 26 January 2021, the Protocol to Upgrade the Free Trade Agreement between China and
New Zealand was signed; it has not yet entered into force. The Upgrade Protocol revised the original
agreement in five areas (rules of origin, customs procedures and trade facilitation, technical barriers
to trade, trade in services, and cooperation); furthermore, it added e-commerce, government
procurement, competition policy, and environment and trade chapters to the Agreement.
2.31. During the review period, China was negotiating the following agreements: the China-Japan-
Republic of Korea FTA, the China-Gulf Co-operation Council FTA, the China-Sri Lanka FTA, the China-
Israel FTA, the China-Norway FTA, the China-Republic of Moldova FTA, the China-Panama FTA, the
China-Palestine FTA, and the Agreement on Trade in Services and Investments between China and
Belarus. In addition, the country is involved in subsequent or upgrading negotiations with the
Republic of Korea, Peru, and Singapore.
14
MOFCOM, China FTA Network: China and Mauritius Sign Free Trade Agreement, 18 October 2019.
Viewed at: http://fta.mofcom.gov.cn/enarticle/chinamauritiusen/enmauritius/201910/41658_1.html.
15
MOFCOM, Regional Comprehensive Economic Partnership (RCEP). Viewed at:
http://fta.mofcom.gov.cn/topic/enperu_recp.shtml.
16
MOFCOM, "The Leading Official of the Department of International Trade and Economic Affairs of
MOFCOM Expounded on the Regional Comprehensive Economic Partnership (RCEP) Agreement (I)", press
release, 16 November 2020. Viewed at:
http://english.mofcom.gov.cn/article/newsrelease/policyreleasing/202011/20201103017259.shtml.
- 36 -
2.32. The authorities indicate that on 11 December 2018, a Memorandum of Understanding

between MOFCOM and the Ministry of the Economic Development of the Russian Federation was
signed on a cooperation and development plan for the Russian Federation's Far East Region17, a
policy document that aims to guide cooperation between the two sides and serve as a guiding
document for Chinese enterprises to invest in the region.
2.33. On 15 January 2020, China and the United States signed the China-United States Phase 1
Economic and Trade Agreement.18 It contains provisions related to, inter alia, intellectual property,
technology transfer, trade in food and agricultural products, and financial services.
2.3.3 Other agreements and arrangements
2.34. China continues to grant unilateral preferences to least developed countries (LDCs). According
to the authorities, since 2015, it has implemented zero tariffs on 97% of taxable items for LDCs that
have established diplomatic relations with China and completed the exchange of diplomatic notes.
As at end-August 2020, 39 LDCs had been given unilateral preferences. Bangladesh, Burkina Faso,
and Kiribati were added to the list of beneficiaries on 1 July 2020, 1 September 2018, and
1 August 2020, respectively. Since 1 January 2020, Equatorial Guinea has been excluded from the
list, as it "graduated" from the LDC category in June 2017.
2.4 Investment Regime
2.4.1 Regulatory framework and market access
2.35. On 15 March 2019, China adopted the FIL, which aims to improve the business environment
for foreign investors and ensure that FIEs participate in market competition on an equal basis with
their domestic counterparts, in accordance with the law. On 31 December 2019, the State Council
promulgated the Implementing Regulations of the FIL. Both the FIL and its Implementing
Regulations entered into force on 1 January 2020. Subsequently, the previous laws and
implementing regulations for foreign investors and FIEs, i.e. the Law on Sino-Foreign Equity Joint
Ventures, the Law on Sino-Foreign Cooperative Joint Ventures, and the Law on Foreign-Invested
Enterprises, as well as their administrative regulations and rules, were repealed.
2.36. The FIL grants national treatment to foreign investments in industries outside the Special
Administrative Measures on Access to Foreign Investment (National Negative List) through the
"pre-establishment national treatment and negative list management system", under which foreign
investors and their investments are to be granted treatment no less favourable than that granted to
domestic investors and their investments at the establishment stage (FIL, Article 4). Article 28 of
the FIL stipulates that "for industries outside of the National Negative List, the investment
administration shall be conducted under the principle of equal treatment to domestic and foreign
investment". Furthermore, the FIL's Implementing Regulations require that FIEs and wholly Chinese-
invested enterprises be equally treated in such aspects as government funding arrangements, land
supply, tax and fee reduction and exemption, qualification licensing, development of standards,
project applications, and human resource policies.
2.37. The authorities state that the system was developed after being implemented in PFTZs and
was expanded nationwide in 2016, followed by the adoption of the National Negative List in 2017.
2.38. The FIL and its Implementing Regulations also accord domestic companies and FIEs equal
treatment regarding access to government funding arrangements, land supply, tax abatement or
exemption, qualification licensing, standard setting, project application, or human resource policies.
In addition, FIEs are accorded equal treatment under the FIL in, inter alia, participation in
government procurement, protection of intellectual property, and licensing formalities. Article 10 of
the FIL provides that foreign companies may comment on new legislation and administrative rules
concerning foreign investment.
2.39. Various investment protection measures exist under the FIL. In a case where the State needs
to expropriate a foreign investor to protect the public interest, such expropriation shall be made
17
Sino-Russian Cooperation and Development Plan in Russia's Far East Region (2018-2024).
18
MOFCOM. Viewed at: http://www.mofcom.gov.cn/article/ae/ai/202001/20200102930845.shtml.
- 37 -
pursuant to statutory procedures and in a non-discriminatory manner, with compensation made

based on the market value of the expropriated investment. Local governments must comply with
policy commitments19 made to, and perform various contracts concluded with, foreign investors in
accordance with the law. If it becomes necessary to adjust those commitments or agreements due
to the public interest, foreign investors shall be compensated for losses incurred.
2.40. With respect to cross-border remittances, in accordance with the FIL, a foreign investor may
freely transfer inward and outward, in CNY or foreign currencies, inter alia, its capital contributions,
profit, capital gains, proceeds from disposition of assets, royalties from IPRs, lawfully obtained
compensation or indemnity amounts, and proceeds from liquidation. Under the FIL, no entity or
individual shall illegally restrict, inter alia, the type of currencies, amount, or frequency of such
remittances.
2.41. Under the FIL, legal liability shall be pursued in case of any IPR infringement. In addition, the
FIL prohibits government officials from forcing foreign investors to transfer their technology by
administrative means; it also requires the authorities to keep confidential any trade secret of foreign
investors that they may become aware of during the performance of their duties.20
2.42. Under the FIL, FDI in China is also guided by the National Negative List and the Catalogue of
Encouraged Industries for Foreign Investment (Encouraged FDI Catalogue), which lists industries
where FDI is encouraged. Industries that are listed in the Encouraged FDI Catalogue are eligible for
preferential measures, such as discounted land prices and tax incentives.
2.43. For restricted industries, foreign investors must meet the specific conditions, such as
shareholding limits, stipulated by the National Negative List. Foreign investors might need prior
approval from the Government to invest in restricted markets. For industries not on the National
Negative List, foreign investors shall receive treatment equal to their domestic counterparts when
investing.
2.44. In June 2018, the National Negative List was issued and the 2017 version of the Catalogue of
Industries for Guiding Foreign Investment was repealed. Since then, the National Negative List has
been revised every year. Compared with the 2017 version, the 2020 National Negative List
introduced new opening-up measures in such industries as seeds, oil and gas, mineral resources,
ship and aircraft manufacturing, infrastructure, finance, value-added telecommunications, and
culture.
2.45. On 23 June 2020, the current version of the National Negative List was issued by the NDRC
and MOFCOM to replace the 2019 version.21 It further reduced the number of restrictive measures,
which continues to decrease (from 63 in 2017 to 33 in 2020) (Chart 2.1). The sectors liberalized
concern services, manufacturing, and agriculture. For example, in the financial sector, the caps on
foreign ownership of securities companies, securities investment fund management companies,
futures companies, and life insurance companies were lifted; in manufacturing, the restrictions on
foreign investment in the smelting and processing of radioactive minerals, as well as on the
production of nuclear fuel, were eliminated. In agriculture, the selection and breeding of new wheat
varieties and the production of seeds are no longer required to be controlled by the domestic party.
The main differences between the 2018, 2019, and 2020 National Negative Lists are highlighted in
Box 2.1 and Box 2.2. Table A2.3 and Table A2.4 provide the lists of restricted and prohibited
measures, respectively, in 2019 and/or 2020.
19
Article 27 of the Implementing Regulations now defines "policy commitments" as any written
commitment made by a local People's Government at any level or its relevant departments to foreign investors
and FIEs with respect to supporting policies, preferential measures, and other means of facilitating foreign
investment.
20
The authorities state that the Government has never made, through existing laws, regulations, or
policies, technology transfer a precondition for inward FDI, or issued any laws, regulations, or policies
obligating investors to transfer their technologies.
21
NDRC. Viewed at:
https://www.ndrc.gov.cn/xxgk/zcfb/fzggwl/202006/P020200624549035288187.pdf.
- 38 -
Chart 2.1 Number of restrictive measures in China's Special Administrative Measures

Chart 2.[CHN] Number of restrictive measures in China's Special Administrative Measures determining access to foreign investment, 2017-
determining
2020 access to foreign investment, 2017-20
100 95
80 National negative list

PFTZ negative list
63
60
48
45
40
40 37
33
30
20
0
2017 2018 2019 2020
Source: Special Administrative Measures on Access to Foreign Investment and the Free Trade Zone Special
Source: Special Administrative Measures on Access to Foreign Investment and the Free Trade Zone Special Administrative Measures on
Administrative
Access Measures
to Foreign Investment on 2018,
(2017, Access to and
2019, Foreign Investment (2017, 2018, 2019, and 2020 editions).
2020 editions).
the 2019 Encouraged Catalogue
Encouraged category
Activities added
Manufacturing
1. Electronic equipment such as 5G equipment (mobile phones, cars, drones, etc.) and their core
components, etchers for integrated circuits, chip packing equipment, cloud computing equipment, etc.
2. Equipment such as industrial robots, key components of new energy vehicles (NEVs), smart vehicles, etc.
3. New raw materials for vaccines, cell therapy medicine, large-scale cell culture products, etc.
4. New materials for aerospace, monocrystalline silicon, and large wafers, etc.
Services
1. Development of cold-chain logistics, e-commerce, construction and operation of special railway lines, etc.
2. Artificial intelligence technology, clean production, carbon capture, and circular economy
3. Construction and management of ecological protection projects
4. Medical institution services
5. Tourism infrastructure construction, and tourism information services
Encouraged areas of investment
1. Yunnan, Hunan, and Inner Mongolia: Agriculture products processing, textile and clothing, furniture
manufacturing, etc.
2. Anhui, Sichuan, and Shanxi: Integrated circuits, tablet computers, communication terminals, etc.
3. Henan and Hunan: Logistics storage facilities, car filling stations, etc.
Restricted category
Activities removed
Mining
1. Exploration and development of oil and natural gas (excluding coal-bed methane, oil sands, shale gas,
etc.) – limited to joint venture and cooperation
Energy and water supply
1. Construction and operation of gas and heat in cities with a population of more than 500,000 – requirement
that the Chinese party shall hold the controlling majority of shares
Telecommunications
1. Multi-party communication, store-and-forward, and call centre businesses – requirement that foreign
investment should not exceed 50%
Transportation
1. Domestic shipping agent business – requirement that the Chinese party shall hold the controlling majority
of shares
Culture, sports, and entertainment
1. Performance brokerage institutions – requirement that the Chinese party shall hold the controlling
majority of shares
2. Construction and operation of movie theatres – requirement that the Chinese party shall hold the
controlling majority of shares
- 39 -
Prohibited category
Activities removed
Mining
1. Exploration and mining of molybdenum, tin, antimony, and fluorite
Manufacturing
1. Production of Xuan paper and ink ingot
Environment
1. Exploitation of wildlife resources originally produced in China and protected by the country
Activities added
Mining
1. Exploration, mining and mineral processing of rare earths, radioactive minerals, and tungsten
Source: National Negative List (2019) and the Encouraged Catalogue (2019).
Box 2.2 Main changes in the 2020 National Negative List for foreign investments and the
2020 Encouraged Catalogue
Encouraged category
Activities added (National Catalogue)

Advanced manufacturing
1. High-end manufacturing – Integrated circuit packaging and test equipment manufacturing, laser
projection equipment, ultra-high-definition TV (UHD TV), ventilator, extracorporeal membrane
oxygenation, artificial intelligence auxiliar medical equipment, hardware manufacturing related to
L3/L4/L5 autopilot, etc.
2. New materials – High-purity electron-grade hydrofluoric acid, hydrogen fluoride, special glass fibre,
polarizing film, diffusion film, photomask, polyvinyl polyamine, high-performance fibre, environmental
biofilm, new pesticides, and other items
3. Key components – High-pressure vacuum element, special valve, special bearing, special glass, wheel
speed sensor, etc.
4. Environmental protection – Construction and equipment manufacturing of receiving and disposing facilities
for marine pollutants at ports, construction and equipment manufacturing of emergency facilities for
hazardous chemicals and oil products at ports, etc.
5. Pharmaceutical – Production of vaccines against AIDS, hepatitis C, cervical cancer, malaria, hand-foot-
and-mouth disease, etc.
Production-oriented services
1. Research and development (R&D) and design – R&D of 5G mobile communication technology, block chain
technology, sewage treatment facilities design, etc.
2. Commercial services – High-end equipment maintenance, transformation, and integration of digital
production line, industrial service network platform, etc.
3. Modern logistics – Bulk commodity import and export distribution centre, community logistics and
distribution system, etc.
4. Information services – Online education, online healthcare, online office, etc.
Activities added (Regional Catalogue)

1. Heilongjiang and Yunnan: Agricultural product processing, tourism development, etc.
2. Henan, Shaanxi, and Guangxi: Medical equipment, epidemic prevention and protection articles, active
pharmaceutical ingredient (API) production, etc.
3. Hubei, Sichuan, and Chongqing: Semiconductor materials, graphene, industrial ceramics, etc.
4. Anhui and Shanxi: vocational school, etc.
5. Hainan: Yacht design and manufacturing, financial leasing services, R&D, design, and parts manufacturing
of NEVs, etc.
Restricted category
Activities removed
Agriculture
1. Selection and breeding of new wheat varieties and production of seeds – requirement that the Chinese
party shall hold the controlling majority of shares (a share ratio of not less than 34%)
Manufacturing
1. Manufacturing of commercial vehicles – requirement that foreign investment should not exceed 50%
Energy and water supply
1. Construction and operation of city water drainage network for a city with a population of more than
500,000 – requirement that the Chinese party shall hold the controlling majority of shares
- 40 -
Financial services
1. Foreign investment in life insurance, futures, and securities companies – requirement that foreign
investment should not exceed 51%
Leasing and business services
1. Market research projects – limited to cooperative joint ventures
Health and social work
1. Investment in medical institutions – limited to cooperative joint ventures
Prohibited category
Activities removed
Scientific research and technical services
1. Investment in geodetic measurement, marine mapping, aerial photography mapping, ground movement
measurement, administrative boundary mapping, topographic maps, maps of world's state regions, maps
of national administrative regions, maps of provinces below administrative regions, national maps for
educational purposes, local maps for educational purposes, true three-dimensional maps and electronic
navigation maps, regional geological mapping, mineral geology, geophysics, geochemistry, hydrogeology,
environmental geology, geological disasters, remote sensing geology and other mapping and
measurements – prohibition lifted for mining right owners in carrying out their work within the scope of
their mining rights
Transportation, warehousing, and mail services
1. Investment in air traffic control
Manufacturing
1. Investment in smelting and processing of radioactive minerals, as well as in production of nuclear fuel
Activities added
Transportation, warehousing, and mail services
1. Construction and operation of airport towers
Source: National Negative List (2020) and the Encouraged Catalogue (2020).
2.46. In 2018, the NDRC and MOFCOM jointly issued the Market Access Negative List, which was
implemented nationwide. It listed industries that are prohibited or subject to licensing for investment
and operation within China. According to the authorities, for industries not on the List, market
participants of any kind may enter in a lawful and equal manner. It is a common negative list that
applies equally to market participants of any kind, including state-owned and private enterprises,
domestic-invested enterprises, and FIEs, as well as large enterprises and SMEs. It aims to further
open up the economy and provide a level playing field for market participants. 22 The most recent
version was issued in 2020; it contains 123 items (down from 151 in the 2018 version and 131 in
the 2019 version) that are banned to non-state companies (both domestic and foreign-owned) or
require government approval for entry. While the National Negative List applies only to foreign
investors, the Market Access Negative List applies to both domestic and foreign investors. When
investing in China, a foreign investor must first meet the requirements of the Negative List for the
Access of Foreign Investments, and then those of the Market Access Negative List.
2.47. The 2020 edition of the Catalogue of Encouraged Industries for Foreign Investment, which
replaced the 2019 edition, contains two sections: one national and one regional for 22 provinces and
municipalities located in Central and Western China.23 The national section of the 2020 Encouraged
Catalogue contains 480 industries. Compared with the 2019 Catalogue, 65 items were added, and
50 were revised. The main changes in the 2019 and 2020 Encouraged Catalogues' national section
are summarized in Box 2.1 and Box 2.2. The regional section of the 2020 Encouraged Catalogue
contains 755 items, with 62 items added and 38 revised, compared with the 2019 edition.
2.48. FDI in the PFTZs is guided by a different negative list. The current one is the Special
Administrative Measures for Foreign Investment Access to Pilot Free Trade Zones (2020 PFTZ
Negative List). The 2020 PFTZ Negative List provides an outline of sectors in which foreign
investment is restricted or prohibited in PFTZs. For all industries not listed in this document, foreign
22
China started its Market Access Negative List Scheme, on a pilot basis, in March 2016 via the Market
Access Negative List (Trial Edition). The pilot programme listed 328 items and covered the provinces of
Shanghai, Guangdong, Tianjin, and Fujian. The trial was subsequently expanded in 2017 to cover 15 provinces.
23
The regional section covers Anhui, Chongqing, Gansu, Guangxi, Guizhou, Heilongjiang, Hainan,
Henan, Hubei, Hunan, Inner Mongolia, Jiangxi, Jilin, Liaoning, Ningxia, Qinghai, Shaanxi, Shanxi, Sichuan,
Tibet, Xinjiang, and Yunnan.
- 41 -
investors will receive the same treatment as that for domestic companies with regard to the
establishment and approval requirements and process.
2.49. The 2020 PFTZ Negative List, issued on 23 June 2020 and entered into force on 23 July 2020,
reduced the number of restrictive measures from 95 in 2017 to 30 in 2020 (Chart 2.1). 24
2.50. According to the authorities, some administrative regulations in the PFTZs were temporarily
adjusted during the review period.25 On 26 October 2019, the Standing Committee of the NPC
authorized the State Council to temporarily adjust the application of relevant regulations of the
Foreign Trade Law, the Road Traffic Safety Law, the Fire Prevention Law, the Food Safety Law, the
Customs Law, and the Seed Law in PFTZs for three years. On 15 January 2020, the State Council
decided to temporarily adjust and implement the relevant provisions of the Regulations on the
Administration of Commercial Performances, the Regulations on the Administration of Foreign-
Invested Telecommunications Enterprises, and the Regulations on the Administration of the Printing
Industry in PFTZs (Guo Han No. 8, 2020). On 29 April 2020, the Standing Committee of the NPC
authorized the State Council to temporarily adjust the application of the relevant provisions of the
Land Administration Law, the Seed Law, and the Maritime Law in the China (Hainan) PFTZ until
31 December 2024. On 18 June 2020, the State Council decided to temporarily adjust and implement
the Regulations on Customs Affairs Guarantees, the Regulations on Import and Export Tariffs, the
Regulations on International Maritime Transportation, the Regulations on the Inspection of Ships
and Offshore Facilities, and the Regulations on the Administration of Domestic Water Transport, until
31 December 2024.
2.51. Some of China's policies also reflect the country's efforts to phase out industries considered
to be heavily polluting. These efforts are documented in the Catalogue for Guiding Industry
Restructuring, which was last updated in October 2019, entered into force on 1 January 2020, and
superseded the 2011 version.26 The Catalogue consists of three categories – "encouraged",
"restricted", and "obsolete" industries (industries that conform to the relevant laws, regulations, and
policies of the State are "permitted", but are not listed in the Catalogue). It lists 821 encouraged
items, 215 restricted items, and 441 items that will be phased out. Encouraged items shall be
examined, approved, or filed in accordance with relevant regulations. Restricted items shall not be
newly built, and the existing production capacity is allowed to be upgraded within a certain period
of time. Items to be phased out shall be prohibited from investment and shall be phased out within
the prescribed time-limit. In principle, this provision applies to all types of enterprises in China.
2.4.2 Examination and approval procedures
2.52. Foreign investments are not allowed in prohibited industries included in either the PFTZ or the
National Negative List. Regarding foreign investment in a restricted industry included in either
the PFTZ or the National Negative List, investors must comply with the required administrative
measures, such as those for equity shareholding and qualifications for senior management officers.
Under the regime, the market regulation authority shall conduct a formal examination of relevant
application materials. Where a foreign investor or FIE invests in any sector not specified in either
the PFTZ or the National Negative List, registration (record-filing) shall be conducted under the
principle of equal treatment for domestic and foreign investments. For investments in a sector that
is included in a negative list and subject to restrictions on the proportion of contribution and the
nationality of the legal representative (primary person in charge), the registration shall be conducted
in accordance with the law.
2.53. Until 2019, under the examination and approval system, foreign investors who invest in
restricted areas could have their companies registered at the relevant market regulatory authority,
only after being approved by MOFCOM or relevant industrial administrative departments. On
1 January 2020, the FIL and its Implementing Regulations removed the requirement of approval by
the commercial and industrial authorities. Instead, new FIEs must be registered directly with the
State Council's administration of market regulation, or the administrations for market regulation of
24
The number of prohibited or restricted items in the PFTZ Negative List was 190 in 2013.
25
Temporarily adjusted administrative regulations will be re-adjusted as appropriate based on the
results of related reforms.
26
State Council, The National Development and Reform Commission Revised and Issued the "Industrial
Structure Adjustment Guidance Catalogue (2019)". Viewed at: http://www.gov.cn/xinwen/2019-11/06/content
_5449193.htm.
- 42 -
the local People's Government authorized by the State Council in accordance with the FIL.
Investment in industries and fields that require a licence in accordance with the law shall go through
the relevant licensing procedures.
2.54. A foreign investor or FIE shall submit investment information to the commerce authority
through the enterprise registration system. Investment information accessible via the
interdepartmental information-sharing system shall not be required to be submitted separately to a
different authority. The authorities state that the contents and scope of foreign investment
information reporting shall be determined by the principle of real necessity.27 For the submission of
annual reports, instead of preparing three different reports, foreign investors or FIEs shall combine
specific information required by MOFCOM and the State Administration of Foreign Exchange (SAFE)
into a single report prepared for the SAMR.28 The reporting system applies to FIEs and foreign-
invested partnerships. The reporting requirements cover information with respect to the
establishment of and changes to FIEs and their subsidiaries, as well as annual reporting. For the
sectors not specified in the National Negative List, the registration requirements are the same as
those for domestic enterprises. The business forms, structures, and rules of activities of companies
shall be governed by the Company Law, the Partnership Law, and other laws. The FIL and the
Implementing Regulations provide for an interim period of five years (until 31 December 2024) for
FIEs to adapt to the new legal requirements and to implement relevant corporate changes.
2.55. Foreign-invested projects (FIPs) involving fixed assets investment are subject to the general
filing system and limited approval system.29 The authorities note that in February 2021, about 99%
of FIPs were subject to the informative filing system. The system did not undergo a substantial
change during the review period. Projects subject to verification (approval) are those listed in the
Catalogue of Investment Projects Subject to Government Approval (2016), while those not included
in it are subject to record-filing. The approval standards are based on several core criteria, including
laws and regulations; the development plan; market access conditions; and industrial, land, and
environmental policies. The authorities indicated that FIP applications are generally approved as long
as they have no negative impact on national security, the environment, or public interest, and they
comply with the relevant laws, regulations, and Catalogues, and the national development plans and
industrial policies.
2.56. The Catalogue of Investment Projects Subject to Government Approval (2016) indicates in
which instances FIPs are subject to approval and the authorities in charge of undertaking the
procedure. Depending on the amount invested, approval is granted by various agencies listed in the
Catalogue. Investment projects valued at USD 300 million or more in the restricted industries require
approval from the NDRC, and they are submitted to the State Council for record-filing, provided that
the total investment amounts to at least USD 2 billion. Provincial governments may approve
restricted projects funded by foreign investment of up to USD 300 million.
2.57. The Catalogue also lists specific projects that require the approval of the Government for both
domestic and foreign enterprises in such areas as agriculture, energy, transportation, information
technology, raw materials, manufacturing of machinery, light manufacturing, high and new
technology, and construction in urban areas.
2.58. In the case of projects involving "serious" overcapacity, the approval process is outlined in
the Guiding Opinions on Resolving Serious Production Overcapacity Conflicts, Guo Fa No. 41, 2013.
In accordance with requirements of existing policies, projects designed to expand capacity in any of
these sectors are strictly prohibited.
2.59. Pursuant to the Circular on the Establishment of a System for Security Review of Acquisition
of Domestic Enterprises by Foreign Investors, foreign investments in Chinese domestic enterprises
might be subject to national security review if the FDI is deemed to have an influence on national
security. It applies only to certain types of foreign M&A transactions. The Circular provides for the
27
On 31 December 2019, MOFCOM and the SAMR issued the Measures for Reporting of Information on
Foreign Investment, followed by the Notice on Matters Concerning the Reporting of Information on Foreign
Investment, a supporting document released by MOFCOM. Both regulations took effect on 1 January 2020.
28
On 16 December 2019, MOFCOM, the SAMR, and SAFE jointly issued the Notice on Completing Annual
Reporting "Multiple Reports in One" Reform Related Work.
29
As regulated by the Administrative Measures for the Approval and Record-Filing of Foreign-Invested
Projects (FIPs), NDRC Order No. 12, 2014.
- 43 -
scope, content, working mechanism, and procedures for the M&A security review, and it creates a
unified and standardized security review system for M&A activities conducted by foreign investors.
The FIL and its Implementing Regulations contain provisions on national security review. In
April 2019, the NDRC issued Announcement No. 4, 2019, clarifying that the application materials for
the security review of foreign investment shall be received by the NDRC Government Affairs Service
Hall. On 19 December 2020, the NDRC and MOFCOM issued the Measures for the Security Review
of Foreign Investment, further clarifying the review authorities, scope, and procedures, which aimed
at improving the standardization, accuracy, and transparency of security review. The Measures came
into force on 18 January 2021.
2.60. The document containing Trial Measures for the National Security Review of Foreign
Investment in Pilot Free Trade Zones (Guo Ban Fa No. 24, 2015) was published in 2015 to explore
and improve the system for national security review of foreign investments. 30 It continues to govern
the security review of foreign investment in PFTZs, and its scope of application is wider than the
above-mentioned review system. Under the Measures, investments by foreign companies are
reviewed if they involve businesses related to the military fields, key agricultural products, energy,
infrastructure, transportation, culture, information technology, and equipment manufacturing that
relate to national security. The review evaluates the influence of foreign investment on national
security, economic stability, social order, morality, Internet safety, and the development of key
technology concerning state security. A joint committee with representatives from the NDRC,
MOFCOM, and other agencies is in charge of conducting the review.
2.61. The authorities state that the SAMR has been working with relevant ministries and agencies
to shorten the time for the enterprise registration process and streamline the procedures. The SAMR
has provided guidance for relevant local governmental departments in the construction of a unified
online service platform for enterprise establishment. Enterprise registration, official seal making,
invoice application, and purchase of tax control equipment can be completed online by filling out one
single form. The authorities indicate that it takes less than five working days to establish an
enterprise in China.
2.4.3 Incentives to foreign direct investments
2.62. China offers various tax incentives to FIEs to promote sectors deemed beneficial to the
development of its economy. Most equipment imported to be used in projects in sectors listed in the
Catalogue of Encouraged Industries may benefit from customs duty exemptions. Goods listed in the
Catalogue of Products Imported for Foreign Investment Projects and Not Eligible for Tax Exemption
and in the Catalogue of Imported Major Technical Equipment and Products Not Eligible for Tax
Exemption (last revised in 2019 and entered into force on 1 January 2020) are excluded from this
treatment.
2.63. In September 2018, the Ministry of Finance, the State Taxation Administration, the NDRC,
and MOFCOM jointly issued the Notice on Widening the Scope of Application of Temporary Waiver
for Withholding Income Tax for Overseas Investors Using Distributed Profits for Direct Investments
(Cai Shui No. 102, 2018). According to the Notice, the scope of application of the favourable tax
policy put in place in 2017 (Cai Shui No. 88, 2017) was expanded from encouraged FIPs to all
non-prohibited FIPs and areas. Under the Notice, profits derived by foreign investors from resident
companies in China are entitled to a tax deferral incentive and will not trigger withholding tax if the
investors reinvest the profits in any non-prohibited FIPs.
2.64. Until 2019, projects in sectors listed in the Catalogue of Priority Industries for Foreign
Investment in the Central-Western Regions of China (Central-Western Regions Catalogue) could
benefit from customs duty exemptions on the importation of equipment within the scope stipulated
by relevant policies. On 30 June 2019, the Government combined the encouraged category of the
Catalogue for the Guidance of Foreign Investment Industries with the Central-Western Regions
Catalogue, and accordingly issued a unified Catalogue of Encouraged Industries for Foreign
Investment.
30
State Council, Notice of the General Office of the State Council on Issuing the Trial Measures for the
National Security Review of Foreign Investment in Pilot Free Trade Zones. Viewed at:
http://www.gov.cn/zhengce/content/2015-04/20/content_9629.htm.
- 44 -
2.65. Enterprises may enjoy a reduced enterprise income tax rate of 15%, provided that they meet
certain conditions and engage in encouraged industries in certain areas.
2.66. Foreign investment is encouraged in high-tech enterprises and R&D. When importing R&D
equipment or procuring it domestically, "qualified" domestic and foreign R&D centres can apply for
import duty, VAT, and consumption tax exemption, and a VAT refund for domestic equipment.31
2.67. The following region-specific preferential tax regimes (establishing reduced rates for the
beneficiaries) were extended or initiated during the review period: the preferential policies for
corporate income tax in the Large-scale Development in the Western Region32; the preferential
income tax policy of Hainan Free Trade Port33; individual income tax incentives in the Guangdong-
Hong Kong, China-Macao, China Greater Bay Area.34 Furthermore, some tourism industry projects
were added to the catalogue of preferential corporate income tax in Hengqin New Area. 35
2.68. As a response to the COVID‑19 pandemic, several relief measures were taken or announced
for foreign investors. For example, all export tax rebates must be made in full without delay except
for energy-intensive and polluting products. In addition, the measures provide that China will work
to shorten the negative list on foreign investment and expand the catalogue of industries where
foreign investment is encouraged, encourage financial institutions to increase foreign trade loans to
cope with the impact of the pandemic, and encourage commercial insurance companies to offer
short-term export credit insurance and lower premium rates. Under the measures, recent tax and
fee relief policies designed to help companies in difficulty should equally apply to both domestic
enterprises and FIEs.
2.69. On 9 March 2020, the NDRC issued the Circular on Further Deepening the Reform regarding
Foreign Investment Projects Responding to the COVID‑19 Pandemic (NDRC Foreign Investment
Announcement No. 343, 2020). The Circular includes a number of measures, such as simplifying the
approval procedures for foreign investment projects.36
2.4.4 Bilateral investment and tax agreements
2.70. As at end-June 2020, China had signed 107 agreements on avoidance of double taxation, 101
of which have come into effect.37 In addition, China has tax arrangements with the Hong Kong
Special Administrative Region (SAR) and the Macao SAR. Since January 2018, China has entered
into agreements on avoidance of double taxation with Angola, Argentina, the Republic of the Congo,
and Gabon, and has fully revised and signed new double taxation avoidance agreements with
New Zealand, Italy, and Spain. On 30 December 2020, China and the European Union concluded, in
principle, a Comprehensive Agreement on Investment; the text of the Agreement is yet to be
finalized by both sides.
31
Notice of the Ministry of Finance, the General Administration of Customs and State Taxation
Administration on Import Tax Policies that Support Sci-Tech Innovation during the 13th Five-Year Plan Period
(Cai Guan Shui No. 70, 2016) and Announcement of the Ministry of Finance, the Ministry of Commerce and
State Taxation Administration on Continuing to Implement the VAT Policy on Equipment Purchased by R&D
Institutions.
32
Announcement on Continuing Corporate Income Tax Policies for Large-scale Development in the
Western Region (MOF Announcement No. 23, 2020).
33
Notice on Preferential Corporate Income Tax Policies for the Hainan Free Trade Port (Cai Shui [2020]
No. 31) and Notice on Individual Income Tax Policies for High-end Talents in Short Supply in Hainan Free Trade
Port (Cai Shui No. 32, 2020).
34
Notice on Individual Income Tax Incentives for Guangdong-Hong Kong, China-Macao, China Greater
Bay Area (Cai Shui No. 31, 2019).
35
Notice on Adding Projects in the Tourism Industry to the Catalogue of Corporate Income Tax
Preferences for Hengqin New Area (Cai Shui No. 63, 2019).
36
State Council, Notice of the National Development and Reform Commission on Responding to the
Epidemic. Viewed at: http://www.gov.cn/zhengce/zhengceku/2020-03/11/content_5490062.htm.
37
State Taxation Administration, Tax Policy and Tax Treaties. Viewed at:
http://www.chinatax.gov.cn/chinatax/n810341/n810770/index.html.
- 45 -
3 TRADE POLICIES AND PRACTICES BY MEASURE
3.1 Measures Directly Affecting Imports
3.1.1 Customs procedures, valuation, and requirements
3.1. The General Administration of Customs (GACC) remains responsible for customs matters.
In 2018, the GACC took on responsibilities relating to exit-entry inspection and quarantine previously
held by the General Administration of Quality Inspection and Supervision (Section 3.3.3). China has
45 customs institutions directly under the GACC (including 42 customs areas, 678 subordinated
customs institutions, and 132 subordinated customs offices).
3.2. Customs procedures are regulated by several pieces of legislation (Table 3.1). Recent changes
to the Customs Law and the Regulations on Import and Export Duties removed the administrative
licensing requirements for temporary imports and export.1 Changes to various other customs-related
regulations, including the Provisions on the Customs Administration of Declarations for the Import
and Export of Goods and the Customs Rules on Administration of the Levying of Duties on Imports
and Exports, were aimed at optimizing the business environment, reducing institutional transaction
costs, simplifying customs procedures, and shortening the time for customs clearance.2
Table 3.1 China's legislation related to customs procedures

Legislation Date of issuance/amendment
Customs Law Decree No. 50 issued in 1987, and amended in 2000, 2013,
2016, and 2017
Regulations on Import and Export Duties State Council Decree No. 392, adopted in 2003, and amended
in 2011, 2013, 2016, and 2017
Provisions on the Customs Administration GACC Decree No. 103, adopted in September 2003, and
of Declarations for the Import and Export amended in 2014, 2017, and 2018
of Goods
Customs Rules on Administration of the GACC Decree No. 124, adopted in 2005, and amended in
Levying of Duties on Imports and Exports 2010, 2014, 2017, and 2018
3.3. As at the time of China's previous Review, importers must register as foreign trade operators
with the Ministry of Commerce (MOFCOM) or its authorized bodies before filing customs declarations.
Foreign-invested enterprises (FIEs) may register as foreign trade operators; FIEs require a copy of
the certificate of "approval of foreign-invested enterprises" to register. According to the authorities,
the GACC has taken measures to simplify and facilitate registration procedures 3, has cancelled the
validity period for the registration of customs declaration enterprises and their branches so that
registration is of long-term effect4, and will no longer check the approval certificate of FIEs under
certain circumstances.5
1
Customs Law (as amended in 2017). Viewed at: http://www.customs.gov.cn/customs/302249/
302266/302267/1880958/index.html; and Regulations on Import and Export Duties (as amended in 2016).
Viewed at: http://www.customs.gov.cn/customs/302249/302266/302267/2558681/index.html.
2
Amendments to the Customs Administration of Declarations for the Import and Export of Goods and
the Customs Rules on Administration of the Levying of Duties on Imports and Exports (through GACC
Order No. 235 on Decree on the Publication of the General Administration of Customs Decision on the
Amendment of Some Regulations. Viewed at:
http://www.customs.gov.cn/customs/302249/302266/302267/1413710/index.html.
3
The relevant GACC announcements are: No. 28, 2018, on Issues Concerning the Integration of
Enterprises' Qualifications for Customs Declaration and Inspection. Viewed at: http://www.customs.gov.cn/
customs/302249/302266/302267/1662054/index.html; No. 143, 2018, on Relevant Matters concerning the
Promotion of Integrated Customs Declaration and Inspection to Optimize the Registration of Customs
Declaration Entities. Viewed at: http://www.customs.gov.cn/xining_customs/533860/533861/2060885/index.
html; and No. 191, 2018, on Matters concerning Further Optimizing the Administration of the Registration of
Customs Declaration Entities. Viewed at:
4
GACC Announcement No. 213, 2019, on Cancelling the Validity Period of the Registration of Customs
Declaration Enterprises and Their Branches.
5
GACC Announcement No. 226, 2019, on No Longer Verifying the Approval Certificate for a Foreign-
Funded Enterprise. The circumstances when verification of approval certificates is not required include when:
(i) foreign-invested international freight agent enterprises apply for customs declaration agency of inbound and
- 46 -
3.4. Import declarations may be submitted on paper or in electronic format through the single
window system (see below). The use of a customs broker is mandatory. Documents to be provided
with import declarations are listed in the Provisions on the Customs Administration of Declarations
for the Import and Export of Goods. They include contracts, invoices, a packing list, a list of freight
(manifest of cargo), bills of ladings (transport bills), acting customs clearance authorization
entrustment agreement, import licences, and any other import documents as prescribed by the
GACC.6 The authorities indicate that since 2020 some documents, including contracts and packing
lists, no longer need to be submitted to customs in the import declaration process 7, and other
required documents have been simplified or optimized for the application and printing processes.
The GACC does not charge fees for making customs declarations or for the use of the National Single
Window (see below). With the consent of the GACC, import declarations may be filed, and customs
clearance may take place, in advance of the goods' arrival in China8; according to the authorities,
this is encouraged.
3.5. In 2019, the GACC launched a reform of the "two-step declaration" for imports, which means
that enterprises do not need to submit all declarations and documents at one time. The first step
involves making the summary declaration with the bill of lading to pick up the goods. The second step
involves completing the whole declaration process within a specified time. According to the
authorities, the reform, which was first piloted in some customs offices, made enterprise declaration
more efficient and convenient, accelerated cargo release, and further improved the efficiency of
customs clearance. It has been applied across the country since 1 January 2020.
3.6. China maintains a standardized National Single Window (NSW) for international trade
(www.singlewindow.cn), initiated in 2016 and based on the China E-Port.9 The NSW connects the
systems of the relevant port management and international trade departments, providing a one-stop
service for customs formalities and procedures. It is interconnected with provincial single windows,
which are nationally standardized but also embedded with locally distinct services. 10 The NSW was
also enhanced to provide a one-stop platform for trade services and for inter-connection with trading
partners. Since China's previous Review, the number of connected ministries and commissions
increased (from 11 in January 2018 to 25 at end-2020), and the number of basic service functions
(e.g. port law enforcement services) increased from 9 to 16 over the same period. The NSW is now
fully operational. The NSW is the main online entry point for traders to submit their customs
declarations and associated documents. In 2018, over 70% of imports were declared through the
single window. By end-2019, the percentage had risen to 100%. Use of the NSW remains voluntary.
According to the authorities, the online application rates for other major declaration services, such
as cargo, manifest, and ship declarations, has reached 100%. China shared its experience of the
NSW with the WTO Committee on Trade Facilitation in 2019.11
3.7. The GACC operates an "Internet + Customs" platform, which provides online access to
government customs services, such as pre-declaration information input, export rebates,
administrative approval, and intellectual property rights (IPR) registration. The system allows
enterprises to submit information in one place rather than to different port management
authorities.12 It is separate from the NSW (see above), which provides a single platform for the
submission of standardized information and documentation to the relevant authorities.
3.8. Importers are required to comply with the inspection and quarantine requirements of Customs,
as stipulated by law, regulations, and the Catalogue of Import and Export Commodities Subject to
Compulsory Inspection. The Catalogue lists commodities as required to protect human, animal or
plant health, and the environment, and to prevent fraud and safeguard national security. The list
outbound express; and (ii) consignees and consigners of foreign-invested import and export goods go through
the cancellation procedures with customs.
6
Provisions on the Customs Administration of Declarations for the Import and Export of Goods,
Article 27. Viewed at: http://www.customs.gov.cn/customs/302249/302266/302267/2539748/index.html.
7
GCC Notice on Issuing the List of Measures to Coordinate Port Epidemic Prevention and Control and
Facilitate Customs Clearance (Shu Zong Fa No. 57, 2020).
8
Provisions on the Customs Administration of Declarations for the Import and Export of Goods,
Chapter III.
9
China E-Port is a large information-sharing platform for customs clearance that was jointly established
several years ago by the GACC and other relevant departments under the State Council.
10
WTO document WT/TPR/M/375/Add.1, 1 February 2019.
11
WTO TFA Database. Viewed at: https://tfadatabase.org/members/china.
12
GACC. Viewed at: http://english.customs.gov.cn/.
- 47 -
was amended twice (in 2019 and 2020) to remove import supervision inspection requirements on
390 tariff lines (at the 10-digit HS level), including cloth and adult clothing, textiles, machinery, and
cold-rolled steel plates.13 During the review period, the GACC issued various administrative
measures for the inspection and/or quarantine of specific goods.
3.9. Enterprises are classified into different groups based on risk analysis, which is based on their
credit rating and the characteristics of the commodities they import. Additionally, transport modes
have different risk indices, for example, relating to sensitive routes and the country of departure. 14
The authorities indicate that data on the share of imports subject to physical inspection are not
available.
3.10. In October 2018, the GACC adopted the inspection and supervision method of "inspection and
release before testing" for imported low-risk minerals such as iron ore, manganese ore, chromium
ore, lead ore and its concentrate, and zinc ore and its concentrate. According to the authorities, the
average inspection and release time of imported iron ore has been significantly reduced from
18.89 days to 2.21 days.
3.11. The authorities indicate that, in October 2020, the overall clearance time for imports
nationwide was 43.48 hours, reduced by 55.35% compared with 2017.15
3.12. China's Authorized Economic Operator (AEO) scheme remains in place; the authorities
indicate that, over the past decade, it underwent several revisions and improvements and developed
from the initial single system to a customs credit management system that combines the
requirements of the national credit system with the AEO system of the World Customs Organization.
By end-2020, there were 3,523 AEOs in China, accounting for 0.65% of all import and export
enterprises but covering around 30% of the total value of imports and exports. By
end-February 2021, China had signed mutual recognition agreements of AEO systems with
43 trading partners. China shared its AEO programme experience with the WTO Trade Facilitation
Committee in 2018.16
3.13. Some 163 "special customs supervision areas", governed by their own respective regulations,
continue to exist; 39.3% are located in the Pilot Free Trade Zones (PFTZs). The objectives of such
areas include carrying out bonded processing, logistics, and services. China's special customs
supervision areas are approved by the State Council and supervised by Customs. There are six types
of these areas: bonded zones, export processing zones, bonded logistics parks, bonded ports,
comprehensive bonded zones, and cross-border industrial zones. There have been no major changes
in their rules and regulations. China also applies different customs procedures to specific areas, in
some instances on a trial basis, to assess their functionality.17 Special customs procedures remain
in place to facilitate customs formalities for importers (and exporters) of multiple batches of time-
limited, fresh, perishable, difficult-to-store, and dangerous goods, as well as bonded goods exported
13
GACC Announcements No. 220, 2019, and No. 9, 2020. Viewed at:
http://www.customs.gov.cn/customs/302249/302266/302267/2811876/index.html; and
14
WTO documents WT/TPR/S/375/Rev.1, 14 September 2018; and WT/TPR/M/375/Add.1,
1 February 2019. An enterprise's credit rating is based on import and export records and whether it is
law-abiding. Enterprises are categorized according to their credit rating into authorized enterprises, enterprises
of general integrity, and dishonest enterprises.
15
The authorities indicate that figures on import clearance times cited in the previous Secretariat Report
(WTO document WT/TPR/S/375/Rev.1, 14 September 2018) referred to handling procedures for customs
clearance (the time from Customs' acceptance of the declaration of goods to the issuing of the release order).
The figures provided in this Review consider overall clearance time for goods at the port (the time from the
arrival of goods at the port to their pick-up, including arrival at the port, unloading and tally, clearance
preparation, customs clearance, and customs release).
16
17
GACC Decree No. 209, 27 June 2013, Customs Supervision Measures for Hengqin New Area. Viewed
at: http://www.mofcom.gov.cn/article/b/g/201309/20130900326388.shtml; and GACC Decree
No. 208, 27 June 2013, China Customs Regulatory Approach to Pingtan Comprehensive Experimental Zone
(Trial). Viewed at: http://www.mofcom.gov.cn/article/b/g/201309/20130900326405.shtml.
- 48 -
from or imported into China via road ports.18 Specific customs clearance supervision modes to
support China's cross-border e-commerce pilot projects have been continued.19
3.14. Citizens, legal persons, or other organizations believing that a specific administrative act of
Customs infringes upon their legitimate rights and interests may file an application for administrative
reconsideration within 60 days of the knowledge of such an act, or file a lawsuit in a People's Court
within six months of such knowledge. For tax payment disputes, a party can file an application for
administrative reconsideration with Customs in accordance with the Customs Law. If the party is
dissatisfied, the next step is to file an administrative proceeding with a People's Court. Between
January 2018 and July 2020, the GACC accepted 104 administrative review cases, including
43 government information publicity cases, 6 inspection and quarantine treatment cases,
12 administrative penalty cases, 8 taxpaying disputes, 1 complaint report reply, 2 administrative
licensing cases, and 2 enterprise management cases. Over the same period, the GACC handled
46 lawsuits, including 16 complaints and reports, 1 taxpaying dispute, 3 administrative penalty
cases, 20 government information publicity cases, 5 unaccepted reconsideration cases,
1 administrative compensation case, and 1 administrative licensing case.
3.1.1.1 Preshipment inspection
3.15. In 2019, China notified to the WTO its laws and regulations putting the Agreement on
Preshipment Inspection into force.20 These are the Law on Import and Export Commodity Inspection
(amended in 2018)21; Regulations on the Implementation of the Law on Import and Export
Commodity Inspection (revised in 2019)22; Measures for the Inspection, Supervision and
Administration of Imported Old Mechanical and Electrical Products23; and the Measures for the
Supervision and Administration of Inspection and Quarantine of Imported Solid Waste Which Can Be
Used as Raw Materials.24 The authorities indicate that mandatory preshipment inspection (PSI)
requirements are applied to a specified range of imported old mechanical and electrical products;
PSI requirements also used to be required for imports of solid waste before such imports were
prohibited on 1 January 2021 (Section 3.1.5).
3.1.1.2 Customs valuation
3.16. There have been no changes in China's customs valuation rules and procedures since its
previous Review. These are contained in GACC Decree No. 2013 and were notified to the WTO
in 2018.25 Customs value is determined on the basis of the transaction value and, when it cannot be
used, the other valuations methods are used in sequential order, as stipulated in the WTO Customs
Valuation Agreement.
3.1.1.3 Trade facilitation
3.17. China deposited its instrument of acceptance of the Protocol of Amendment inserting the
Agreement on Trade Facilitation (TFA) into Annex 1A to the WTO Agreement on 4 September 2015.
18
Administrative Measures for Centralized Declaration of Imported and Exported Goods.
19
At the time of China's previous Review, four new customs clearance supervision modes had been
proposed to support cross-border e-commerce pilot projects (general export, export to special areas, direct
purchase import, and e-commerce bonded import), three new supervision modes for cross-border e-commerce
had been set up; and a cross-border e-commerce retail import and export informational customs clearance
management system had been established (WTO document WT/TPR/M/375/Add.1, 1 February 2019). As
indicated by the authorities in the context of this Review, in 2020 Customs carried out the pilot programme of
business-to-business export in cross-border e-commerce in 22 customs offices.
20
WTO document G/PSI/N/1/Rev.4/Add.1, 23 October 2019.
21
Law on Import and Export Commodity Inspection. Viewed at:
22
Regulations on the Implementation of the Law on Import and Export Commodity Inspection. Viewed
at: http://www.customs.gov.cn/customs/302249/302266/302267/2369666/index.html.
23
Measures for the Inspection, Supervision and Administration of Imported Old Mechanical and
Electrical Products. Viewed at:
24
Measures for the Supervision and Administration of Inspection and Quarantine of Imported Solid
Waste Which Can Be Used as Raw Materials. Viewed at:
25
WTO document G/VAL/N/1/CHN/6, 12 April 2018.
- 49 -
China notified its Category A commitments, which cover the majority of measures, in June 201426,
and its Category B commitments in June 2017.27 China does not have any Category C commitments.
The authorities indicate that implementation of Category B clauses was accelerated and, in some
cases, achieved ahead of schedule. Notably, the "Single Window" clause was implemented in
July 2019, and the "establishment and publication of average release times" was implemented in
January 2020. According to the WTO TFA database, China fully implemented the Agreement ahead
of the original date of 22 February 2020.28 China updated official publication locations and contact
points with relevant information and participated in exchanges of experience within the Committee
on Trade Facilitation (it shared its AEO programme experience with the Committee in October 2018
and its single window experience in October 2019).29
3.18. In February 2020, the GACC issued 10 Measures to Cope with the Impact of the Epidemic and
Promote the Steady Growth of Foreign Trade in order to reduce the impact of COVID‑19 on the
Chinese economy and promote the steady growth of foreign trade when preventing and controlling
the epidemic (Box 3.1). Additionally, in March 2020, the GACC issued a List of Measures for
Coordinating Work to Prevent and Control the Epidemic at Ports and Facilitating Customs Clearance.
Reportedly, this list contains 50 measures to implement the decisions and arrangements on epidemic
prevention and control and the facilitation of customs clearance at ports, focusing on four aspects:
(i) preventing imported cases of COVID‑19; (ii) facilitating customs clearance; (iii) reducing import
and export costs; and (iv) ensuring the unimpeded operation of industrial chains and foreign trade
supply chains.30
Box 3.1 GACC trade facilitation measures
1. Simplification of business registration and help with clearance formalities. Applications for changes
to a business's registration information (except name changes) may be postponed until after the outbreak
ends. The GACC will provide more timely assistance to businesses (especially micro, small, and medium-sized
enterprises (MSMEs)) with import/export problems.
2. Expedited clearance of imported electromechanical equipment and raw materials urgently

needed for domestic production, including through increased use of inspection machines and minimized
used of laboratory testing of goods on strength of third-party certificates, test reports, or enterprise quality
and safety self-declarations.
3. Import facilitation of food and agricultural product imports. Expedited process to grant market
access to more categories of agri-food products from more countries and to register more establishments.
Shortening of quarantine approval process. Green lanes to be established at key ports to provide around-the-
clock clearance for foreign agri-food products on a reservation basis. Priority inspection of imported food and
agricultural products over other goods and priority testing of products suspected to contain pests or disease.
4. Support businesses in export expansion. The GACC optimizes of pre-export control and certification
services. Expedited administrative approval for registered exporters and training in dealing with technical
trade barriers.
5. Simplified sanitary approval for imported special medical supplies. Direct release by customs of
imported special medical supplies used for curing, preventing, and diagnosing COVID‑19 on the strength of
certificates issued by relevant competent authorities, provided the sanitary risk is controllable.
6. Simplified extension formalities for processing trade enterprises, in case of delayed resumption of
production.
7. Simplified write-off formalities and reduced on-site audits. The GACC handles write-off formalities
based on the inventory data provided by enterprises, without checking at the factory. If feasible, the GACC
conducts off-site audits by video or electronic data transmission to minimize interruption to enterprises'
production and operation.
8. Simplified and expedited administrative penalty procedures. The GACC handles law-breaking cases
involving anti-epidemic supplies in a fast and simple way, and should not detain the involved goods, items,
transportation conveyances or account documents under usual circumstances. The involved party's written
confession, if proven by key evidence such as inspection records can be used as evidence by the GACC.
26
WTO documents WT/PCTF/CHN/1, 1 June 2014; and G/TFA/N/CHN/1/Add.1, 24 November 2017.
27
WTO documents G/TFA/N/CHN/1, 6 June 2017; and G/TFA/N/CHN/1/Add.2, 14 February 2018.
28
29
All TFA notifications may be viewed at: https://tfadatabase.org/members/china.
30
GACC. Viewed at: http://www.customs.gov.cn/customs/xwfb34/302425/2892073/index.html.
- 50 -
9. Enhanced international coordination and steps to cope with external trade restrictions.
Monitoring, analysis, and publication of external trade restrictions by the GACC and provision of consultation
services.
10. Efficiency with support of "Internet + Customs". When a paper document is required for verification,
its electronic copy can be accepted by the GACC upon approval before the submission of the paper document.
Customs, through a new service hotline and media platforms, answers queries from enterprises and publishes
customs policies and measures.
Source: GACC. Viewed at: http://www.customs.gov.cn/customs/ztzl86/302414/302415/gmzyx/zcwj5/3358

972/index.html; and GACC, GACC Launches Facilitative Measures as Foreign-Trade Businesses Begin
to Resume Operations, 19 February 2020. Viewed at:
http://english.customs.gov.cn/Statics/8f0f8824-eef2-492b-ace6-77d84bf12f1f.html.
3.19. The authorities confirm that China's COVID‑19-related measures affecting goods, in the area
of trade facilitation, include: (i) a MOFCOM notice actively guiding and encouraging enterprises to
apply for import and export licences through a paperless process, further simplifying the materials
required for the paperless application for import and export licences, optimizing the application and
updating processes of electronic keys, and encouraging enterprises to apply for and update electronic
keys online; (ii) a Ministry of Agriculture and Rural Affairs (MARA) circular implementing
nine facilitation measures regarding three categories of agricultural administrative approval (licence
renewal, simplification of approval procedure, and optimization of approval process); and (iii) trade
facilitation measures through the holding of the 127 th Canton International Fair online.31
3.1.2 Rules of origin
3.20. China continues to apply preferential and non-preferential rules of origin.
3.21. Non-preferential rules of origin are used to apply the most-favoured nation (MFN) tariff rate;
ensure the origin of goods subject to anti-dumping, countervailing, and safeguard measures; ensure
that import quotas and tariff quota limits are imposed on specific countries; and determine the origin
of imported goods purchased by the Government. During the review period, the GACC simplified the
application process for certificates of non-preferential origin.32
3.22. Preferential rules of origin apply in accordance with the specifications of the various
preferential agreements signed by China. They are also used to grant preferential treatment to
imports from least developed countries (LDCs). In general, the criteria used to determine origin
include change in tariff classification, whether the good is wholly obtained in one party, regional
value content, processing operation, or other requirements. Most free trade agreements (FTAs)
provide for the possibility of bilateral cumulation. Since China's previous Review, rules of origin of
FTAs with Chile; Macao, China; and Georgia were notified to the WTO. 33 The main features of all of
China's preferential rules of origin in force are described in the Secretariat report for China's previous
Review.34 To facilitate customs regulation-compliant clearance, China extended its electronic
networking systems of origin, which enable the transmission of electronic data regarding certificates
of origin in real time; the systems now cover 16 countries and regions under 13 RTAs. 35
31
WTO, COVID‑19: Measures Affecting Trade in Goods. Viewed at:
https://www.wto.org/english/tratop_e/covid19_e/trade_related_goods_measure_e.htm.
32
This change was introduced through GACC Administrative Measures for the Issuance of Certificates of
Non-Preferential Origin, implemented through GACC Order No. 240, which amends various regulations. Viewed
at: www.customs.gov.cn/customs/302249/302266/302267/1880777/index.html. Filing procedures were
changed to simplify material submission requirements; applicants are no longer required to submit copies of
documents, including the business licence, registration form for foreign trade operators, and organization code
certificates, and they do not need to submit the original copies to be checked.
33
WTO documents G/RO/N/191, 20 January 2020; G/RO/N/187, 20 September 2019; and G/RO/N/171,
24 May 2018.
34
WTO document WT/TPR/S/375/Rev.1, 14 September 2018. Table A3.1 describes the main features of
the rules of origin under the Asia Pacific Trade Agreement and the Association of South East Asian Nations Free
Trade Agreement, as well as China's RTAs with Australia; Hong Kong, China; Macao, China; Chile; the Republic
of Korea; New Zealand; Pakistan; Singapore; Peru; Switzerland; Iceland; Georgia; and Costa Rica.
35
New systems that became operational during the review period were under China's RTAs with
Pakistan (online date of 30/04/2018); Chile (01/01/2019); Singapore (01/01/2019); ASEAN (Singapore,
01/11/2019; and Indonesia, 15/10/2020); Georgia (01/01/2020), and five LDCs (Bangladesh, Niger, Ethiopia,
Mozambique, and Timor-Leste on 18/08/2020).
- 51 -
3.1.3 Tariffs
3.1.3.1 Applied MFN tariffs
3.23. China's tariff structure is composed of MFN tariff rates, "agreement tariff rates", special
preferential tariff rates, general tariff rates, and tariff quota rates. In addition, interim tariff rates,
which are usually lower than MFN rates, are applied for a specific period of time (usually one year).36
3.24. China's applied MFN tariff in 2021 consists of 8,580 lines at the 8-digit level in the 2017
Harmonized System. Most tariff lines (87.4%) carry ad valorem tariffs.
One thousand eighty-one tariff lines (12.6% of all lines) were duty-free. Thirty-four tariff lines
(0.4 % of all lines) carry specific rates.
3.25. The simple average applied MFN rate in 2021 was 7.1%, compared with 9.3% in 2017, with
tariff-rate reductions in nearly all product categories. The tariff was higher for agricultural products
(WTO definition), at 12.7%, showing a notable decrease compared with 2017 and 2015 (Table 3.2).
The average applied tariff on non-agricultural products fell to 6.2% (from 8.5% in 2017 and 8.6%
in 2015). The percentage of tariffs that exceeded 15% (international tariff peaks) was 4.5%
(significantly lower than the 13.9% in 2017). The percentage of tariffs subject to domestic tariff
peaks was 1.9% (compared with 1.8% in 2017).
3.26. With respect to agriculture, the main decreases in tariff rates can be found under food
preparations. The tariff average under HS Chapter 16 (preparations of meat and fish) dropped from
10.4% in 2017 to 5.5% in 2021, and the maximum tariff rate dropped from 23% to 12%. The tariff
average under HS Chapter 19 (preparations of cereals, flour, starch, or milk) dropped from 17.5%
in 2017 to 9.0% in 2021, and the maximum tariff rate dropped from 30% to 10%. Under
HS Chapter 20 (preparations of vegetables, fruit, or nuts), the tariff average dropped from 20.1%
in 2017 to 6% in 2021.
3.27. Among the main products/product groups affected by decreases in tariff peaks were food
preparations, clothing and footwear (HS Chapters 62-64), articles of stone and cement
(HS Chapter 68), articles of precious metals (HS 7113 to HS 7117), motor vehicles (HS 8703), and
monitors and projectors (HS 8528).
Table 3.2 Tariff structure, 2015, 2017, and 2021

MFN applied Current Final
2015 2017a 2017b 2021a bounda,c boundc
Bound tariff lines (% of all tariff lines) 100.0 100.0 100.0 100.0 100.0 100.0
Simple average rate 9.5 9.5 9.3 7.1 9.6 9.6
WTO agricultural products 14.8 14.8 14.6 12.7 15.1 15.1
WTO non-agricultural products 8.6 8.6 8.5 6.2 8.8 8.7
Duty-free tariff lines (% of all tariff lines) 9.7 9.8 9.8 12.6 9.6 10.3
Simple average rate of dutiable lines only 10.5 10.5 10.3 8.1 10.7 10.7
Tariff quotas (% of all tariff lines) 0.6 0.6 0.6 0.5 0.5 0.5
Non-ad valorem tariffs (% of all tariff lines) 0.5 0.4 0.4 0.4 0.0 0.0
Domestic tariff "peaks" (% of all tariff lines)d 2.2 2.0 1.8 1.9 2.1 2.1
International tariff "peaks" (% of all tariff lines)e 14.4 14.6 13.9 4.5 15.5 15.3
Overall standard deviation of tariff rates 7.5 7.5 7.4 6.1 7.7 7.6
Coefficient of variation of tariff rates 0.8 0.8 0.8 0.9 0.8 0.8
Nuisance applied rates (% of all tariff lines)f 2.9 2.9 3.2 4.3 2.8 2.5
36
Agreement rates apply to imports from countries and customs territories with which China has
preferential trade agreements (Section 2). Special preference duty rates are unilateral preferences applied to
imports originating in LDCs with which China has a trade agreement. General rates apply to: products whose
origin cannot be determined; products from countries that do not have a reciprocal trade agreement with
China; non-WTO Members; and some territories of EU member States. If a country appears in several lists, the
most favourable duty rate applies, taking into account the rules of origin. Interim duties are fixed annually by
the Customs Tariff Commission, and usually apply from 1 January to 31 December of each year. Interim duties
are applied on an MFN basis and replace the MFN duties for the lines that are affected. Interim duty rates are
lower than the MFN rates, and in certain instances the interim duty rate applies to just part of a tariff line.
- 52 -
MFN applied Current Final

2015 2017a 2017b 2021a bounda,c boundc
Number of lines 8,285 8,547 8,547 8,580 8,580 8,580
Ad valorem rates (> 0%) 7,437 7,671 7,669 7,499 7,753 7,696
Duty-free rates 806 838 840 1,081 827 884
Specific rates 34 34 34 34 0 0
Alternate rates 3 3 3 3 0 0
Otherg 5 1 1 0 0 0
a As at 1 July. Tariff cuts implemented by the expansion of the Information Technology Agreement are
included.
b As at 1 December 2017. Tariff cuts fully applied at the 8-digit level (179 tariff lines) are included.
c Bound rates are based on the 2021 tariff schedule. Final bound rates are fully implemented by 2023.
d Domestic tariff peaks are defined as those exceeding three times the overall average applied rate.
e International tariff peaks are defined as those exceeding 15%.
f Nuisance rates are those greater than zero, but less than or equal to 2%.
g Rates involving either an ad valorem rate, if the price is below or equal to a certain amount, or a
compound rate, if the price is higher.
Note: Calculations are based on national tariff line level (8-digit), excluding in-quota rates and including
ad valorem equivalents (AVEs) for non-ad valorem rates provided by the authorities.
Interim duty rates are used for the calculations when fully applied at the 8-digit level.
Source: WTO Secretariat calculations, based on data provided by the authorities.
3.28. In 2021, China's applied MFN tariff contained 50 different ad valorem tariff rates (compared
with 78 in 2017). These ranged from 0-65%, with a standard deviation of 6.1 (Table A3.1).
3.29. Over 87% of all tariffs ranged from duty-free to 10%, higher than the 71% reported in 2017,
and in tandem the share of lines with rates higher than 10% decreased significantly. In 2021, 1.9%
of tariff lines had rates of over 20% (Chart 3.1). China's highest tariffs of 65% apply to 20 tariff
lines (wheat and meslin; maize, other than seed; rice; wheat and meslin flour; cereal groats, meal
and pellets; certain worked cereal grains (of maize and of barley); and vermouth and other wine
flavoured with plants (in containers holding more than 2 litres)). Rates of 57% apply to four tariff
lines (other manufactured tobacco (HS 2403)). Rates of 50% apply to 10 tariff lines (7 to cane or
beet sugar and chemically pure sucrose in solid form (HS 1701) and 3 to mineral or chemical
fertilizers (HS 3105)).
Chart 3.1
Chart 3.1 Distribution
Distribution of MFN applied
of MFN tariff rates,
applied 2015,
tariff 2017,
rates, and 2021
2015, 2017, and 2021
Number of tariff lines
5,000
51.9
4,500
MFN 2015 (8,285 tariff lines)
4,000 MFN 2017 (8,547 tariff lines)
43.1
42.8 (as at 1 December)
3,500
MFN 2021 (8,580 tariff lines)
(as at 1 July)
3,000
2,500
23.1
2,000
18.4
17.5
1,500 15.2 15.1
12.6
1,000 9.7 9.8
7.9 8.4 7.8
500 3.8 4.2

2.5 2.2 1.9 1.1
0.8
0
Duty free >0-5 >5-10 >10-15 >15-20 >20-25 >25
Tariff rates (%)
Note:
Note: Figures
Figures aboveabove
the barsthe bars
denote denote
the share ofthe
totalshare
lines. of total
2015 lines.
tariff 2015
schedule tariffonschedule
is based is based and
HS12 nomenclature, on
2017HS12 nomenclature,
and 2021 on HS17. and 2017 and 2021 on HS17.
Source: WTO
Source: Secretariat
WTO calculations,
Secretariat based on data
calculations, provided
based by theprovided
on data authorities.
by the authorities.
- 53 -
3.30. Between 2017 and 2021, average tariff rates decreased across all HS sections except for
03 (fats and oils) and 19 (arms and ammunition). The most significant drops were seen in
HS Sections 04 (prepared food, beverages); 11 (textiles and articles); 12 (footwear and headgear);
14 (precious stones, etc.); 17 (transport equipment); 20 (miscellaneous manufacturing); and
21 (works of art, etc.) (Chart 3.2).
Chart 3.2 Average

Chart 3.[CHN] Averageapplied tariff
applied tariff rates,
rates, bysection,
by HS HS section, 2017
2017 and 2021and 2021
20%
MFN 2017 (as at 1 December) MFN 2021 (as at 1 July)
18%
16%
14%
12%
10%
8%
6%
4%
2%
0%
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 Total
01 Live animals & products 07 Plastic & rubber 13 Articles of stones 19 Arms & ammunition
02 Vegetable products 08 Hides & skins 14 Precious stones, etc. 20 Miscellaneous manufacturing
03 Fats & oils 09 Wood & articles 15 Base metals & products 21 Works of art, etc.
04 Prepared food, beverages 10 Pulp, paper, etc. 16 Machinery
05 Mineral products 11 Textiles & articles 17 Transport equipment
06 Chemicals & products 12 Footwear, headgear 18 Precision instruments
Note: Excluding
Note: Excluding in-quota
in-quota rates
rates and and including
including AVEs for AVEs
non-adfor non-ad
valorem valorem
rates. rates.
Interim dutyInterim duty
rates are usedrates are used
for the
for the when
calculations calculations when
fully applied atfully applied
the 8-digit at the 8-digit level.
level.
Source: WTO
Source: WTO Secretariat
Secretariat calculations,
calculations, basedbased onprovided
on data data provided by the authorities.
by the authorities.
3.1.3.2 Tariff rate quotas (TRQs)
3.31. Wheat (7 tariff lines), corn (5 lines), rice (14 lines), sugar (7 lines), wool and wool top
(9 lines), cotton (2 lines), and chemical fertilizer (3 lines) are subject to TRQs (Section 4.1.2).
3.1.3.3 Bound tariffs
3.32. Upon its entry into the WTO, China bound 100% of its tariffs at ad valorem rates ranging from
0-65% for agriculture (WTO definition) and from 0-50% for non-agricultural products. The simple
average current bound rate is 9.6% (15.1% for agriculture and 8.8% for non-agricultural goods);
final bound rates must be implemented by 2023. While all tariffs were bound at ad valorem rates,
applied MFN tariffs on 37 tariff lines are non-ad valorem. At the time of China's previous Review,
the authorities indicated that ad valorem equivalents do not exceed the bound tariff rate in practice,
as the lower rate is applied.
3.1.3.4 Preferential rates
3.33. China applies preferential tariffs under its preferential (PTAs) and regional trade agreements
(RTAs) (Section 2.3.2). Hong Kong, China and Macao, China face the lowest average tariff duties,
followed by Chile and New Zealand (Table 3.3). The share of duty-free tariff lines in China's RTAs
ranges between 0.04% (RTAs with Hong Kong, China and Macao, China) and 6.6% (Separate
Customs Territory of Taiwan, Penghu, Kinmen and Matsu (Chinese Taipei)). Data on utilization of
preferential tariffs under RTAs and PTAs were not available.
3.34. China also grants preferential tariff treatment to imports from LDCs that have established
diplomatic relations with China, and completed the exchange of diplomatic notes. By February 2021,
- 54 -
China had implemented zero tariffs on 97% of tariff lines for these 41 LDCs. Submissions have been
made by LDCs and China to the WTO Committee on Rules of Origin regarding utilization rates of
LDC exports under China's LDC preferential trade arrangement.37
Table 3.3 Summary analysis of the Chinese preferential tariff, 2020

Total WTO agriculture WTO non-agriculture
Average Duty-free Average Duty-free Average Duty-free
(%) ratesa (%) (%) ratesa (%) (%) ratesa (%)
MFN 7.1 12.6 12.7 8.9 6.2 13.2
Agreement tariff rates
APTAb 6.5 12.8 11.8 9.8 5.7 13.3
ASEANc 0.6 94.0 1.6 92.5 0.4 94.3
Hong Kong, China CEPAd 0.04 99.2 0.0 100.0 0.05 99.1
Macao, China CEPAd 0.04 99.2 0.0 100.0 0.05 99.1
Chinese Taipei ECFAe 6.6 19.9 12.5 10.3 5.7 21.4
Pakistan FTA 3.8 46.3 8.9 27.8 3.0 49.2
Chile FTA 0.4 97.6 1.9 94.9 0.1 98.0
New Zealand FTA 0.4 97.9 1.9 94.8 0.1 98.4
Singapore FTA 4.1 45.8 8.4 43.1 3.4 46.2
Peru FTA 0.9 93.4 2.5 89.2 0.6 94.0
Costa Rica FTA 0.5 95.9 2.5 86.6 0.2 97.4
Iceland FTA 0.5 96.0 2.6 90.9 0.2 96.8
Switzerland FTA 2.0 62.2 5.0 39.6 1.6 65.8
Australia FTA 0.5 94.6 2.5 87.2 0.2 95.8
Korea, Rep. of FTA 3.5 42.1 7.1 24.9 2.9 44.8
Georgia FTA 0.8 90.8 3.3 80.6 0.4 92.4
Mauritius FTA 1.6 87.9 4.6 78.0 1.1 89.5
Least developed preferential rates
Special preferential tariff agreement for:
Bangladesh and Lao PDR
under APTA 7.0 13.9 12.6 9.1 6.1 14.7
Cambodia 6.5 18.7 10.1 30.0 6.0 16.9
Lao PDR 6.8 16.4 10.9 23.8 6.1 15.2
Myanmar 6.8 16.5 11.9 14.7 6.0 16.8
LDC1 (40 countries) 0.6 96.6 2.3 93.5 0.3 97.0
LDC2 (Benin, Timor-
Leste, Myanmar) 0.8 94.4 2.4 92.3 0.5 94.8
Memorandum item:
Bangladeshf 0.5 96.6 2.3 93.5 0.3 97.0
Cambodiag 0.4 97.1 1.4 94.6 0.2 97.5
Lao PDRh 0.4 97.1 1.4 94.7 0.2 97.5
Myanmari 0.5 95.7 1.4 94.6 0.3 95.8
Singaporej 0.6 94.1 1.5 92.6 0.4 94.3
Korea, Rep. ofk 3.4 42.1 7.1 24.9 2.8 44.8
a Duty-free lines as a percentage of total tariff lines.

b Preferential rates under the Asia Pacific Trade Agreement (APTA) are applicable to the Republic of
Korea, Sri Lanka, Bangladesh, India, and Lao People's Democratic Republic (PDR).
c Preferential rates under the Association of South East Asian Nations (ASEAN) Agreement are
applicable to Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, the
Philippines, Singapore, Thailand, and Viet Nam.
d Closer Economic Partnership Arrangement (CEPA).
e Cross-straits Economic Co-operation Framework Agreement.
f Based on lowest rates taken among APTA, Bangladesh and Lao PDR under APTA, and LDC1.
g Based on lowest rates taken among ASEAN, special preferential for Cambodia under APTA,
and LDC1.
h Based on lowest rates taken among APTA, ASEAN, Bangladesh and Lao PDR under APTA, special
preferential for Lao PDR, and LDC1.
i Based on lowest rates taken among ASEAN, special preferential for Myanmar, and LDC2.
j Based on lowest rates taken among ASEAN, and Singapore FTA.
k Based on lowest rates taken among APTA, and the Republic of Korea FTA.
AVEs for non-ad valorem rates provided by the authorities. Interim duty rates are used for the
calculations when fully applied at the 8-digit level.
37
WTO document G/RO/W/192, 9 October 2019; and G/RO/W/197, 20 July 2020.
- 55 -
3.1.3.5 Tariff exemptions or concessions
3.35. Tariff exemptions apply to the following imports: (i) goods in a single consignment on which
the duties are estimated to be less than CNY 50; (ii) advertising material and samples of no
commercial value; (iii) goods donated by international organizations or foreign governments;
(iv) goods damaged prior to customs clearance; (v) fuels and provisions to be used by vessels that
are in transit in China; and (vi) goods imported for daily use and valued at less than CNY 8,000 per
person per day. Tariff concessions can apply to goods that are processed and exported within a
specific period of time.
3.36. In addition, duty exemptions and reductions may apply in accordance with the relevant
regulations by the State Council, and on goods imported into designated areas, for specific
enterprises for a specific use.38 For instance, imported commodities are exempt from import duties
and other taxes when entering special customs supervision areas. Various customs duty exemptions
in place for the period 2017-18 were notified to the WTO Committee on Subsidies and Countervailing
Measures.39 Information was not available on any customs duty exemptions or reductions introduced
since 2019; the authorities indicate that there were no available data on revenue forgone from tariff
concessions or exemptions over the same period.
3.1.4 Other charges affecting imports
3.37. As noted in previous Reviews, other charges affecting imports are the value added tax (VAT),
the consumption tax, the Automobile Purchase Tax, and (until March 2020) port construction fees.
To support COVID‑19 prevention and control, companies and individual businesses are exempt from
VAT and consumption tax (and various other charges that do not affect imports 40) for goods
self-produced, processed through commissioning, purchased, or donated for the purposes of curbing
the spread of COVID‑19, through public welfare social organizations, People's Governments and their
departments at or above the country level and other state entities, or directly to hospitals
undertaking the task of COVID‑19 prevention and control. This exemption was effective from
1 January 2020.41
3.1.4.1 Value added tax (VAT)
3.38. In 2019, VAT accounted for 39.5% of total tax revenue (up from 39.1% in 2017). In
May 2018, VAT tiers were reduced to 16%, 10%, and 6% (from 17%, 11%, and 6% in 2017). 42
Effective from April 2019, VAT was further reduced to 13%, 9%, and 6% (Table 3.4).43
3.39. As notified to the WTO, preferential VAT policies were in place during the period 2017-18 for:
(i) incubators of science and technology enterprises; (ii) science and technology parks of national
universities; (iii) integrated utilization of resources; (iv) new-type wall materials;
(v) photovoltaic-generated electricity; (vi) hydropower electricity; (vii) small enterprises making
little profit; (viii) enterprises that employ disabled people; (ix) imported products exclusively used
by disabled people; (x) products for disabled people; (xi) anti-HIV-AIDS medicine; (xii) tea sold in
the border areas; (xiii) imported products for the purpose of replacing the planting of poppies;
(xiv) imports of seeds (seedlings); (xv) the integrated circuit industry; (xvi) large passenger
aircraft; and (xvii) anti-cancer drugs.44 Pending China's submission of its new notification to the
WTO Committee on Subsidies and Countervailing Measures, information was not provided by the
authorities regarding which preferential VAT policies remain in place. From 1 January 2020 to
31 December 2020, taxpayers were exempt from VAT on income obtained by providing film
38
Customs Law, Article 57.
39
WTO document G/SCM/N/343/CHN, 19 July 2019.
40
These taxes/charges are the urban maintenance and construction tax, the educational surtax, and
local education surcharges.
41
MOFCOM and State Taxation Administration, Announcement No. 9, 2020, on the Relevant Donation
Tax Policies Supporting the Prevention and Control of the COVID‑19 Outbreak.
42
State Taxation Administration. Viewed at:
http://www.chinatax.gov.cn/eng/c101270/c101271/c5094511/content.html.
43
KPMG, China's VAT System Takes Significant Steps Forward in Applying International Best Practice
VAT Policies, 25 March 2019. Viewed at: https://home.kpmg/cn/en/home/insights/2019/03/china-tax-alert-
12.html.
44
- 56 -
projection services.45 From 1 January 2019 to 31 December 2022, taxpayers are exempt from VAT
on goods donated for poverty alleviation, under certain conditions.46
Table 3.4 VAT rates, December 2020

Rate Products and services
13% (1) Rate applied for taxpayers selling goods, labour services, or tangible movable property
leasing services or imported goods, except as otherwise specified in items (2), (4), and (5).
9% (2) Rate applied to taxpayers selling transportation, postal, basic telecommunications,
construction, or immovable leasing services, selling immovables, transferring the right to use
the land, or selling or importing: (i) grain and other agricultural products, edible vegetable oil,
and edible salt; (ii) tap water, heating, cooling, hot water, coal gas, liquefied petroleum gas,
natural gas, dimethyl ether, methane gas, and coal products for residential use; (iii) books,
newspapers, magazines, audio-visual recordings, and electronic publications; (iv) feed,
fertilizer, pesticide, agricultural machinery, and agricultural films; and (v) other goods
specified by the State Council.
6% (3) Rate applied to taxpayers selling services or intangible assets, except as otherwise
specified in items (1), (2), and (5).
Zero-rated (4) Rate applied to taxpayers exporting goods, except as specified by the State Council, and
to domestic entities and individuals selling services or intangible assets across national borders
within the scope prescribed by the State Council.
Exempt (5) VAT exemptions apply to: self-produced agricultural products sold by agricultural
producers; contraceptive medicines and devices; antique books; apparatus and equipment
imported and directly used for scientific research, experiments, and teaching; imported
materials and equipment from foreign governments and international organizations as
gratuitous aid; articles exclusively for persons with disabilities that are directly imported by
organizations of persons with disabilities; and self-used articles sold by the seller.
Source: Interim Regulation on Value Added Tax (State Council Order No. 691), Articles 2 and 15; Notice of
the Ministry of Finance and State Taxation Administration on the Relevant Policies on the
Streamlining and Combination of Value-added Tax Rates (Cai Shui No. 37, 2017); and
Announcement of the Ministry of Finance, the State Taxation Administration, and the GACC on
Relevant Policies for Deepening the Value-added Tax Reform (Announcement No. 39, 2019).
3.1.4.2 Consumption (excise) tax
3.40. In 2019, the consumption (excise) tax (CT) accounted for 8% of total tax revenue (up from
7.1% in 2017). The CT continues to be levied on products that are considered to be harmful to
human health, social order, and the environment; luxury goods; high-energy consumption and
high-end products; and non-renewable and non-replaceable petroleum products. Tax rates vary
depending on the product; they can be ad valorem, specific, or compound. There have been no
changes to excise tax rates since China's previous Review (Table 3.5). As notified to the WTO,
preferential CT rates were available for petroleum products produced with comprehensive utilization
of resources, imported products exclusively used by disabled people, and refined oil. 47 Pending
China's submission of its new notification to the WTO's Committee on Subsidies and Countervailing
Measures, information was not provided by the authorities regarding new preferential CT rates or
exemptions recently introduced.
Table 3.5 Consumption tax, March 2021

Product Tax rate
Cigars 36%
Cigarettes
Production procedure
Price higher than CNY 70 per carton 56% plus CNY 0.003/cigarette
Price lower than CNY 70 per carton 36% plus CNY 0.003/cigarette
Wholesale 11% plus CNY 0.005/cigarette
Cut tobacco 30%
45
Announcement of the Ministry of Finance and State Taxation Administration on the Tax and Fee
Support Policies for the Film Industry and Other Industries (Announcement No. 25, 2020).
46
Announcement of the Ministry of Finance, the State Taxation Administration, and the State Council
Leading Group Office of Poverty Alleviation and Development on the Policy of Exemption of Value-Added Tax on
Goods Donated for Poverty Alleviation (Announcement No. 55, 2019).
47
- 57 -
Product Tax rate

Alcoholic drinks and liquor
White spirit distilled from grain, potatoes or grapes 20% plus CNY 0.5/500 g (or per 500 ml)
Yellow rice wine CNY 240/tonne
Beer made from malt, whose factory price of a value over CNY 250/tonne
or equal to CNY 3,000 (VAT excluded) per tonne
Beer made from malt, whose factory price of a value of less CNY 220/tonne
than CNY 3,000 (VAT excluded) per tonne
Other fermented alcoholic beverages 10%
Luxury cosmetics 15%
Precious jewellery, pearls, jade, and precious stone
Gold, silver platinum jewellery, and diamonds 5%
Pearls, jade, and precious stones 10%
Firecrackers and fireworks 15%
Gasoline
Motor gasoline and aviation gasoline (containing > 0.013 g CNY 1.52/litre
of lead per litre)
Motor gasoline and aviation gasoline (containing < 0.013 g CNY 1.52/litre
of lead per litre)
Diesel oil CNY 1.2/litre
Aviation kerosene CNY 1.2/litre
Naphtha CNY 1.52/litre
Solvent CNY 1.52/litre
Lubricants CNY 1.52/litre
Fuel oil CNY 1.2/litre
Motor vehicles
Passenger vehicles with less than 9 seats with a cylinder
capacity of:
- less than 1,000 ml 1%
> 1,000 ml, but < 1,500 ml 3%
> 1,500 ml, but < 2,000 ml 5%
> 2,000 ml, but < 2,500 ml 9%
> 2,500 ml, but < 3000 ml 12%
> 3,000 ml, but < 4,000 ml 25%
- 4,000 ml or more 40%
Middle-size or light passenger vehicles for commercial 5%
purposes
"Ultra-luxurious" vehicles In addition to the CT for the production
(import) based on the above rate, the CT for
retail is levied at 10%
Motorcycles
Those with a cylinder capacity of not more than 250 ml 3%
Those with a cylinder capacity of more than 250 ml 10%
Yachts 10%
Luxury watches, with a unit price higher than CNY 10,000 20%
Golf equipment 10%
Solid wood flooring 5%
Disposable chopsticks 5%
Batteries 4%
Paint 4%
3.1.4.3 Automobile Purchase Tax
3.41. Under the 2019 Automobile Purchase Tax Law, China levies a 10% tax on domestically
produced and imported vehicles.48 The 2019 Law replaces the 2000 Provisional Regulations Vehicle
Purchase Tax. For domestic production, the tax is applied to the full price paid by the taxpayer to
the seller, excluding VAT. For imported vehicles, the taxable price is the duty-paid price plus customs
48
Automobile Purchase Tax Law. Viewed at: http://www.npc.gov.cn/englishnpc/c23934/202009/
f0e542fd054f412c9af8ceef9298c573.shtml. Changes introduced by the 2019 Law: (i) adjusted the scope of
taxation (from automobiles, motorcycles, trams, trailers, and agricultural transport vehicles to automobiles,
trams, automobile trailers, and motorcycles with an engine displacement of more than 150 ml; and adjusted
the types of taxable vehicles; (ii) abolished the maximum taxable price requirement; (iii) added the statutory
exemption items; (iv) cancelled the paper tax clearance certificate of vehicle purchase tax; (v) revised the
definition of non-transportation vehicles with fixed items; (vi) upgraded the legal level of tax refund provisions;
and (vii) added provisions related to the coordination mechanism.
- 58 -
duty and CT. It is applied to the cost of the vehicle including the import tax and CT. 49 The tax does
not apply to urban rail vehicles (e.g. subways and light railways), special wheeled machinery vehicles
(e.g. loaders, graders, excavators, and bulldozers), cranes, forklifts, and electric motorcycles. Since
2014, the tax has been exempted for certain new energy vehicles (NEVs); this exemption will remain
in place until end-2022. NEVs exempt from the tax/levy are administered by the Ministry of Industry
and Information Technology (MIIT) and the State Taxation Administration through the regularly
updated Catalogue of Models of New Energy Vehicles Exempted from Automobile Purchase Tax. Both
domestically produced and imported NEVs that meet all the specific requirements (which relate to,
inter alia, technical requirements and testing and services standards) can apply to be listed in the
Catalogue, and all the Catalogue-listed models can enjoy tax exemptions.50 As notified to the WTO,
other preferential tax rates applied in 2017 and 2018 to urban public transportation enterprises that
purchase public buses and trolleybuses, low emission cars, and trailers.51 Pending China's
submission of its new notification to the WTO Committee on Subsidies and Countervailing Measures,
information was not available on whether these preferential tax policies remain in place or if any
new preferential tax rates/exemptions have been recently introduced.
3.1.4.4 Port construction fees
3.42. Until 1 March 2020, China levied port construction fees on imported and exported goods. 52
For domestic export containers and inland containers, the fees were CNY 32 per 20-foot container
and CNY 48 per 40-foot container. For foreign import and export containers, the fees were
CNY 64 per 20-foot container and CNY 96 per 40-foot container. The fee for other non-standard
containers, except 20-foot and 40-foot containers, was levied according to that of similar types of
containers (for non-standard containers less than 30 feet, the fee was levied according to that of
20-foot containers; for non-standard containers of 30 feet and above, the fee was levied according
to that of 40-foot containers). The authorities indicate that a temporary decision was taken not to
collect these fees from 1 March to 31 December 2020, followed by a permanent decision to abolish
fees from 1 January 2021.
3.1.5 Import prohibitions, restrictions, and licensing
3.43. China continues to classify imports into three categories: not restricted, restricted, and
prohibited. The import of restricted goods is administered through licences or import quotas,
although the latter were not applied during the review period. The licensing system does not
differentiate between the origins of products unless otherwise provided for in RTAs entered into
by China.53
3.1.5.1 Import prohibitions
3.44. According to the Foreign Trade Law (last amended in 2016), China may maintain import
prohibitions on the grounds of protection of human health or safety, protection of the lives or health
of animals and plants, protection of the environment, and implementation of measures related to
the import or export of gold or silver.
3.45. China notified to the WTO its import prohibitions in place for the period 2018-20 (Table 3.6).
These prohibitions applied to certain toxic substances and wild animal products; certain old/second-
hand mechanical and electrical equipment; certain hazardous chemicals, pesticides, and persistent
organic pollutants; mercury-added products; certain solid wastes; ractopamine; certain types of
filament lamp; and charcoal imported from Somalia. This list of prohibited products is also contained
49
For full details, see Automobile Purchase Tax Law, Article 6.
50
The exemption criteria for the period 2017-20 are contained in the Announcement of the Ministry of
Finance, the State Taxation Administration, the MIIT, and the Ministry of Science and Technology on the
Exemption of Automobile Purchase Tax for New Energy Vehicles (Announcement No. 172, 2017). Seemingly,
the exemption was extended until end-2022. Global Times, "China Scraps Vehicle Purchase Tax for all NEVs",
22 April 2020. Viewed at: https://www.globaltimes.cn/content/1186457.shtml#:~:text=China%20has%20al
ready%20scrapped%20the,to%20all%20NEVs%20this%20time.
51
52
Ministry of Finance and Ministry of Transport Administrative Measures for the Collection and Use of
Port Construction Fees (Cai Zong No. 2011, 2019).
53
WTO document G/LIC/N/3/CHN/18, 30 January 2020.
- 59 -
in MOFCOM's Catalogue of Commodities Subject to Import Prohibition.54 In 2018, MOFCOM and the
GACC adjusted the list of used mechanical and electrical products prohibited from import, by
removing from the Catalogue used mechanical and electrical products such as aircraft engines, ship
engines, non-medical X-ray equipment, and computer gamespot.55
Table 3.6 Import prohibitions notified to the WTO for period 2018-20
WTO
Tariff line code(s) affected, based on justification National legal basis and
Product
HS17 and grounds entry into force
for restriction
Certain toxic ex0506, ex0507, ex1302, ex2903 Article XX of Former Ministry of Foreign
substances and GATT 1994 Trade and Economic
wild animal Cooperation (MOFTEC)
products Announcement No. 19,
2001
Certain ex7311, ex7321, ex7613, ex8402, ex8403, Article XX of MOFTEC, GACC, and AQSIQ
old/second-hand ex8404, ex8416, ex8417, ex8519, ex8520, GATT 1994 Joint Announcement
mechanical and ex8521, ex9018, ex9022, ex9504, ex8407, No. 37, 2001
electrical 84078408, 87
equipment
Certain hazardous ex2524, ex2903, ex2908, ex2910, ex2915, Article XX of MOFCOM, GACC, and
chemicals, ex2918, ex2919, ex2921, ex2924, ex2925, GATT 1994, the former State Environmental
pesticides, ex2932, ex2914, ex2909, ex2920, ex3808, Rotterdam Protection Administration
persistent organic ex3824, ex8506, ex8535, ex8536, ex8539, Convention, the (SEPA) Joint Announcement
pollutants, and ex3304, ex3401, ex3808, ex9025, ex9026, Stockholm No. 116, 2005; MOFCOM,
mercury-added ex9018 Convention, GACC, and Ministry of
products and the Ecology and Environment
Minamata (MEE) Joint Announcement
Convention No. 73, 2020
Certain solid ex0501, ex0502, ex0505, ex0506, ex0507, Article XX of Ministry of Environmental
wastes (also ex0511, ex1522, ex1703, ex2517, ex2525, GATT 1994, the Protection (MEP), MOFCOM,
including other ex2530, ex2618, ex2619, ex2620, ex2621, Basel National Development and
solid waste of ex2710, ex2713, ex2804, ex3006, ex3804, Convention Reform Commission
which tariff lines ex3825, ex4004, ex4017, ex4115, ex4707, (NDRC), GACC, and AQSIQ
unspecified) ex6309, ex6310, ex7001, ex7112, ex7401, Joint Announcement
ex7802, ex8102, ex8105, ex8107, ex8110, No. 39, 2017
ex8111, ex8112, ex8548, ex2520, ex2524,
ex6806, ex8415, ex8418, ex8450, ex8469
to ex8473, ex8508-ex8510, ex8516,
ex8517, ex8518, ex8539, ex9504, ex8519
to ex8531, ex8532 to ex8534, ex8540 to
ex8542, ex9018-ex9022, ex84, ex85, ex90,
and other solid waste unspecified ex3915,
ex5103, ex5104, ex5202, ex5505
Certain solid ex2618, ex2619, ex3915, ex7204, ex7404, Article XX of MEE, MOFCOM, NDRC, and
wastes ex7602, ex8908 GATT 1994, the GACC Joint Announcement,
Basel No. 6, 2018
Convention
Certain solid ex4401, ex4501, ex7204, ex8101, ex8104, Article XX of MEE, MOFCOM, NDRC, and
wastes ex8106, ex8108, ex8109, ex8112, ex8113 GATT 1994, the GACC Joint Announcement,
Basel No. 6, 2018
Convention
54
Catalogue of Goods Prohibited from Import (1st Batch), MOFCOM Announcement No. 19, 2001.
Viewed at: http://www.mofcom.gov.cn/article/b/e/200207/20020700031637.shtml; 3rd Batch, MOFCOM,
GACC, and State Administration of Environmental Protection Announcement No. 36, 2001. Viewed at:
http://www.mofcom.gov.cn/article/b/c/200404/20040400209990.shtml; 4th Batch and 5th Batch, MOFCOM,
GACC, and State Administration of Environmental Protection Announcement No. 25, 2002. Viewed at:
http://www.mofcom.gov.cn/article/b/c/200404/20040400205769.shtml; 6th Batch, MOFCOM, GACC, and State
Administration of Environmental Protection Announcement No. 116, 2005. Viewed at: http://www.mofcom.
gov.cn/article/b/c/200602/20060201575919.shtml; and Adjustment of Catalogue of Goods Prohibited from
Import (3rd Batch), MOFCOM, GACC, and State Administration of Environmental Protection Announcement
No. 73, 2004. Viewed at: http://www.mofcom.gov.cn/article/b/c/200412/20041200313887.shtml.
55
MOFCOM and GACC Announcement on Matters Concerning Adjustments to the Catalogue of Used
Machinery Items Prohibited from Import No. 106, 2018. Viewed at:
http://www.mofcom.gov.cn/article/b/c/201812/20181202821859.shtml. The Catalogue of Goods Prohibited
from Import (2nd Batch) issued by MOFCOM, the GACC, and the General Administration of Quality Supervision,
Inspection and Quarantine of 27 December 2001 was concurrently repealed. "Gamespot" refers to video games
on a TV receiver, video games or other game consoles operated by coins, and other video games.
- 60 -
WTO
Tariff line code(s) affected, based on justification National legal basis and
Product
HS17 and grounds entry into force
for restriction
Ractopamine 29225020 Article XX of MOFCOM and GACC Joint
GATT 1994 Announcement No. 110,
2009
Certain type of ex8539 Article XX of NDRC, MOFCOM, GACC,
filament lamp GATT 1994 State Administration for
Industry and Commerce
(SAIC), and AQSIQ Joint
Announcement No. 28,
2011
Charcoal imported 4402 Article XXI of MOFCOM Announcement
from Somalia GATT 1994, No. 27, 2012
United Nations
S/RES/2036
(2012)
Source: WTO document G/MA/QR/N/CHN/5/Rev.1, 15 February 2019; and information provided by the
authorities.
3.46. Since 1 January 2021, imports of all solid waste products have been prohibited, and the
previous regime for allowing imports of certain wastes under licensing conditions has been
terminated.56 These wastes were contained in the Catalogue of Restrictive Solid Waste (that can be
used as raw materials) and the Catalogue of Non-restrictive Solid Waste. During the review period,
questions and concerns about China's changes to measures restricting and prohibiting imports of
solid waste were raised in the WTO Committee on Import Licensing by the European Union, the
United States, Canada, the Republic of Korea, Australia, and Japan. Concerns related to, inter alia,
the impact of these measures on global recycling processing capacity, and the apparent
non-application of the same bans and restrictive contaminant standards to domestically sourced
solid wastes. China was urged to ensure transparency by notifying measures, both introduced and
planned, and to consider less trade-restrictive measures. In response, China has drawn attention
to, inter alia, pollution in China and the imperative of limiting the negative effects of solid waste. 57
Certain recycling materials for brass, iron-steel materials, copper, and cast aluminium alloys may
be imported if they meet the required standards.58
3.1.5.2 Import licensing requirements
3.47. China's import licensing system includes automatic and non-automatic import licences. In
addition, licences are used to allocate TRQs (Section 4.1.2). Furthermore, China applies import
licences to specific dual-use substances for the purposes of safeguarding national security and public
interest and under relevant international agreements.59 Most import licensing requirements are in
HS Sections 17 (transport equipment) and 3 (animal/vegetable fats and oils) (Chart 3.3).
56
Ministry of Ecology and Environment, MOFCOM, NDRC, and GACC Announcement on Relevant Issues
Regarding Complete Prohibition on Imported Solid Waste (Announcement No. 53, 2020). Viewed at:
https://www.mee.gov.cn/xxgk2018/xxgk/xxgk01/202011/t20201125_809835.html.
57
WTO documents G/LIC/M/50, 15 January 2020; G/LIC/M/49, 21 August 2019; G/LIC/M/48, 14 March
2019; and G/LIC/M/47, 25 September 2018.
58
MEE, Announcement on Issues Related to Standardizing the Management on the Imports of Recycling
Materials for Brass, Recycling Materials for Copper and Recycling Materials for Cast Aluminium Alloys. Viewed
at: https://www.mee.gov.cn/xxgk2018/xxgk/xxgk01/202010/t20201019_803869.html. The texts of the
relevant national standards may be viewed at: http://openstd.samr.gov.cn.
59
WTO document G/LIC/N/3/CHN/18, 30 January 2020; and GACC Announcement No. 68, 2019, on the
Issuance of the Catalogue of Dual-Use Items and Technologies Subject to Import and Export Licensing. Viewed
at: http://cys.mofcom.gov.cn/article/zcgz/201912/20191202927099.shtml.
- 61 -
Chart 3.[M licensing] Import licensing by HS section, 2020

Chart 3.3 Import licensing by HS section, 2020
% of HS section
40
Automatic import licensing HS section
35 01 Live animals and products
Non-automatic import licensing 02 Vegetable products
03 Animal/vegetable fats and oils
30 04 Prepared food products
05 Mineral products
25 06 Chemicals and products thereof
10 Pulp, paper and paperboard
11 Textiles and clothing
20
15 Base metals
16 Machinery and electrical equipment
15 17 Transport equipment
18 Precision material
10
0
01 02 03 04 05 06 10 11 15 16 17 18
Note: Calculations are based on the 2020 tariff schedule at 8-digit level.
Note: Calculations are based on the 2020 tariff schedule at 8-digit level.
Source: WTO calculations, based on data provided by the authorities.
3.1.5.2.1 Automatic import licensing requirements
3.48. A Catalogue of Goods Subject to Automatic Import Licensing is issued annually.60 All
commodities listed in the Catalogue can be imported freely; automatic import licences are
maintained only for monitoring purposes. In 2020, 24 categories of goods were subject to automatic
import licensing requirements implemented by MOFCOM (comprising 356 tariff lines at the
HS 10-digit level)61, and a further 18 categories of goods (comprising 206 tariff lines at the
HS 10-digit level)62 were subject to automatic import licensing requirements, implemented by
provincial-level local competent commercial departments or local and departmental
electromechanical offices, entrusted by MOFCOM. Changes to the Catalogue during the review period
involved the removal of licensing requirements for 15 product types totalling 118 HS codes, including
steam turbines and automobile products63, and the cancellation of automatic licensing measures for
bauxite and aluminium oxide (two HS codes) in January 2020.
3.49. There have been no major changes in the application procedures and terms of automatic
import licences since the previous Review.64 The validity of an automatic import licence is
six months; it can be extended in certain cases. Applications can be filed with MOFCOM or its
entrusted institutions. Licence applications shall be immediately approved by the issuing authority
(or within a maximum of 10 working days under special circumstances). Automatic import licences
60
Catalogue of Goods Subject to Automatic Import Licensing (2020), MOFCOM and GACC Joint
Announcement No. 63, 2019. Viewed at:
http://images.mofcom.gov.cn/wms/202001/20200108224418706.pdf.
61
These categories are beef; pork; lamb; fresh milk; milk powder; cassava; barley; sorghum;
soybeans; rapeseed; sugar (out-of-quota); corn distillers grains; soybean meal; tobacco; crude; refined oil;
fertilizer; diacetic acid; fibre tow; tobacco machinery; mobile communication products; satellite, radio, and TV
equipment; car products; aircraft; and ships.
62
These categories are broiler products, vegetable oil, iron ore, copper concentrate, coal, refined oil,
fertilizer, steel, construction machinery, printing machines, textile machinery, metal smelting and processing
equipment, metal processing machine tools, electrical equipment, car products, aircraft, ships, and medical
equipment.
63
Products for which licensing requirements were removed included some mobile communication
products, some ships, game consoles, steam turbines, non-vehicle engines and key parts, hydraulic turbines
and other power plants, chemical plants, food machinery, paper machinery, some textile machinery, some
metal smelting and processing equipment, electrical equipment, railway locomotives, some automotive
products, and some medical equipment.
64
For details regarding the procedure to obtain automatic import licences, see China's last notification
under Article 7.3 of the Agreement on Import Licensing Procedures (WTO document G/LIC/N/3/CHN/18,
30 January 2020).
- 62 -
are not transferable. Enterprises are allowed, and encouraged, to apply for and receive import
licences online.65
3.1.5.2.2 Non-automatic import licensing requirements
3.50. Products subjected to non-automatic licences are listed in the Catalogue of Import Goods
Subject to Licensing.
3.51. In 2020, the Catalogue of Import Goods Subject to Licensing listed 118 tariff lines at the
HS 10-digit level that were subject to non-automatic import licensing (compared with 139 tariff lines
at the HS 10-digit level in 2017).66 During the review period, some used mechanical and electrical
products, such as engineering machinery, electric power and electrical equipment, and textile
machinery, were deleted from the Catalogue. As noted in previous Reviews, imports subject to
non-automatic licences mainly include used mechanical and electronic equipment, and substances
that deplete the ozone layer. The purpose of non-automatic import licensing for ozone-depleting
substances is to fulfil China's obligations under the Montreal Protocol on Substances that Deplete
the Ozone Layer, and the licensing requirements with respect to used machinery are to serve social
interests and to protect the environment and consumer health and security.67 The procedures to
obtain a non-automatic import licence have remained unchanged since the previous Review.
3.1.6 Anti-dumping, countervailing, and safeguard measures
3.1.6.1 Anti-dumping measures
3.52. As noted in previous Reviews, MOFCOM is the agency responsible for initiating and conducting
anti-dumping investigations and determining the existence of dumping and of injury, and their causal
link. MOFCOM's Trade Remedy and Investigation Bureau (TRB) is responsible for anti-dumping,
countervailing duty, and safeguards investigations and determinations (with the exception of
anti-dumping investigations involving agricultural products, where the injury investigation is
conducted jointly by MOFCOM and the Ministry of Agriculture).
3.53. The legal framework for the conduct of anti-dumping investigations and the application of
anti-dumping measures remains the Foreign Trade Law68, the Regulations on Anti-Dumping69, and
a number of published Rules, some of them provisional.70 During the review period, three of these
Rules were amended (see below); there have been no other changes to the anti-dumping procedures
that are covered in detail in China's previous Reviews. 71 The authorities indicate that China is
preparing notification to the WTO regarding these amended rules. In 2018, China notified to the
WTO its Interim Rules on Implementation of the World Trade Organization Ruling in Disputes
Concerning Trade Remedy Measures, which entered into force on 29 July 2013.72
3.54. On 4 April 2018, MOFCOM promulgated the Rules on Interim Review of Dumping and Dumping
Margins (Interim Review Rules), which replace the Interim Rules for the Mid-Term Review of
Dumping and Dumping Margins that have been in place since 2002. They introduced various
changes. First, they refined and clarified provisions relating to the rights and obligations of the
investigating agency and interested parties, including in relation to: (i) clarifying the timing for filing
a periodical review application to provide an opportunity for a periodical review application under
special circumstances; (ii) clarifying that exporters and manufacturers must submit evidence that
proves the necessity of a review; (iii) clarifying the period for domestic industry to request evidence
65
MOFCOM and GACC Announcement No. 82, 2018, on Paperless Application and Receiving of Import
Licences and Paperless Customs Clearance for Goods. Viewed at:
http:/www.mofcom.gov.cn/article/b/e/201810/20181002794907.shtml.
66
Catalogue of Import Goods Subject to Licensing (2020), MOFCOM and GACC Announcement No. 65,
2019. Viewed at: http://www.mofcom.gov.cn/article/b/e/201912/20191202927133.shtml.
67
68
WTO document G/ADP/N/1/CHN/2/Suppl.4, 1 December 2004.
69
WTO document G/ADP/N/1/CHN/2/Suppl.3, 20 October 2004.
70
WTO documents G/ADP/N/1/CHN/2/Suppl.1, 18 February 2003; G/ADP/N/1/CHN/2/Suppl.2, 14 April
2003; G/ADP/N/1/CHN/2/Suppl.4, 1 December 2004; G/ADP/N/1/CHN/2/Suppl.5, 11 January 2007; and
G/ADP/N/1/CHN/2/Suppl.6, 19 October 2007.
71
WTO document WT/TPR/S/375/Rev.1, 14 September 2018; and WT/TPR/S/342/Rev.1, 12 October
2016.
72
WTO document G/ADP/N/1/CHN/2/Suppl.7, 3 October 2018.
- 63 -
materials to be submitted during the review; (iv) clarifying that the exporter/producer can submit
an application for an interim review; and (v) cancelling the provision that the periodical review is
not completed as an automatic end-of-term review. Second, they adopted clearer and stricter
periodical review procedures and time requirements to ensure investigation efficiency. Third, they
incorporated provisions to be consistent with WTO rules (e.g. improving the description of the
sampling survey and the disclosure before final ruling).73
3.55. The Rules on Questionnaires in Anti-Dumping Investigations, which came into force on
4 May 2018, are the basis for conducting questionnaire investigations in anti-dumping investigations
and replaced rules in place since 2002. Changes introduced related to: (i) extending the application
of questionnaire surveys beyond determining dumping and dumping margins to include determining
damage issues; (ii) clarifying the rights and obligations of the investigating agency and interested
parties74; (iii) deleting the content that should be stated in the specific questionnaire descriptions
and requirements; (iv) setting questionnaire survey procedures and time requirements; and
(v) incorporating WTO-consistent provisions into the rules relating to handling of information that
requires confidentiality, providing interested parties with an opportunity to comment, and setting
out the conditions for applying facts available.75
3.56. The 2018 Rules for Hearing of Anti-dumping and Anti-Subsidy Investigations also came into
force on 4 May 2018.76 The Rules replaced three rules governing such hearings in place since 2002.77
Changes introduced related to: (i) the creation of a unified hearing procedures (there is no longer a
distinction between different types of investigations (anti-dumping, countervailing, and damage));
(ii) the refining of procedural provisions and clarification of rights and obligations of the investigating
agency and interested parties (including with respect to the investigating agency's consideration for
the need for confidentiality, its notification of the holding of hearings through an online
announcement, its explanation of reasons for not holding a hearing, and the provision of
opportunities for interested parties to express their opinions); (iii) introduction of clearer and stricter
hearing procedures and time requirements; and (iv) introduction of WTO-consistent provisions
relating to interested parties' rights to express their opinions/reasons to the investigating agency
through other means if they are not physically present at the hearing.78
3.57. China initiated 34 anti-dumping investigations from January 2018 to end-December 2020
(Table 3.7). These investigations related to the following products/trading partners: polyphenylene
ether (United States, August 2020); wines in containers holding 2 litres or less (Australia,
August 2020); certain monoalkyl ethers of ethylene glycol and propylene glycol (United States,
August 2020); polyvinyl chloride (PVC) (United States, August 2020); ethylene-propylene-
non-conjugated diene rubber or ethylene propylene diene monomer (European Union, Republic of
Korea, and United States, June 2019); polyphenylene sulphide (Japan, Republic of Korea, Malaysia,
and United States, May 2019); methionine (Japan, Malaysia, and Singapore, April 2019); m-Cresol
(European Union, Japan, and United States, July 2019); n-Propanol (United States, July 2019);
ortho-dichlorobenzene (India and Japan, January 2018); phenol (European Union, Japan,
Republic of Korea, Thailand, and United States, March 2018); barley (Australia, November 2018);
stainless steel billet and hot-rolled stainless steel plate (coil) (European Union, Indonesia, Japan,
and Republic of Korea, July 2018); 7-phenylacetamido-3-chloromethyl-3-cephem-4-carboxylic acid
p-methoxybenzyl ester (India, November 2018); vertical machining centres (Japan and
Chinese Taipei, October 2018); and grain sorghum (United States, February 2018).
73
MOFCOM. Viewed at: http://english.mofcom.gov.cn/article/policyrelease/announcement/201804/
20180402734712.shtml. The Interim Review Rules stipulate the meaning of the periodical review, the
conditions and procedures for filing a case, the procedures and standards for deciding to file a case, the scope
of investigation for the review period, calculation of dumping margin and price commitments in review, time-
limit, and announcement of review and effectiveness of measures.
74
Investigating agencies under the amended rules are required to notify and explain to interested
parties the reasons for not accepting submitted information and give them the opportunity to explain further.
The number of response sheets submitted by interested parties was reduced to lift the burden on enterprises.
Interested parties are now allowed to submit their own answer sheets.
75
MOFCOM. Viewed at: http://gpj.mofcom.gov.cn/article/bi/bj/gzjd/201804/20180402729842.shtml.
76
These rules stipulate hearing procedures, including the holding method, application time-limit and
method, decision and notification, registration and participation, and submission of written materials.
77
The three rules were the Interim Rules for Anti-dumping Investigation Hearings, Interim Rules for
Countervailing Investigation Hearings, and Industrial Damage Hearing Rules.
78
MOFCOM. Viewed at: http://gpj.mofcom.gov.cn/article/bi/bj/gzjd/201804/20180402729839.shtml.
- 64 -
Table 3.7 Anti-dumping investigations and measures, January 2018-December 2020

2018 2019 2020
Investigation initiations 16 14 4
Provisional measures 22 9 5
Definitive measures 23 13 2
Expired/terminated measures 4 11 6
Source: WTO documents G/ADP/N/350/CHN, 9 March 2021; G/ADP/N/342/CHN, 16 October 2020;

G/ADP/N/335/CHN, 21 April 2020; G/ADP/N/328/CHN, 23 October 2019; G/ADP/N/322/CHN,
12 April 2019; and G/ADP/N/314/CHN, 22 October 2018.
3.58. China's anti-dumping measures on the following products were terminated during the review
period: methyl methacrylate (MMA) (Singapore, Thailand, and Japan, December 2020); adipic acid
(United States, European Union, and Republic of Korea, October 2020); pyridine (India and Japan,
November 2019); methyl ethyl ketone (Japan and Chinese Taipei, November 2019); polyvinyl
chloride (Japan, Republic of Korea, Chinese Taipei, and United States, October 2019); cellulose pulp
(Brazil, Canada, and United States, April 2019); solar-grade polysilicon (European Union,
November 2018); toluene diisocyanate (European Union, March 2018); sulfamethoxazole (India,
June 2018); and broiler products (United States, February 2018).79
3.59. As at end-December 2020, China was enforcing 113 anti-dumping definitive measures.
Imports from 16 countries or territories (counting the European Union as one when measures are
applied to all EU member States) were affected. Among all affected trading partners, imports from
the United States were subject to the largest number of anti-dumping measures, followed by Japan,
the European Union, and the Republic of Korea, reflecting the same trend as in previous years
(Table 3.8).
Table 3.8 Anti-dumping measures in force, by trading partner/region, January 2018-

December 2020
Trading partner/region 2018 2019 2020
United States 23 22 24
Japan 20 20 21
European Union 15 17 17
Korea, Republic of 13 15 16
Chinese Taipei 10 8 7
India 6 6 6
Singapore 4 4 4
Thailand 5 6 6
Turkey 1 1 1
Australia 0 0 1
Brazil 2 2 2
Canada 1 0 0
France 1 1 0
Indonesia 0 1 1
Italy 1 1 0
Malaysia 3 3 4
Russian Federation 1 1 1
Saudi Arabia, Kingdom of 1 1 1
South Africa 1 1 1
Total 108 110 113
Note: Figures for 2018-20 reflect anti-dumping measures in force on 31 December of each year.
Undertakings and duties are considered as separate measures.
Source: WTO documents G/ADP/N/350/CHN, 9 March 2021; G/ADP/N/335/CHN, 21 April 2020; and
G/ADP/N/322/CHN, 12 April 2019.
3.60. China's longest-standing anti-dumping measures in force relate to chloroprene rubber from
the European Union, Japan, the Republic of Korea, and the United States; dispersion unshifted
single-model optical fibre from Japan and the Republic of Korea; potato starch from the
European Union; nonyl phenol from India and Chinese Taipei; paper for electrolytic capacitors from
Japan; and bisphenol-A from Japan, the Republic of Korea, Singapore, and Chinese Taipei.
WTO documents G/ADP/N/335/CHN, 21 April 2019; G/ADP/N/328/CHN, 23 October 2019;

79
G/ADP/N/322/CHN, 12 April 2019; and G/ADP/N/314/CHN, 23 October 2018.

- 65 -
3.61. Chemical products continue to account for most measures in force at end-December 2020,
followed by products made of resin, plastic, and rubber (Chart 3.4).
Chart 3.4 Anti-dumping measures in force, by product groups, as of 31 December 2020
Chart 3.4 Anti-dumping measures in force, by product, 31 December 2020
Paper; paperboard & articles

4
Textiles & textile articles
Resins, plastic & rubber 3
24
Base metals & articles thereof
13
Precision instruments
Total: 113 5
Other
7
Chemical products
57
Note: Other includes live animals and products (two measures); vegetable products (two measures);
prepared foodstuff (one measure); and glassware (two measures).
Note: Other includes live animals and products (2 measure); vegetable products (2 measures);
Source: WTO foodstuff
prepared notifications.
(1 measure); and glassware (2 measures).
Source: WTO
3.1.6.2 notifications.
Countervailing measures
3.62. The legal framework governing countervailing measures remains the Foreign Trade Law (last
amended in 2016), the Regulations on Countervailing Measures (last amended in 2004), and a
number of published rules. There have been no changes to existing rules, nor have new ones been
introduced, since January 2018. In 2018, China notified to the WTO its Interim Rules on
Implementation of the World Trade Organization Ruling in Disputes Concerning Trade Remedy
Measures, which entered into force on 29 July 2013.80
3.63. There have been no changes to the procedures for countervailing investigations. These
procedures are similar to those applied for anti-dumping investigations; the main differences are
described in China's Trade Policy Review Report for its previous Review.81
3.64. The number of China's countervailing investigations initiated and measures in force have
remained relatively constant over the past five years (Table 3.9). Eight countervailing investigations
were initiated during the review period (since 2018), one of which then terminated due to public
interest considerations and one of which was terminated due to withdrawal by the applicant
(Table 3.10). In January 2019, China undertook a sunset review of countervailing measures on
solar-grade polysilicon from the United States, resulting in continuation of the definitive duties
imposed in January 2020. In April 2019, China undertook a rebus sic stantibus review of
countervailing measures on distiller dried grains with solubles from the United States, resulting in
maintaining the original measures.
3.65. Details of China's RTA provisions on CV measures are contained in the Trade Policy Review
Report for its previous Review.82
80
WTO document WT/SCM/N/1/CHN/1/Suppl.5, 3 October 2018.
81
82
- 66 -
Table 3.9 Countervailing investigations and measures, 2016-20

2016 2017 2018 2019 2020
Investigation initiations 1 1 3 1 4
Provisional measures 1 0 1 0 2
Definitive measures 0 1 1 0 2
Expired/terminated measures 0 0 2 0 0
Measures in force (end-period) 4 5 4 4 6
Source: WTO documents G/SCM/N/371/CHN, 26 February 2021; G/SCM/N/363/CHN, 16 October 2020;

G/SCM/N/356/CHN, 13 March 2020; G/SCM/N/349/CHN, 23 October; G/SCM/N/342/CHN,
9 April 2019; G/SCM/N/334/CHN, 22 October 2018; G/SCM/N/328/CHN, 6 April 2018;
G/SCM/N/313/CHN, 1 March 2017; and WT/TPR/S/375/Rev.1, 14 September 2018.
Table 3.10 Countervailing investigations initiated during the review period, as at

31 December 2020
Provisional Final
Partners Product Initiation Import volume
measures measures
Australia Barley 21/12/2018 - 19/05/2020 61.57% of apparent
6.9% domestic consumption
All others
6.9%
Wines in containers 31/08/2020 11/12/2020 - 13.36% of apparent
holding 2 litres or less 6.3%-6.4% domestic consumption
All others
6.4%
India 7-phenylacetamido- 26/11/2018 - None 100% of total imports
3-chloromethyl- (application
3-cephem- withdrawn on
4-carboxylic-acid 25/05/2020)
p-methoxybenzyl ester
United States polyvinyl chloride 14/10/2020 - - 1.54% of apparent
(PVA) domestic consumption
Certain monoalkyl 14/09/2020 - - 18.29% of apparent
ethers of ethylene domestic consumption
glycol and propylene
glycol
Polyphenylene ether 14/08/2020 - - 15.18% of apparent
domestic consumption
n-Propanol (NPA) 29/07/2019 09/09/2020 18/11/2020 67.43% of total
34.2%- 34.2%-37.7% imports
37.7% All others 37%
All others
37%
Grain sorghum 04/02/2018 - None -
(Terminated –
Public
Interest)
18/05/2018
- None.
Source: WTO documents G/SCM/371/CHN, 26 February 2021; G/SCM/N/363/CHN, 16 October 2020;
G/SCM/N/356/CHN, 13 March 2020; G/SCM/N/349/CHN, 23 October 2019; G/SCM/N/342/CHN,
9 April 2019; and G/SCM/N/334/CHN, 22 October 2018.
3.1.6.3 Safeguard measures
3.66. During the review period, China did not initiate any new safeguard investigations. As indicated
in the previous Review, China imposed a safeguard measure on sugar on 22 May 2017.83 China
notified to the WTO that the measure would remain in force for three years (i.e. until May 2020).
China did not notify an extension of the safeguard measure. On 16 October 2018, Brazil requested
83
The investigation was initiated in September 2016 and definitive safeguard measures in the form of
an additional ad valorem duty of 45% were imposed on 22 May 2017. The duty applied to imports outside the
existing quota and were to be reduced to 35% within three years (WTO document WT/TPR/S/375/Rev.1,
14 September 2018; see also WTO documents G/SG/N/8/CHN/2/Suppl.1, G/SG/N/10/CHN/2, and
G/SG/N/11/CHN/2, 23 May 2017). China subsequently notified the WTO that exemptions from this measure
applicable to certain developing countries had been revoked, and that the safeguard measure would apply to
imports of sugar from all developing countries (regions) from 1 August 2018 (WTO documents
G/SG/N/8/CHN/2/Suppl.2, G/SG/N/10/CHN/2/Suppl.1, and G/SG/N/11/CHN/2/Suppl.1, 18 July 2018).
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consultations with China pursuant to the Understanding on Rules and Procedures Governing the
Settlement of Disputes (DSU) on certain Chinese measures concerning imports of sugar. 84 This
request covers: (i) China's 22 May 2017 safeguard measure on imported sugar; (ii) China's
administration of its TRQ for sugar; and (iii) China's so-called "automatic import licensing" system
for out-of-quota sugar. The European Union, Thailand, and Guatemala requested to join the
consultations.85 A panel has not been established as of the writing of this report.
3.67. In 2018, China notified to the WTO its Interim Rules on Implementation of the World Trade
Organization Ruling in Disputes Concerning Trade Remedy Measures, which entered into force on
29 July 2013.86 Other than this new information, the laws and regulations governing safeguard
measures in China did not change during the review period. The Foreign Trade Law (last amended
in 2016), the Regulations on Safeguards (last amended in 2004), and other published rules provide
the regulations on safeguard investigations and the application of measures.
3.68. As noted in previous Reviews, MOFCOM, specifically the TRB, is in charge of investigating and
determining if there has been an increase in imports and if injury has been caused. If an investigation
involves agricultural goods, the investigation and determination must be done jointly with the
Ministry of Agriculture. Investigation procedures have not changed since, and are detailed in, China's
Trade Policy Review Report for its previous Review, as are details on safeguard provisions in the
RTAs to which China is signatory.87
3.2 Measures Directly Affecting Exports
3.2.1 Customs procedures and requirements
3.69. The general framework of export procedures, including registration and documentation,
remained largely unchanged during the review period. Registration formalities for exports of goods
for commercial purposes are similar to those for imports and governed by the same regulations
(Section 3.1.1).
3.70. An exporter must register as a foreign trade operator with MOFCOM or its authorized bodies,
before filing customs declarations. Export declarations must be made on paper or in electronic
format. As at the time of the previous Review, declarations can be made either by the consignor, or
by a customs declaration enterprise entrusted by the consignor. On 1 January 2020, the authorities
established a paperless application system for export licences and customs clearance operations for
goods subject to exports control.88 Exporters of the specified goods may choose to adopt paper or
paperless operations. On 9 September 2019, the same system was established for export licence
application of used cars.89
3.71. As stipulated by the Law on Inspection of Import and Export Commodities, exporters must
comply with the requirements of the Catalogue of Import and Export Commodities Subject to
Compulsory Inspection, which is regularly amended to add or subtract commodities. The inspection
of import and export commodities aims to protect the health and safety of human beings, protect
the life and health of animals or plants, protect the environment, prevent fraud, and safeguard
national security. The import and export commodities that are included in the Catalogue shall be
inspected by Customs. For cabins and containers used for the exports of perishable food, the carrier
or the packing unit must apply for inspection before loading.90
3.72. Some items, such as dangerous chemicals, fireworks, lighters, food products, and rare earths,
are subject to export inspection. These goods must be inspected where they are produced. The
packaging of the exports of dangerous chemicals or goods must also undergo inspection and tests.
84
WTO document WT/DS568/1, 22 October 2018.
85
WTO documents WT/DS568/2, 2 November 2018; and WT/DS568/3-4, 5 November 2018.
86
WTO document G/SG/N/1/CHN/2/Suppl.5, 3 October 2018.
87
88
MOFCOM, MOFCOM and GACC Notice No. 64, 2019. Viewed at:
http://www.mofcom.gov.cn/article/b/e/201912/20191202927111.shtml.
89
Shang Ban Mao Han No. 297, 2019.
90
FAO, Law of the People's Republic of China on Import and Export Commodity Inspection. Viewed at:
http://www.fao.org/faolex/results/details/en/c/LEX-FAOC152646/.
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3.73. Under China's risk management system, enterprises are classified into different groups based
on risk analysis. As with import procedures, customs inspection and supervision depend upon the
enterprise's rating (Section 3.1.1). Goods exported by high-risk enterprises and other high-risk
goods (based on risk analysis) are inspected, while other exports are released through fast-track
clearance or a "low-risk examination".
3.74. Following the global outbreak of the COVID‑19 pandemic, China launched a series of trade
facilitation and compliance measures with a view to, inter alia, containing COVID‑19, maintaining
trade flows of medical supplies, and minimizing the disruption caused by COVID‑19. An emergency
plan was adopted to further streamline customs procedures, including inspections and quarantine,
and reduce port charges.91 In February 2020, the GACC rolled out 10 measures to support new
importers and exporters to overcome challenges relating to the pandemic, including the
simplification of business registration and clearance formalities, optimization of pre-export control
and certification services, and the supply of up-to-date market information.92
3.75. The authorities also implemented more stringent control measures on enterprises involved in
the export of COVID‑19-related test kits and other medical devices. On 31 March 2020, MOFCOM,
the GACC, and the National Medical Products Administration issued Announcement No. 5, 2020, on
Ensuring the Orderly Export of Medical Supplies93; subsequently, on 25 April 2020, MOFCOM, the
GACC, and the State Administration for Market Regulation (SAMR) issued Announcement No. 12,
2020, on Reinforcing Quality Regulation on Exported Supplies for COVID‑19 Response.94 The
Announcements introduced a new quality verification procedure for the export of medical products,
including a requirement to provide a valid medical device product registration certificate in China.
In addition, exporters must provide proof that the products meet the quality standards of the
importing country.95
3.2.2 Taxes, charges, and levies
3.76. China applies export duties in accordance with the Regulations on Import and Export Tariffs.
They are applied with a view to protecting the domestic environment and supporting the effective
utilization and sustainable development of energy and scarce resources. Interim tariff rates may be
applied to export goods within a certain period. The State Council shall establish the Customs Tariff
Commission to decide on the goods subject to interim tariff, the tariff rates, and the time-limit. The
authorities state that interim export tariff rates are adjusted as appropriate based on national
economic development considerations.
3.77. Export duties are calculated based on the transaction value of exports, plus transport-related
fees, and insurance cost. In 2020, all export duties were ad valorem. Certain items are subject to
the interim export tariff levied at a rate of zero.
3.78. As at January 2021, 102 tariff lines (at the 8-digit level) were subject to statutory export
duties, unchanged since 2015, while 75 tariff lines carried interim duties, down from 180 in 2017
(Table 3.11). The highest tax rate (50%) applies to tin ores and concentrates (HS 2609).
91
UNCTAD, Case Study: China's Trade Facilitation Responses to the COVID‑19 Pandemic, 22 May 2020.
Viewed at: https://unctad.org/en/pages/newsdetails.aspx?OriginalVersionID=2328.
92
GACC, GACC Launches Facilitative Measures as Foreign-Trade Businesses Begin to Resume
Operations, 19 February 2020. Viewed at: http://english.customs.gov.cn/Statics/8f0f8824-eef2-492b-ace6-
77d84bf12f1f.html.
93
MOFCOM. Viewed at: http://www.mofcom.gov.cn/article/b/e/202003/20200302950371.shtml.
94
MOFCOM. Viewed at: http://english.mofcom.gov.cn/article/policyrelease/announcement/.
95
National Medical Products Administration. Viewed at: https://www.nmpa.gov.cn/. The updated lists of
products covered by the Announcements are available on the website of the China Chamber of Commerce for
Import and Export of Medicines and Health Products (www.cccmhpie.org.cn).
- 69 -
Table 3.11 Export duties by type and HS chapter, 2020

Statutory duties Interim duties
HS chapter
No. of lines Range % No. of lines Range %
Total 102 20-50 75 0-35
03 Fish and crustaceans 1 20 0 n.a.
05 Products of animal origin, n.e.s. 4 40 1 0
26 Ores, slag and ash 7 20-50 2 0-20
28 Inorganic chemicals 3 20-30 1 10
29 Organic chemicals 1 40 1 0
41 Raw hides and skins 2 20 0 n.a.
72 Iron and steel 17 20-40 5 10-20
74 Copper and articles thereof 32 30 32 0-15
75 Nickel and articles thereof 4 40 4 5-15
76 Aluminium and articles thereof 24 20-30 24 0-15
79 Zinc and articles thereof 4 20 4 0-15
81 Other base metals 3 20 1 5
n.a. Not applicable.

Note: Tariff lines where export duties are only partially applied are included.
Source: Customs Tariff of Import and Export of the People's Republic of China, 2020.
3.2.3 Export prohibitions, restrictions, and licensing
3.79. Export restrictions and prohibitions are aimed to, inter alia, maintain national security, social
public interests, or public morality; protect human health or safety, or the lives or health of animals
and plants; protect the environment; protect exhaustible natural resources that are in short domestic
supply or may require effective protection; and take effect in case of serious disturbance of the order
of export business operations.
3.80. Export restrictions, including prohibitions and licensing requirements are in place on a variety
of items, as highlighted in China's WTO notification in 2019 on its quantitative restrictions. 96 The list
of items that are subject to prohibitions and restrictions is generally announced by MOFCOM, in
collaboration with other relevant departments. Export prohibitions apply to products such as certain
forest litter and turf, ractopamine, certain hazardous chemicals, natural sand (except metallic sand),
pesticides and persistent organic pollutants, charcoal, certain toxic substances, and wild animal
products. The legal basis for export prohibitions are mainly provided by: (i) former Ministry of
Foreign Trade and Economic Cooperation (MOFTEC) Announcement No. 19, 2001; (ii) MOFCOM,
GACC, and SFA Joint Announcement No. 40, 2004; (iii) MOFCOM, GACC and former State
Environmental Protection Administration (SEPA) Joint Announcement No. 116, 2005; (iv) MOFCOM,
GACC Joint Announcement No. 87, 2006; (v) MOFCOM, GACC Joint Announcement No. 96, 2008;
and (vi) MOFCOM and GACC Joint Announcement No. 110, 2009.
3.81. China applies export licences to specific dual-use substances for the purposes of safeguarding
national security and public interest and performing the obligations under relevant international
agreements. The control is executed by the State Administration of Science, Technology and
Industry for National Defence and MOFCOM, in coordination with other relevant agencies.
3.82. Restricted exports may be subject to quotas and licences. China imposes global and
destination-specific export quotas. The list of products subject to quotas (Table 3.12) and the quota
volumes for the following year is published on 31 October of each year. MOFCOM announces the
total export quota of goods before 31 October each year. The authorities state that the latest total
quota was provided through the Announcement on the Total Export Quotas for Goods (MOFCOM
Announcement No. 49, 2020).
3.83. Regarding licensing requirements, MOFCOM issues on a yearly basis the Catalogue of Goods
Subject to the Administration of Export Licences.97 The Catalogue lists goods that are subject to
export licensing (Table 3.12). The 2019 announcement, set to be implemented in 2020, lifted the
licensing requirements for export of vitamin C and penicillin products. The Catalogue also lists goods
96
WTO document G/MA/QR/N/CHN/5/Rev.1, 15 February 2019.
97
MOFCOM Announcement No. 47, 2019; and MOFCOM and GACC Announcement No. 66, 2019. Viewed
at: http://www.mofcom.gov.cn/article/b/e/201912/20191202927141.shtml.
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that are subject to export quota (Table 3.12). For exports subject to a quota, the exporter must
obtain the quota prior to applying for a licence.
Table 3.12 Products subject to export quotas and licensing, 2020

Type of
Products Comment
management
Products subject to quotas and licensing
Wheat, maize, rice, cotton, and coal Export quota The export quota is
(licence) allocated by the NDRC
and the licence issued
by MOFCOM.
Wheat, maize, and rice flour; ephedra herbs for medicinal use Export quota The export quota is
(cultivated); sawn timber; live chicken (for export to Hong (licence) allocated by MOFCOM.
Kong, China); live swine and cattle (for export to Hong Kong,
China and Macao, China); crude oil; and refined oil (excluding
lubricating oil, grease, and lubricating base oil)
Rush and rush products; liquorice and liquorice products Export quota The export quota is
bidding allocated by MOFCOM.
(licence)
Products subject to licensing
Live cattle and swine (for export to markets other than Hong Export licence Export traders apply
Kong, China and Macao, China); live chicken (for export to for export licences
markets other than Hong Kong, China); beef, pork, and with relevant export
chicken; natural sand (including standard sand); bauxite; contracts.
phosphate rock; magnesia; talc block (powder); fluorite
(fluorspar); rare earths; tin and tin products; tungsten and
tungsten products; molybdenum and molybdenum products;
antimony and antimony products; coke; refined oil (lubricating
oil, grease, lubricating oil base oil); paraffin; semimetals and
semimetal products; disodium sulphate; silicon carbide; citric
acid; silver; platinum (exported under processing trade);
indium and indium products; motorcycles (including all-terrain
vehicles) and motorcycle engines and frames; and automobiles
(including complete sets of parts) and automobile chassis.
Substances that deplete the ozone layer Export licence Export of such product
must be allowed
before applying for an
export licence.
Source: MOFCOM Announcement No. 47, 2019; and MOFCOM and GACC Announcement No. 66, 2019.
3.84. According to the authorities, the value of exports of goods subject to export licensing stood
at USD 63.86 billion in 2020, up from USD 39.50 billion in 2017.
3.85. In addition, to "maintain foreign trade order", export declarations of certain products subject
to export licensing (liquorice, liquorice products, and natural sand), when exported to
Chinese Taipei; Hong Kong, China; and Macao, China, may be cleared only through designated ports.
The export clearance ports of liquorice are Tianjin Customs, Shanghai Customs, and Dalian Customs;
the export clearance ports of liquorice products are Tianjin Customs and Shanghai Customs; the
export clearance ports of natural sand (to Chinese Taipei; Hong Kong, China; and Macao, China) are
limited to the province (autonomous region, municipalities) customs. The authorities state that the
measures of administration at designated ports for the export of liquorice and liquorice products,
and natural sand shall be cancelled in 2021.
3.86. The Catalogue of Technologies Restricted or Forbidden for Export was published in
August 2020 by MOFCOM and the Ministry of Science and Technology (MOST). 98 The first version of
the Catalogue was released in 1998 and was amended twice (in 2001 and in 2008). The amendments
to the 2020 Catalogue were based on the draft proposed revisions released by MOFCOM and the
corresponding public comments collected in 2018.
3.87. The Amendment added 23 new items to the list subject to export restrictions, including
technologies related to drones, production of space materials, design and construction of large-scale
high-speed wind tunnels, and aerospace bearings and lasers. It also provides description of new
98
MOFCOM, 2020 Catalogue, Notification No. 38/2020, 28 August 2020. Viewed at:
http://www.mofcom.gov.cn/article/b/c/202008/20200802996641.shtml.
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elements and technical specifications subject to export control. For example, it adds "personalised
information recommendation service technology based on data analysis" and "artificial intelligence
interactive interfaces", one type of which uses voice recognition.
3.88. The Amendment removed four items that were subject to export prohibition in the
2008 Catalogue, which involve technologies related to microbial fertilizers, as well as the production
of synthetic and semisynthetic caffeine and vitamin B2 production, and it removed five items that
were subject to export restriction in the 2008 Catalogue, which involve technologies related to the
Newcastle disease vaccine (for chickens), production of natural medicines, preparation and
processing of functional polymer materials with biological activity, production of certain synthetic
and semisynthetic chemicals, and information security firewall software.
3.89. Exports of a technology, either by means of transfer or licensing, would be prohibited if such
technology is classified as a prohibited technology in the Catalogue. With regard to transfer of any
technology subject to export restrictions in the Catalogue, approval from a competent commerce
authority at the provincial level is required before entering into any substantial transfer negotiation
with foreign counterparties, and an export licence issued by the same authority would be also
required when completing the technology transfer agreement.
3.90. On 17 October 2020, the Standing Committee of the NPC passed the Export Control Law,
which entered into force on 1 December 2020. Under Article 2 of the Law, export control refers to
"prohibitions or restrictions on transfer of controlled items from the territory of the People's Republic
of China to overseas and the provision of controlled items by any citizen or incorporated or
non-incorporated organization of the People's Republic of China to any foreign organization or
individual".
3.91. The Law defines "controlled items" to include dual-use items (with both civilian and military
applications), military products, and nuclear products. In addition, "controlled items" include "other
goods, technologies, services that are related to the maintenance of national security and interests
and the implementation of international obligations such as non-proliferation". It also requires
exporters to provide documentation establishing the intended end-use and end-user for the
controlled items to be issued by the end-user or the Government at the end-user's location.
End-users are required to commit not to change the end-use or transfer the item to any third party
without authorization from the Chinese export control authorities. Exporters and importers are
further obliged to report any potential change in the end-use or end-user.
3.92. While the previous export control framework still remains in place on a number of fragmented
lists of items, the new Export Control Law provides for the establishment of a single framework for
restricting exports of controlled items through published control lists. According to the authorities,
China has formulated six administrative laws and regulations on export control, including the
Administrative Rules on Monitored Chemicals, the Regulations on the Control of Nuclear Exports, the
Administrative Regulations on the Export of Military Products, the Regulations on the Export Control
of Dual-use Nuclear Items and Related Technologies, the Regulations on the Export Control of
Missiles and Missile-related Items and Technologies, and the Regulations on the Export Control of
Dual-use Biological Items and Related Equipment and Technologies. Specific export control lists were
also released. In addition to the established control lists, the new legislation authorizes export control
authorities to list items for "temporary controls" for a provisional period of up to two years before
determining whether to list the items on a control list. The authorities indicate that China is in the
process of formulating supporting regulations and shall release further regulations at a later stage.
3.93. Besides the item-based control lists, the Law provides for the establishment of control lists of
foreign business entities that fall under one of the following cases: (i) violate end-user or end-use
restrictions; (ii) "possibly endanger national security and interests"; or (iii) use controlled items for
terrorist purposes. Chinese exporters will be barred from dealing with foreign business entities on
the controlled list. However, they will be able to request exemptions under certain conditions,
according to the Law.
3.94. Exporters must apply for an export licence from the relevant export control authority in order
to export any item listed on a control list or subject to temporary controls. Article 13 of the Law
provides that approval or disapproval of exports will be based on eight criteria: national security and
interests, international obligations and external commitments, the type of exports, the sensitivity of
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controlled items, the countries or regions they are bound for, the end-users and end-uses, relevant
credit records of exporting companies, and "other factors stipulated by laws and administrative
regulations". For goods, technologies, and services other than those listed on the export control list
and temporarily controlled items, an exporter must apply to the national export control authorities
for an export licence, if the exporter knows or should know, or has been notified by the national
export control authorities, that the relevant goods, technologies, and services may endanger national
security and interests, or may be used for the design, development, production, or use of weapons
of mass destruction and their means of delivery, or may be used for terrorism.
3.95. Under the Law, China may take measures reciprocally, according to the actual circumstances,
if any country or region "abuses" its export control measures in ways that endanger China's national
security and interest.
3.2.4 Export support and promotion
3.96. China's most recent notification to the WTO regarding export subsidies was submitted in 2020.
China indicated that export subsidies were not granted to agricultural products in 2019.99
3.97. Exporters are entitled to VAT rebates.
3.98. After the issuance by the Ministry of Finance (MOF) and the State Taxation Administration of
the Announcement on Increasing the Export Tax Refund Rate of Some Products in 2020100, the VAT
rebate rate of all products, except for the high-pollution, high-energy consuming, and
resource-based products, became equal to the applied rate. The MOF and the State Taxation
Administration administer the VAT rebate regime.
3.99. Since 2018, VAT rebate rates on exports have been successively adjusted through the
following measures: Notice of the MOF and the State Taxation Administration on Adjusting the VAT
Rates (Cai Shui No. 32, 2018); Notice on Increasing the Export Rebate Rates for Mechanical and
Electrical Products, Cultural Products and Other Products (Cai Shui No. 93, 2018); Notice on
Adjusting the Export Tax Rebate Rates for Certain Products (Cai Shui No. 123, 2018); MOF, State
Taxation Administration, and GACC Announcement on Policies for Deepening the VAT Reform
(Announcement No. 39, 2019); and MOF and State Taxation Administration Announcement on
Increasing the Export Tax Refund Rates for Certain Products (Announcement No. 15, 2020).
3.100. The latest adjustment to VAT rebate rates (Announcement No. 15, 2020) increased VAT
refund rates for 1,464 goods as from 20 March 2020.101 The announcement includes 380 agricultural
and agricultural-related items and increases the rebate rate from 6% to 9%. The rate for the
remaining 1,084 tariff lines in the Announcement increased from 9% to 13%.
3.101. Following the most recent round of adjustments of VAT rebate on exports, four refund rates
are in force: 13%, 9%, 6%, and 0%, with the proportion of tariff lines subject to each rebate rate
being 61.2%, 18.9%, 0.1%, and 19.6%, respectively. Products not subject to VAT rebate include
high-energy-consuming products, high-polluting products, and endangered species of fauna and
flora.
3.102. Exports promotion may also take the form of import duty exemptions for certain products
(Section 3.1.3). Beyond their primary role as a test ground for policy reforms, PFTZs have attracted
companies that export. Since 2013, China has established an increasing number of PFTZs across the
country; currently, there are 31 PFTZs. In the Shanghai PFTZ, for example, benefits available to
companies include a reduced corporate income tax rate of 15% (standard 25%) for five years in
industries such as integrated circuits, artificial intelligence, biomedicine, and civil aviation; reduced
individual income tax for foreign staff in PFTZ companies; and streamlined customs handling for
PFTZ imports and exports.
3.103. Companies located in the Shanghai PFTZ can produce either in bonded or non-bonded areas.
The payment of import tariffs by companies located in bonded areas is suspended and only becomes
99
WTO document G/AG/N/CHN/53, 7 December 2020.
100
Ministry of Finance and State Taxation Administration Announcement No. 15, 2020.
101
The Bulletin is available at: http://szs.mof.gov.cn/zhengcefabu/202003/t20200317_3484123.htm.
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effective when final products are sold to the rest of China. The PFTZ also features a distinctive
mechanism for dispute resolution, with arbitration governed by a separate set of Arbitration Rules
issued by the Shanghai International Arbitration Centre.
3.104. According to the authorities, in 2020, the total foreign trade value amounted to
CNY 4.7 trillion in the 18 PFTZs, and 393,000 new companies were established (including
6,472 newly established foreign-funded enterprises).
3.105. Export support programmes also include the organization, by MOFCOM's Trade Development
Bureau (TDB), of exhibitions in emerging markets and export-oriented training activities. The TDB
also maintains the websites of China Trade Promotion and provides, through various service
platforms, background information about foreign markets.
3.106. The Overseas Commercial Complaint Service Centre for Chinese Enterprises provides
services to Chinese enterprises in the areas of complaint-handling, consulting, talent base
construction, and support for start-ups.
3.107. The authorities indicate that several export promotion and assistance activities abroad were
implemented during the review period. As at June 2020, the China Council for the Promotion of
International Trade had established 387 trade cooperation mechanisms with 341 institutions in
143 countries and regional organizations. Since 2019, trade forums were held with countries
including Cambodia, Pakistan, and Nepal.
3.2.5 Export finance, insurance, and guarantees
3.108. Export finance102, insurance, and guarantees are predominantly granted by a number of
policy financial institutions with the mandate to promote foreign trade and cross-border investment.
The bulk of export finance is provided by the China Export-Import Bank (China Eximbank), which
provides export finance, and the state-owned China Export & Credit Insurance Corporation
(SINOSURE), which provides export credit insurance and related guarantees. Foreign-owned
companies are also eligible for the services of China Eximbank and SINOSURE. China is not a
member of the OECD; it does not participate in the OECD's Arrangement on Officially Supported
Export Credits. The authorities indicate that China has always been actively involved in the
consultation of the International Working Group on export credits, including its technical working
group.
3.109. China Eximbank is a state-owned policy bank with the status of an independent legal entity.
It is dedicated to supporting China's foreign trade, investment, and international economic
cooperation.103 It was created in 1994 to provide financing for the importation and exportation of
capital goods and services and for Chinese companies that undertake overseas construction and
investment projects. Its main mandate includes facilitation of export and import of equipment and
new- and high-tech products, and assisting Chinese companies with comparative advantages in their
offshore projects. According to the authorities, the Government injects capital into China Eximbank
as its shareholder; in the course of business, China Eximbank raises funds mainly by issuing bonds
in both domestic and international capital markets.
3.110. China Eximbank primarily offers overseas financing through a range of activities such as
export credits (including export buyer's credit and export seller's credit), loans for overseas
construction and investment, and concessional loans. Export buyer's credit consists of loans
extended to overseas borrowers to finance their imports of Chinese goods, while export seller's credit
consists of loans granted to domestic enterprises within the scope of their export activities. The Bank
provides two preferential facilities: government concessional loans and preferential export buyer's
credit. Concessional loans are offered to developing countries at rates lower than market interest
rates and are usually tied to Chinese exports.104 The authorities note that all projects operate
according to market principles, and banks do not attach any additional conditions to their loans.
102
According to the authorities, this relates only to official export credit.
103
China Eximbank, About the Bank. Viewed at:
http://english.eximbank.gov.cn/Profile/AboutTB/Introduction/.
104
OECD Development Centre, Perspectives on Global Development 2010 Shifting Wealth, How China is
Influencing Africa's Development, April 2010. Viewed at:
https://www.oecd.org/development/pgd/45068325.pdf.
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China Eximbank provides its services to various enterprises. In 2018, China Eximbank conducted
USD 178.1 billion worth of international settlement (USD 118.3 billion), letters of guarantee
(USD 9.4 billion), and trade finance transactions (USD 50.3 billion), a year-on-year increase of
8.85%.105
3.111. China Eximbank is the designated institution to implement the Chinese Government
Concessional Loan and Preferential Export Buyer's Credit, two Concessional facilities provided to
other developing countries. As at end-2018, China Eximbank's concessional business covered more
than 90 countries in the ASEAN region, South Asia, Central Asia, West Asia, Africa, Latin America,
and the South Pacific.106
3.112. China's official export credit insurance agency is SINOSURE. It was created in 2001 by
merging the export credit insurance departments of China Eximbank and the People's Insurance
Company of China, with the mandate to promote exports and cross-border investments through
export credit insurance and investment insurance. Based on information provided by the authorities,
SINOSURE's export credit insurance in 2018 and 2019 covered around 20% of total exports.
3.113. SINOSURE offers, inter alia, short-, medium-, and long-term export credit insurance, bond
and guarantee facilities, and overseas investment insurance and credit information services. There
are several kinds of short-term export credit insurance, with a maximum term of two years
(Table 3.13). The list of available insurance products is available online.107 Exporters may choose
from the following insurance products/solutions: (i) comprehensive cover insurance, which
indemnifies exporters from the direct loss arising from political or commercial risks; (ii) small and
medium-size enterprise (SME) comprehensive cover insurance, which protects SME exporters from
the risk of foreign exchange collection; (iii) small and micro enterprise easy credit insurance, which
is tailor-made to meet the specific need of small and micro businesses; and (iv) additional pre-export
insurance, which mainly covers the credit risk before export of goods. Financing banks may also
choose specific insurance products.
Table 3.13 Overview of SINOSURE short-term export credit insurance policy

Covered risks and insured percentage
Covered commercial risks
The buyer goes bankrupt or insolvent.
The buyer defaults on payment for goods.
The buyer refuses to take delivery of goods.
The issuing bank goes bankrupt, closes down, or is under receivership.
The issuing bank defaults in spite of consistency of trading documents and consistency between letter of
credit and trading documents, or dishonours under usance of letter of credit.
Covered political risks
The country or region of the buyer or issuing bank prohibits or restricts the buyer or issuing bank from
paying for goods or making letter of credit payment to the insured.
An import ban is imposed on the goods purchased by the buyer, or the import permit issued to the buyer is
revoked.
A war, civil war, or riot makes the buyer unable to perform the contract, or makes the issuing bank unable
to discharge its payment obligation under letter of credit.
A third country through which the payment by the buyer or issuing bank has to be routed issues a
moratorium.
Insured percentage
Up to 90% for the loss resulting from political loss.
Up to 90% for the loss resulting from bankruptcy, insolvency, default, or other commercial risks.
Up to 90% for the loss resulting from the buyer's refusal to accept goods.
Up to 100% under the export credit insurance (forfaiting) policy.
Up to 90% under the SME comprehensive cover insurance.
Source: China Export & Credit Insurance Corporation (SINOSURE). Viewed at:
http://www.sinosure.com.cn/en/Insurance/steci/index.shtml.
105
China Eximbank, 2018 Export-Import Bank Annual Report. Viewed at:
http://www.eximbank.gov.cn/aboutExim/annals/2018_2/.
106
China Eximbank, Chinese Government Concessional Loan and Preferential Export Buyer's Credit (Two
Concessional Facilities). Viewed at:
http://english.eximbank.gov.cn/Business/CreditB/SupportingFC/201810/t20181016_6972.html.
107
SINOSURE, ST Export Credit Insurance. Viewed at:
http://www.sinosure.com.cn/en/Insurance/steci/index.shtml.
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3.114. SINOSURE offers various medium- and long-term insurance instruments to protect various
risks born by exporters and financial institutions (Table 3.14). The term is generally between 2 and
15 years. Four insurance instruments exist under the medium- and long-term framework: export
buyer's credit insurance; export supplier's credit insurance; export deferred payment refinancing
insurance; and overseas financial leasing insurance.108
Table 3.14 Overview of SINOSURE medium- and long-term export credit insurance policy
Covered risks and insured percentage
Covered commercial risks
The debtor declares bankruptcy, or the winding-up and/or dissolution or the debtor's default of payment of
the principal or/and interest due and payable on the due date under the loan agreement or commercial
contract.
Covered political risks
The debtor is being prohibited or inhibited from repaying its debt to the insured with the currency agreed in
the loan agreement or with other freely convertible currencies as a result of the promulgation of any law,
decree, order, rule, or adoption of any administrative measure by the government of the debtor's country
(or region) or a third country (or region) through which the repayment must be effected.
The debtor is unable to implement its repayment obligations under the loan agreement as a result of any
moratorium announced by the government of the debtor's country (or region) or a third country (or region)
through which the repayment must be effected.
The occurrence of war, revolution, or riot in the debtor's country (or region) or other applicable political
events to be determined by SINOSURE.
Insured percentage
Up to 95% for export buyer's credit insurance and export deferred payment refinancing insurance.
Up to 90% for export supplier's credit insurance.
Up to 90% for overseas lease insurance with financial institution ((FI), including financial lease company)
insured, or 90% for overseas lease insurance with non-FI insured.
Note: SINOSURE medium- and long-term export credit insurance covers risks in relation to the collection
of deferred payment by exporters, the account receivable by financial leasing companies, and the
recovery of loan principal and interest by financial institutions. The tenor is normally 2 to 15 years.
Source: SINOSURE, M / LT Export Credit Insurance. Viewed at:
http://www.sinosure.com.cn/en/Insurance/meci/index.shtml.
3.3 Measures Affecting Production and Trade
3.3.1 Incentives
3.115. During the review period, China continued to provide incentives and financial support to
different sectors and industries. The authorities indicate that these measures are in place to
accelerate transformation and upgrading of traditional industries, foster infant industries, stimulate
innovation, promote development in remote areas, enhance competitiveness of SMEs, and attract
FDI. Furthermore, support was also granted with a view to protecting the environment, reducing
emissions, and conserving energy. Generally, support is granted by the Central Government or local
governments in the form of direct transfers and tax preferences. The authorities indicate that no
incentives are granted in the form of access to credit.
3.116. The Government's Five-Year Plans for Economic and Social Development serve as a
reference for the design of support policies and for the identification of priority areas, even though
the plans do not outline specific measures. The 13 th Five-Year Plan (2016-20) highlighted the
importance of innovation capacity, and advocated increased innovation in agriculture, strategic
emerging industries, intelligent manufacturing, and services. In addition to the Five-Year Plans for
Economic and Social Development, there are also sector-specific Five-Year Plans for individual
industries.
3.117. In June 2019, China notified to the WTO its support programmes at the central and
subcentral levels during the period 2017-18.109 The 249-page notification contains information on
79 central-level and 420 subcentral-level programmes. According to the notification, the objectives
of the subsidies are to support rural and regional development, protect the environment, conserve
108
SINOSURE, M / LT Export Credit Insurance. Viewed at:
http://www.sinosure.com.cn/en/Insurance/meci/index.shtml.
109
WTO documents G/SCM/N/343/CHN, 19 July 2019; and G/SCM/N/343/CHN/Corr.1, 31 July 2019.
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energy, upgrade specific industries, improve productivity and efficiency, and increase welfare of
disabled people.
3.118. At the central level, support is provided in form of preferential taxes, payment and stamp
duty exemptions, tariff and VAT reductions, and fiscal appropriation. Fifteen of the 79 programmes
had already expired by the time of provision of the notification (Table A3.2). No information was
provided by the authorities on how many of the programmes were still active as at April 2021.
Among the 59 central programmes still active in 2019, 7 were on the agricultural sector; 5 each on
technology, fishery, energy, and disability; 4 on infrastructure; 3 each on waste management,
financing, environment, and automobile and transportation; 2 each on SMEs, poverty reduction,
pharmaceuticals, and economic development; and 1 each on oil and gas, mining, and FDI. Among
the active programmes, budget information was only made available for 14 programmes that
provided support in form of fiscal appropriation.
3.119. At the subcentral level, the notification contains 420 programmes in 31 provincial
administrations and 5 designated city administrations. Of these programmes, 283 were still active
in 2019. No information was provided by the authorities on how many of the programmes were still
active as at April 2021. Under these programmes, incentives are provided to specific industries,
SMEs, research and development (R&D) activities, industry upgrade, less developed regions, and
rural areas. Support at the subcentral level is through fiscal appropriation. The amount of subsidies
differs by municipality and by industry.
3.120. During the review period, several communications were submitted by other Members
concerning China's subsidy policy and notifications.110 These communications referred to the amount
of central and subcentral subsidies, the role of government guidance funds, China's fulfilment of its
subsidy notification requirements (in particular, subsidies not mentioned in the notifications),
subsidies to individual sectors (e.g. agriculture, fisheries, and steel), and eligibility criteria for specific
subsidy schemes. China provided written answers to questions asked in these communications.111
Specifically, China provided further information about the beneficiaries and eligibility criteria of the
programmes. However, the total amount of expenditure or revenue forgone was usually not
provided; according to the authorities, this is due to the lack of statistics on tax expenditures.
3.121. The authorities indicate that a notification on subsidies covering the years 2019 and 2020
will be submitted to the WTO in due course.
3.122. The notifications submitted to the WTO and the replies provided by China to questions asked
by other Members did not enable the Secretariat to have a clear overall picture of China's support
programmes. In particular, the notifications do not contain information on expenditure levels in
certain sectors such as aluminium, electric vehicles, glass, shipbuilding, semiconductors, or steel.
Information on subsidies going beyond the 2019 notification was not made available to the
Secretariat. In the WTO Committee on Subsidies and Countervailing Measures, China generally
provides answers to questions that focus on its subsidy notifications, but not on subsidy policies not
covered in its notification.112 The authorities indicate that under the provisions of the
WTO Agreement on Subsidies and Countervailing Measures (SCM Agreement), there is no obligation
to provide written information on programmes not contained in the subsidy notification.
3.123. It would appear that transparency on government support may also be hampered, as the
Government, through numerous state-owned enterprises (SOEs), is involved in the financing and
management of companies, making it difficult to identify the precise policy actions (see also
Section 3.3.5). The authorities do not agree with this statement and indicate that no implicit
110
WTO documents G/SCM/Q2/CHN/75-76, 30 January 2019; G/SCM/Q2/CHN/77, 5 March 2019;
G/SCM/Q2/CHN/78, 4 April 2019; G/SCM/Q2/CHN/79, 9 April 2019; G/SCM/Q2/CHN/85, 27 January 2020;
G/SCM/Q2/CHN/86-89, 29 January 2020; and G/SCM/Q2/CHN/90, 20 August 2020. Questions were asked by
the United States, the Dominican Republic, Japan, New Zealand, the European Union, Canada, and Australia.
111
WTO documents G/SCM/Q2/CHN/80-84, 20 November 2019; G/SCM/Q2/CHN/91-95, 28 October
2020; and G/SCM/Q2/CHN/96, 30 October 2020.
112
WTO document G/SCM/M/110, 13 February 2020, paras. 109 and 117. Furthermore, in April 2017
questions were posed by the European Union and the United States under Article 25.8 of the SCM Agreement,
regarding non-notified steel subsidies, to which China has not yet provided written replies (WTO document
G/SCM/Q2/CHN/70, 13 April 2017).
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subsidies were paid to China's SOEs. According to the authorities, the Government does not
intervene in SOEs' financing, operation, and management.
3.124. In addition to the notified programmes, it would appear that numerous other initiatives are
in place to support different industries and attract foreign investment. So-called "government
guidance funds", or government-guided investment funds, use public resources to make equity
investments in industries that the Government considers important (Table 3.15). The Secretariat
was not able to get clarity on what these funds are.113 Some of them are still in the process of being
established, and it is unclear what their ultimate size will be. According to some external sources,
they are mostly financed by the Central Government and local governments, large SOEs, and state-
owned financial institutions. Most of the funds are utilized to finance advanced manufacturing, new
materials, and other innovative industries. Information provided in Table 3.15 was not confirmed by
the authorities; they expressed the view that the information is not relevant to this Review. They
also state that these funds were in part privately funded, that they would not provide any subsidies,
and hence would not have to be notified. According to the authorities, these funds are not required
to be notified under the SCM Agreement as support provided through these funds does not constitute
subsidies.
Table 3.15 Government guidance funds

Size
Founding
Name (CNY Industries
year
billion)
Beijing Science and 20 2017 Optoelectronics, big data, new materials, clean energy,
Technology Innovation Fund artificial intelligence, advanced manufacturing,
healthcare, information technology, quantum computing
Chengdu Qianhai Industry 40 2016 Infrastructure, emerging industry, advanced
Guidance Fund manufacturing industry, innovative industry, public
services
Futian Guiding Fund 10 2015 New energy, new material, aviation, healthcare,
information technology
Guangdong Semiconductor 15 2016 Integrated circuits, advanced manufacturing, devices
and Integrated Circuit
Industry Investment Fund
Haihe River Industrial Fund 100 2015 Healthcare, biotechnology, new energy, advanced
manufacturing, mobile Internet, new materials
Henan Industrial 60 2017 Advanced manufacturing, services
Agglomeration Area
Development Investment
Fund
Jiangxi Development and 100 2017 Innovative and emerging industry, traditional industry
Upgrade Guidance Fund upgrade, services
Jilin Industry Investment 10 2015 Strategic emerging industry, modern agriculture, services
Guidance Fund
National Emerging Industry 40 2016 Not specified
Investment Guidance Fund
National SME Development 100 2016 Not specified
Fund
Shandong Finance Group 10 2014 Not specified
Shenzhen Guidance Fund 100 2010 Information technology, healthcare, smart devices,
environmental protection
Shenzhen State-owned Asset 150 2016 Environmental protection, advanced manufacturing
Reform and Development
Fund
Smart Yangtze River Industry 30 2016 Real estate, sports, culture, tourism, agriculture,
Guidance Fund transportation, public services
Xiamen Industrial Investment 10 2015 Displays, computer and telecom devices, healthcare, new
Fund material, tourism and exhibitions, logistics, software,
finance, culture
Xuzhou Industry 39.5 2016 Not specified
Development Fund
Yangtze River Industry Fund 200 2015 Information technology, advanced manufacturing, new
materials, healthcare, clean energy, emerging industries
Zhongyuan Silk Road Fund 20 2017 Airport construction, logistics, trade, culture, tourism
Source: Compiled by the WTO Secretariat from various sources.
113
Therefore, it is not clear if they are subject to notification to the WTO.
- 78 -
3.125. In addition, some other funds that are related to government policies appear to conduct
direct investments to support a particular policy initiative (Table 3.16). These funds include
expenditures under the Belt and Road Initiative (BRI), and funds for China's SOEs. According to the
authorities, the incentives provided by these funds do not constitute subsidies and are not required
to be notified under the SCM Agreement.
Table 3.16 Policy-related funds

Size
Founding
Name (CNY Industries
year
billion)
Advanced Manufacturing 20 2016 "Made in China 2025" focus industries: rail transport,
Investment Fund (first high-end shipping, marine engineering equipment,
phase) industrial robots, new energy cars, modern agricultural
equipment, advanced medical devices, new materials
Beijing Big Data Industry 10 2016 Big data transaction platforms, sensors, chips, data
Investment Fund (first resources, data technology
phase)
Central Enterprise Guochuang 150 2017 High-speed rail, nuclear energy, aerospace, clean energy,
Investment Guidance Fund 3D printing, new energy cars, robotics, quantum network
China Big Data Industry 20-30 2016 Big data and related value chains in Guiyang City
Development Fund
China Culture Industry 20 2011 Culture, media, entertainment, performing arts, data
Investment Fund
National Integrated Circuit 139 2014 Semiconductor manufacturing, chip design, materials,
Industry Investment Fund (first testing and assembly
phase)
Shanghai Integrated Circuit 50 2017 Semiconductor manufacturing, chip design, materials,
Industry Investment Fund testing and assembly
Silk Road Fund 265 2014 BRI-related projects
Source: Compiled by the WTO Secretariat from several sources.
3.126. It would appear that financial support is also provided to the semiconductor industry.
According to an OECD study, it was estimated that Chinese semiconductor firms received 86% of
global equity support and 98% of all below-market borrowing.114 The study also estimated that
Chinese semiconductor companies receive more government funding than companies in other
countries, and have below-market equity returns. Moreover, the study estimated that state
participation in China's semiconductor industry has increased significantly over the past years,
including in companies that started as privately owned. The authorities state that they cannot
confirm the results of the study; they also indicate that the conclusions of the study are not credible
as they are based on estimated data.
3.127. Given the importance of the Chinese economy and the size of government support accorded
to individual companies, China's support measures are reported to be susceptible to affect global
markets, downstream industries, and individual value chains. Such effects of China's support cannot
be quantified in general, as relevant data are not publicly available. Nevertheless, a study by the
OECD found, for example, that China's financial support on energy and concessional finance for
aluminium smelting, coupled with export restrictions on raw aluminium, provide Chinese exporters
of semi-finished aluminium goods with a significant cost advantage, leading to important
repercussions in global markets.115 The authorities state that they do not agree with this view, and
indicate that China does not provide subsidies on energy and concessional finance for aluminium
smelting.
3.128. No official studies on the impact of China's public support on productivity growth and
innovation are available. Available firm-level data have allowed academic studies to analyse the
efficiency of China's government support. With regard to the overall efficiency, it has been found
that government support had a negative effect on corporate investment efficiency and is positively
correlated with overinvestment.116 With regard to R&D support specifically, it has been shown that
114
OECD (2019), Measuring Distortions in International Markets: The Semiconductor Value Chain, OECD
Trade Policy Papers No. 234.
115
OECD (2019), Measuring Distortions in International Markets: The Aluminium Value Chain, OECD
Trade Policy Papers No. 218.
116
Hu, J. et al. (2019), "Government Subsidies and Corporate Investment Efficiency: Evidence from
China", Emerging Markets Review, Vol. 41.
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China's public support led to an increase in patent quantity, but not in patent quality. 117 The
authorities do not agree with the conclusions of these studies.
3.129. In the wake of the COVID‑19 pandemic, the Central Government and regional governments
launched a series of policies to cushion the economic consequences caused by the pandemic, besides
ensuring steady medical supplies and daily necessities. The Central Government's measures include
tax reductions, reduction of certain social insurance fees, increase of employer contributions for
unemployment insurance, temporary exemptions of social insurance fees for SMEs, reduction of
electricity and gas costs, and deferred tax payments for SMEs. Measures taken by regional
governments include the waiving of rents for SMEs, extending government procurement to support
SMEs, selected repayment of employers' social insurance contributions, and exempting companies
severely impacted by the pandemic from various taxes.
3.130. In April 2020, the Government released a Notice on Optimizing Fiscal Subsidies for Promoting
New Energy Vehicles, extending subsidies for electric and hybrid vehicles until end-2022. Vehicles
must meet minimum technical and performance criteria to qualify. The notice for the first time
introduced a sales limit of 2 million vehicles per year. A price limit of CNY 300,000 including tax was
also introduced. No information was available on total expenditure under this programme.
3.131. During the review period, China has continued to provide government support to its
agriculture sector (Section 4.1.2). China's 2019 subsidy notification also provides information about
various programmes in the agriculture sector.118 China notified that it did not provide export
subsidies in 2018.119 No notification on domestic support has been submitted to the WTO since the
previous Review in 2018. The authorities indicate that a new notification would be submitted before
mid-July 2021.
3.132. Available figures indicate that China also continued to provide substantial support to its
fisheries sector. China's subsidy notification refers to six different programmes at the Central
Government level and 25 programmes at the local level.120 For example, CNY 398.5 million was
provided in 2017 and 2018 for stock enhancement. According to external estimates, China's
government support to its fisheries sector totalled USD 7.3 billion in 2018.121 Moreover, a large share
of China's government support to the sector is considered as "capacity-enhancing". The authorities
indicate that a new fisheries policy would be issued soon.
3.3.2 Standards and other technical requirements
3.3.2.1 Overview
3.133. Since its previous Review, China introduced or revised various laws and regulations related
to standards and other technical requirements. On 1 January 2018, the revised Standardization Law
entered into force and included new provisions such as those on association standards. According to
the authorities, the Law improved the procedures for setting mandatory standards (or technical
regulations), clearly defined local and sector standards, and established a disclosure system for self-
declaration of enterprise standards. On 6 January 2020, the SAMR promulgated the Measures for
the Administration of Mandatory National Standards, which stipulate the procedures for making and
revising mandatory standards. They entered into force on 1 June 2020. On 16 January 2020, the
SAMR promulgated the Measures for the Administration of Local Standards, which stipulate
procedures for making and revising local standards; they entered into force on 1 March 2020. On
6 January 2020, the SAMR published the Measures for the Administration of Mandatory National
Standards, which stipulate the procedures for making and revising mandatory standards; they
117
Boeing, P. and Mueller, E. (2019), "Measuring China's Patent Quality: Development and Validation of
ISR Indices", China Economic Review, Vol. 57; Boeing, P. and Mueller, E. (2016), Measuring Patent Quality and
National Technological Capacity in Cross-country Comparison, Centre for European Economic Research
Discussion Paper No. 16-048.
118
119
WTO documents G/AG/N/CHN/51-52, 6 November 2019.
120
WTO documents G/SCM/N/343/CHN, 19 July 2019; and G/SCM/N/343/CHN/Corr.1, 31 July 2019
(Programmes 74-79).
121
Sumaila, U.R., et al. (2019), "A Global Dataset on Subsidies to the Fisheries Sector", Marine Policy,
Vol. 27; and Sumaila, U.R, et al. (2019), "Updated Estimates and Analysis of Global Fisheries Subsidies",
Marine Policy, Vol. 109.
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entered into force on 1 June 2020.122 Other changes during the review period included: (i) the
adoption on 29 June 2019 of the Vaccine Administration Law at the 11th Session of the Standing
Committee of the 13th National People's Congress (it entered into force on 1 December 2019);
(ii) the adoption on 26 August 2019 of the revised Pharmaceutical Administration Law at the
12th Session of the Standing Committee (it entered into force on 1 December 2019); (iii) the
promulgation on 3 September 2019 of the Circular on the Standards of Cosmetics Registration,
Record-Filing, Inspection and Test by the National Medical Products Administration (NMPA) 123;
(iv) the adoption on 31 August 2018 of the Soil Pollution Prevention and Control Law at the Standing
Committee of the 13th National People's Congress; and (v) the issue on 29 April 2020 of the
Measures for the Environmental Management Registration of New Chemical Substances by the
Ministry of Ecology and Environment (MEE) (Order No. 12 of the Ministry), which entered into force
on 1 January 2021.124
3.134. The Standardization Law classifies China's standards into five major categories: national,
sector, local, association, and enterprise. The national standards include both voluntary and
mandatory standards. Sector standards and local standards are voluntary. The Law also stipulates
that, where there are other provisions on the formulation of mandatory standards in laws,
administrative regulations, and decisions of the State Council, such provisions shall prevail.
3.135. The Plan for Deepening Standardization Reform issued by the State Council proposes that
the current mandatory national, sector, and local standards will be gradually integrated into
mandatory national standards; the three-level system of mandatory national, sector, and local
standards concerning environmental protection, engineering, construction, and medicine and
healthcare will be retained. Sector standards in military industries involving national security and
secrets, such as nuclear and aerospace, are managed by the National Defence Science and
Technology Industry Authorities of the State Council.
3.136. The SAMR, established in 2018, is responsible for organizing and guiding the comprehensive
law enforcement of market supervision, including law enforcement and inspection work in the fields
of quality, measurement, certification, accreditation, and standardization. Specifically, the Law
Enforcement and Inspection Bureau of the SAMR is responsible for formulating and organizing the
implementation of systems and measures for the comprehensive law enforcement of market
supervision and investigation and handling of cases; guiding the investigation and handling of
relevant violations of market entities in access, production, operation, and trading; undertaking the
work of organizing, investigating, and supervising the handling of major and important cases with
national influence, or major and important cases involving more than one province (autonomous
region or municipality directly under the Central Government); and guiding the comprehensive law
enforcement of local market supervision.
3.137. While the China National Certification and Accreditation Administration (CNCA) and the
Standardization Administration of China (SAC) no longer exist as entities, the SAMR retains their
functions, using their names where relevant. The General Administration of Quality Supervision,
Inspection, and Quarantine (AQSIQ) was dismantled when the SAMR was established.
3.138. China's standardization system is administered by the SAMR, performing as the SAC. The
Department of Standard Technical Management of the SAMR issues, under the name of the SAC,
national standards plans; approves the release of national standards; and reviews and releases
important documents such as standardization policies, management systems, plans, and
announcements. In addition, it notifies the public of mandatory national standards, undertakes the
management of the National Professional Standardization Technology Committee, and carries out
the regular work of the State Council's standardization coordination mechanism. The Department of
Standards Innovative Management of the SAMR, under the name of the SAC, coordinates, guides,
122
The SAMR also promulgated the Measures for the Administration of Local Standards, which entered
into force on 1 March 2020.
123
NMPA Circular No. 72, 2019. The Circular cancels requirements on qualification recognition for
cosmetic administrative licensing inspection institutions and the designation of record-filing inspection
institutions; it stipulates that inspection institutions can register themselves for recording administration, and
revises the procedures of registration, record-filing, inspections and tests, requirements for inspection items,
and requirements for and styles of inspection reports.
124
Measures for the Environmental Management of New Chemical Substances (Ministry of
Environmental Protection Order No. 7), issued on 19 January 2020, are to be repealed as Order No. 12 enters
into force.
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and supervises the work related to sector, local, association, and enterprise standards. It is also in
charge of organizing and participating in the activities of the International Organization for
Standardization, International Electrotechnical Commission, and other international or regional
standardization organizations, as well as the signing of relevant international cooperation
agreements.
3.139. Work related to standardization is carried out under the unified organization of the SAC, the
NDRC, the NMPA, other ministries, and local and industry associations (such as the China Association
for Standardization) in their respective fields.125
3.140. The responsibility of the MIIT and other institutions, such as the China Electronics
Standardization Institute, the China Communications Standards Association, the NMPA, and the
National Health Commission, in regard to standard setting has remained largely unchanged since
the previous Review.126
3.141. The GACC is responsible for: (i) entry-exit health quarantine, entry-exit inspection, and
quarantine of animals and plants and their products, and the statutory inspection of imports and
exports; (ii) supervision and administration of the appraisal, verification, and quality safety of
imports and exports; (iii) inspection and quarantine as well as supervision and administration of food
and cosmetics imports; and (iv) food export-related work in accordance with bilateral and
multilateral agreements.
3.142. China's technical barriers to trade (TBT) Enquiry Point is headquartered in the Research
Centre of the GACC for International Inspection and Quarantine Standards and Technical
Regulations; it assists the Notification and Enquiry Bureau of MOFCOM to submit TBT notifications.
3.143. National standards are formulated in accordance with the Measures on Administration
of National Standards, Order No. 10, 24 August 1990, unchanged since the previous Review.127 At
the technical examination stage, mandatory standards must be publicly reviewed by convening
meetings, and the period for receiving comments cannot be less than two months. The authorities
state that before their approval, mandatory standards that may have a significant effect on trade
and whose technical content is not in accordance with the technical content of relevant international
standards must be notified to the WTO. Government agencies, such as the NDRC and the MIIT, have
the staff to approve and promulgate technical regulations that may refer to voluntary standards,
rendering them mandatory.
3.144. As at end-2020, there were 39,460 national standards (2,133 mandatory and
37,327 voluntary standards). According to the authorities, at end-2020, among the national
standards that correspond to the relevant international standards, 92.4% of mandatory standards
and 91.4% of voluntary standards were adoptions or adaptations of international standards,
compared with 74.3% and 85.9% at end-2017. Of the national standards approved in 2020 (before
15 July), 4.0% were mandatory, compared with 2.8% in 2018.
3.145. Between January 2018 and 13 April 2021, China submitted 344 TBT notifications, most of
them under Article 2.9 of the TBT Agreement.128 In the Committee on Technical Barriers to Trade,
125
According to the authorities, both domestic and registered foreign-funded enterprises may
participate in China's national standardization activities. They must file an application to participate in the
corresponding technical committee, as specified in the Administration Provisions on National Professional
Standardization Technology Committee.
126
127
Industry or sectoral standards are formulated by the relevant technical committees. The
standardization administrations of the competent ministries, with the support of the industry institutes of
standardization and technical committees, are responsible for establishing industry or sectoral standard
development plans and approving the corresponding standards. Local standards are formulated by the
standardization authorities of provinces, autonomous regions, and municipalities directly under the Central
Government in accordance with the Administrative Measures on Local Standards. Industry or sectoral and local
standards must also be reviewed within five years of their implementation (Guo Bao Wei Ban No. 3, 2009).
128
WTO documents G/TBT/N/CHN/ series from 1 January 2016 to 8 April 2021.
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between January 2018 and 13 April 2021, 25 specific trade concerns (STCs) were raised by Members
regarding TBT measures maintained or planned by China, including 9 new STCs.129
3.3.2.2 Product certification
3.146. Except for the establishment of the SAMR, and the concurrent abolition of the AQSIQ, no
changes have taken place in the laws and regulations governing China's certification system since
the previous Review. Certification and accreditation are regulated by: the Product Quality Law; the
Import and Export Commodity Inspection Law; the Regulations on Certification and Accreditation;
the Regulations on Compulsory Product Certification; the Measures for the Administration of
Certification Bodies; the Measures for the Administration of Certification Certificates and Certification
Marks; the Measures for the Administration of Organic Product Certification; and the Measures for
the Administration of Energy-Saving and Low-Carbon-Emission Product Certification. China
administers both a voluntary certification system and a compulsory product certification system.
3.147. The Certification and Supervision Department and Accreditation, Testing and Inspection
Department under the SAMR, performing as the CNCA, is responsible for, inter alia, policies related
to certification, accreditation, testing, and inspection. The CNCA participates in the certification,
accreditation, testing, inspection, and other international cooperation of qualification certification;
undertakes the signing of relevant international cooperation protocols; organizes national
inter-ministerial conferences on certification and accreditation; and coordinates with local and
sectoral authorities regarding certification, accreditation, testing, and inspection.
3.148. The China National Accreditation Service for Conformity Assessment (CNAS), under the
administration of the SAMR, is responsible for the accreditation of certification bodies, laboratories,
inspection bodies, and relevant bodies. The CNAS is the national accreditation body recognized by
the SAMR (as the CNCA) in accordance with the Regulations on Certification and Accreditation. The
Secretariat of the CNAS is located in the China National Accreditation Institute for Conformity
Assessment (CNAI). As the legal entity of the CNAS, the CNAI assumes legal liabilities arising from
CNAS accreditation activities. The CNAS is mainly responsible for: (i) establishing and operating the
national accreditation system for conformity assessment bodies, and formulating and publishing
accreditation rules, principles, guidelines, and other normative documents in accordance with,
inter alia, China's relevant laws and regulations and international and national standards;
(ii) assessing the competence of local or foreign conformity assessment bodies that have filed
applications, making accreditation decisions, and conducting accreditation-related surveillance and
management on accredited conformity assessment bodies; (iii) directing and regulating the use of
the CNAS logo and accreditation symbols; (iv) organizing personnel training related to accreditation,
and qualifying, recruiting, and managing accreditation personnel; (v) offering relevant technical
services to conformity assessment bodies, and providing the public with publicly available
information on accredited conformity assessment bodies; (vi) participating in international activities
related to conformity assessment and its accreditation, and signing bilateral or multilateral
accreditation cooperation agreements with relevant accreditation bodies, related bodies, or
international organizations; (vii) dealing with appeals and complaints related to accreditation;
(viii) undertaking tasks assigned by relevant government departments; and (ix) carrying out other
activities related to accreditation.
3.149. China's compulsory product certification system, which applies to both domestic products
and imports, aims to enforce product compliance with technical requirements. The products subject
to compulsory product certification are listed in the Compulsory Product Certification Catalogue
(CCC Catalogue); they cannot be sold in China or imported without a China Compulsory Certification
(CCC) and the corresponding CCC marks. 130 The CCC system is based on national compulsory
standards. The products that have been listed in the compulsory certification directory may only
leave the factory, be sold, imported, and used in other business activity after they have been certified
and labelled. In April 2020, for the purpose of optimizing the business environment and facilitating
imports, the Announcement of the State Administration for Market Regulation and the General
Administration of Customs on Releasing the Catalogue of Products Subject to CCC and
129
STCs 294, 296, 428, 456, 457, 466, 477, 489, 493, 509, 526, 527, 533, 534, 545, 547, 551, 576,
584, 611, 641, 642, 644, 665, and 667.
130
SAMR Announcement on the Compulsory Product Certification Catalogue (CCC Catalogue) and
Description and Definition Form (Announcement No. 18, 2020). Viewed at:
http://gkml.samr.gov.cn/nsjg/rzjgs/202004/t20200428_314776.html.
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2020 Reference Table for the Products Numbers (Announcement No. 21, 2020) was issued,
specifying the product numbers involved in the CCC Catalogue.131
3.150. Under SAMR Announcement on the Compulsory Product Certification Catalogue and
Description and Definition Form (Announcement No. 18, 2020), the CCC Catalogue includes
103 products, 19 of which adopted self-declaration assessment. Under this method, the CCC marks
can be applied after the submission of conformity information; there is no need to involve
accreditation bodies for compulsory product certification.
3.151. The CCC Catalogue is approved and released jointly by the SAMR and the CNCA, together
with the relevant industrial administrative departments, if approval from the industry regulator is
required. Responsibility for the general administration of the compulsory product certification system
and its implementation lies with the CNCA. Random conformity sampling tests are conducted on
imports that have already acquired a CCC.
3.152. Procedures to obtain the CCC mark have remained largely unchanged since the previous
Review; with the exception of 19 products that have been accredited by self-declaration, an
application must be submitted to the authorized accredited certification bodies designated by the
CNCA, each of which is authorized to provide certification for several products subject to the CCC.
In the context of the present Review, the authorities have indicated that there are 35 mandatory
certification bodies.132
3.153. Under certain circumstances, exemptions from CCC certification may be granted. Eligible
products include goods and samples required for research, testing, and certification testing;
parts/goods needed directly for end-users' maintenance purposes; equipment/spare parts
(excluding office supplies) used to complement factory production lines/complete production lines;
goods used only for commercial display but not for sale; imported spare parts for the purpose of
exports as a whole machine; and other goods that are exempt from CCC certification for special
purposes.
3.3.2.3 Labelling and packaging
3.154. Imported pre-packaged food or food additives require a label in Chinese, and instructions,
as long as laws require, in Chinese. Such labels and instruction manuals must specify the origin of
the product and the name, address, and contact details of the domestic agent importing the food. 133
The labels and instructions must comply with the provisions of the Food Safety Law and other
relevant laws and administrative regulations and the requirements of the National Food Safety
Standards, and state the country of origin of the food, as well as the name, address, and contact
details of the domestic agent. Pre-packed food without labels and/or instructions in Chinese or whose
labels or instructions do not comply with the provision of the Law may not be imported.
3.155. Several changes to labelling and packaging requirements took place during the review
period. For example, Articles 67-71 of the Food Safety Law, as amended in 2018, specify the
requirements on food labelling. Article 33 of the Regulations on the Implementation of the Food
Safety Law, as amended in 2019, provides that producers and distributors shall print conspicuous
marks for their involvement in the business of genetically modified foods; it also stipulates that the
labelling measures shall be formulated by the food safety supervision and administration department
of the State Council while consulting the agricultural administrative department of the State Council.
131
This involves updating the CCC Catalogue, drafting and promulgating the implementing rules for the
compulsory certification of products listed in the CCC Catalogue, designing and promulgating certification
marks, defining the requirements for CCCs, designating certification bodies and testing laboratories, carrying
out conformity assessment activities for CCC certification, and supervising and inspecting compulsory product
certification. The SAMR may also authorize market regulation authorities of local People's Governments at or
above the county level as local regulation authorities for products listed in the CCC Catalogue in areas under
their administration.
132
Certification bodies include the China Quality Certification Centre, China Security Technology
Certification Centre, China Agricultural Product Quality Certification Centre, China Safety Glass Certification
Centre, Product Conformity Assessment Centre, China Certification Centre for Fire Products under the Ministry
of Public Security, and China Automotive Certification Centre.
133
Food Safety Law, Article 97; and General Rules for the Labelling of Pre-packaged Foods (GB 7718-
2011), Article 4.1.6.3.
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3.156. Other labelling and packaging requirements include the National Safety Standard General
Rules for the Nutrition Labelling of Pre-packaged Foods (GB28050-2011), the National Food Safety
Standard General Rules for the Labelling of Pre-packaged Foods (GB7718-2011), the National Food
Safety Standard General Rules for Labelling of Pre-packaged Foods for Special Dietary Uses
(GB13432-2013), the Vaccine Administration Law (adopted on 29 June 2019), the revised
Pharmaceutical Administration Law (issued on 26 August 2019), Regulations for the Implementation
of the Drug Administration Law (unchanged since 2018), Regulations for the Supervision and
Administration of Medical Devices (unchanged since 2018, currently being revised), the Regulations
on the Supervision and Administration of Cosmetics (issued on 16 June 2020), the Product Quality
Law (unchanged since 2018), the Administrative Measures for the Packaging and Labelling of
Agricultural Products (unchanged since 2018), and the Provisions for the Administration of Food
Labelling (AQSIQ Decree No. 123).134
3.157. The draft Measures for Supervision and Administration of Food Labelling, published by the
SAMR in November 2019, have not yet been adopted by the legislature. The revised draft of the
Wildlife Protection Law was submitted to the 22 nd session of the Standing Committee of the
13th National People's Congress for the first review on 13 October 2020. Currently, it is being revised
and improved based on the opinions of various parties.
3.3.3 Sanitary and phytosanitary requirements
3.3.3.1 Legal, institutional, and policy framework
3.158. During the review period, there was a substantial reorganization of the agencies responsible
for sanitary and phytosanitary (SPS)-related issues. In 2018, the former China Food and Drug
Administration, General Administration for Industry and Commerce, and the AQSIQ were
restructured into the SAMR, and the NMPA was established under the SAMR's responsibility. The
GACC took on many of the responsibilities previously held by AQSIQ. The respective responsibilities
of the different institutions in charge of China's SPS system are set out in Table 3.17. China's WTO
SPS Enquiry Point is the SPS Notification and Enquiry Division in the Research Centre for
International Inspection and Quarantine Standards and Technical Regulations within the GACC. Its
national notification authority is the WTO Notification and Enquiry Centre within MOFCOM. 135
3.159. As set out in the Food Safety Law, local food safety standards may be developed and
published by the health administrative departments of provinces, autonomous regions, or
municipalities directly under the Central Government for local specialties without national food safety
standards. These must be reported to the heath administrative department of the State Council for
recordation and must be immediately repealed after the relevant national food safety standards are
issued.
3.160. The main SPS-related laws and regulations are set out in Table 3.18. Amendments to the
Law on Import and Export Commodity Inspection in 2018 involved deletion of references to customs
inspection and release of goods based on a customs declaration certificate issued by a commodity
inspection organization136, while changes the Law's 2019 Implementing Regulations reflected
institutional changes.137 Similarly, amendments to the Food Safety Law in 2018138 were to reflect
changes to the names of relevant authorities.
134
AQSIQ Decree No. 123 is planned to be abolished after the Measures for the Supervision and
Administration of Food Labelling are issued and enter into force. The Provisions for the Supervision and
Administration of Production of Food Additives (AQSIQ Decree No. 127) were abolished on 13 July 2020.
135
WTO Sanitary and Phytosanitary Information Management System. Viewed at:
http://spsims.wto.org/en/EnquiryPointsNotificationAuthorities/Search?countryCode=C156&filter=.
136
Law on Inspection of Import and Export Commodities (as amended in December 2018). Viewed at:
http://www.customs.gov.cn/customs/302249/302266/302267/2369445/index.html. Changes were made to
Articles 11 and 15 of the Law.
137
Implementing Regulations of the Law on Inspection of Import and Export Commodities (revised and
promulgated on 2 March 2019). Viewed at:
138
Food Safety Law (revised and promulgated on 29 December 2018. Viewed at:
http://www.npc.gov.cn/npc/c30834/201901/c6d064de8295489288ec1383b33212ee.shtml.
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Table 3.17 Central Government institutions with SPS-related responsibilities, 2021

Institution Responsibilities
National Health Supervision and management of public health; food safety risk assessment;
Commission organization and formulation of national standards for food safety; monitoring,
assessment, and information exchange of food safety risks; and safety reviews of
novel food, new food additives, and new varieties of food-related products.
Ministry of Agriculture Supervision of the safety and quality of agricultural products; supervision and
and Rural Affairs management of livestock and poultry slaughtering facilities; and leading the work
(MARA) of national entry-exit animal and plant quarantine.
State Administration Coordination of food safety supervision and administration; organization of the
for Market Regulation formulation of major food safety policies; building a food safety emergency
(SAMR) response system; organization and guidance of emergency responses;
investigation and handling of major food safety incidents; food safety inspection
and administration; establishment of a supervision and inspection system and a
mechanism for identifying and controlling hidden dangers that cover the whole
process of food production, distribution, and consumption; organization of
supervision and sampling inspection to ensure food safety, risk monitoring,
guiding, and urging the verification and treatment of substandard foods, as well
as pre-warning and exchanges of information on risks.
General Administration Entry-exit commodity inspection; entry-exit health quarantine; entry-exit animal
of Customs (GACC) and plant quarantine; administration of inspection and quarantine of imported
food and cosmetic products; and implementation of work related to exported food
in accordance with multilateral and bilateral agreements.
Table 3.18 Main SPS-related laws and regulations, January 2021

Laws Promulgation/revision
Law on the Entry and Exit Animal and Plant Quarantine Effective 1992. Last revised 2009
Food Safety Law Effective 2009. Last revised 2018
Law on Inspection of Import and Export Commodities Effective 1989. Last revised 2018
Law on Quality and Safety of Agricultural Products Effective 2006
Regulations on Implementation of the Law on the Entry and Effective 1997
Exit Animal and Plant Quarantine
Implementing Regulations of the Food Safety Law Effective 2009. Last revised 2019
Implementing Regulations for the Law on Inspection of Import Effective 2005. Last revised 2019
and Export Commodities
Law on Animal Epidemic Prevention Effective 1997. Last revised January 2021
3.161. The Implementing Regulations of the Food Safety Law entered into force in
December 2019139; changes to these regulations reflect the major changes to the Food Safety Law
in 2015 (described in China's previous Review). A draft of the Implementing Regulations was notified
to the WTO in 2017.140 It would appear that an underlying principle of the Law and the Implementing
Regulations is that food producers should hold primary accountability for food safety; they also
contain provisions on traceability of food and agricultural products sold in China.
3.162. China's 13th Five-Year Food Safety Plan (2016-20) set out the priority goals and associated
tasks to improve food safety governance and the development of the food industry. 141 These
included, inter alia, increasing inspections and testing, addressing pollution, improving food safety
standards and their integration with international standards, upgrading research and testing
capacities, strengthening enforcement and improving related laws and regulations. The authorities
indicate that several steps have been taken to realize the goals in the Food Safety Plan including:
projects to formulate or revise standards and inspection methods142; revisions to Administrative
139
Implementation Regulations of the Food Safety Law (which entered into force on 1 December 2019).
Viewed at: http://www.gov.cn/zhengce/content/2019-10/31/content_5447142.htm.
140
WTO document G/SPS/N/CHN/1055, 14 August 2017.
141
FAO, 13th Five-Year National Food Safety Plan. Viewed at:
http://www.fao.org/faolex/results/details/en/c/LEX-FAOC175008.
142
These projects covered general standards; hygienic standards for production and operation;
supporting inspection methods; and standards for food safety and nutrition practices of formula foods for
infants and young children, formula foods for special medical purposes, and group meals for key populations.
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Measures on Food Safety Standards143; improvements to data collection to inform food safety risk
assessments through monitoring activities, studies, and surveys; improvements to quantitative risk
assessment techniques and models in the fields of chemistry and microbiology in order to discover
and assess food safety hazards developed by the China National Center for Food Safety Risk
Assessment; updates to the Manual of National Food Safety Standards; and strengthened sampling
inspection and monitoring of food safety. The authorities also indicate that China has become
increasingly active in developing international food standards.
3.163. MARA plans to introduce an edible agriculture product compliance certificate system and a
National Agriculture Product Quality and Safety Traceability Platform. According to the authorities,
these measures are only applicable to domestic production and operation of edible agricultural
products.
3.164. From 2018 to early 2021, the GACC signed several memoranda of understanding or
cooperation protocol with the relevant authorities in 28 trading partners on SPS-related issues,
namely: import and export water product safety cooperation; import and export food safety
cooperation; implementing SPS measures; animal and/or plant quarantine/inspection; animal health
and quarantine; SPS measures cooperation; further promoting e-certificate exchange and paperless
cooperation; food safety and animal and plant health cooperation; implementing paperless
cooperation on inspection and quarantine certificates; water product e-certificate cooperation;
establishing a cooperation system for joint prevention and control of plant epidemics and diseases
in border areas; establishing the SPS measures working group; and notification and control
procedures for certain significant poultry diseases.
3.3.3.2 SPS measures
3.165. Between 1 January 2018 and 13 April 2021, China submitted 165 notifications to the WTO
Committee on Sanitary and Phytosanitary Measures (SPS Committee), including 2 emergency
notifications.144 The emergency notifications related to the suspension of imports of logs originating
in six Australian states to prevent the introduction of quarantine pests145, and measures with respect
to imported cold-chain food to prevent the transmission of COVID‑19 (see below).146 Most of China's
notifications during the review period relate to human health and food safety (Chart 3.5).
Forty-four of the SPS measures notified by China during the review period were based on
international standards, recommendations, or guidelines.
3.166. The authorities indicate that, over the period January 2018 to December 2020, China issued
22 national standards, including 4 revised ones, for animal health and 77 national standards in the
phytosanitary area (including 2 revised standards). In 2019, China released the latest versions of
the National Food Safety Standard – Maximum Residue Limits for Pesticides in Foods and the National
Food Safety Standard – Maximum Residue Limits for Veterinary Drugs in Goods, which are applicable
to foods sold in the Chinese market.147
3.167. In 2020, the GACC issued the Announcement on Adjusting the Supervision Requirements for
Certain Imports and Exports.148 This is aimed at optimizing the port business environment and
reducing the burden on enterprises through removing certain SPS-related reporting, registration,
certification, inspection, and other regulatory requirements.
3.168. In order to prevent the reintroduction of the COVID‑19 virus through imported cold-chain
food and to protect the health and safety of consumers, the GACC implemented emergency
preventive measures for foreign manufacturers of imported cold-chain foods with positive novel
coronavirus nucleic acid results. This was notified to the WTO as an emergency measure in 2020,
143
According to the authorities, these revisions involved food safety standards of new food raw
materials, new varieties of food-related products, and new varieties of food additives; the harmonization of
local and national standards; and the harmonization of the standards set for imported food without national
food safety standards.
144
WTO Sanitary and Phytosanitary Information Management System. Viewed at:
http://spsims.wto.org.
145
WTO document G/SPS/N/CHN/1194, 12 January 2021.
146
WTO document G/SPS/N/CHN/1173, 21 September 2020.
147
GB 2763-2019 and GB 31650-2019, respectively.
148
GACC Announcement No. 9, 2020. Viewed at:
http://www.customs.gov.cn/customs/302249/2480148/3262223/index.html.
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which is still in force.149 It has been reported that, in 2020, the city of Shenzhen introduced COVID‑19
handling and testing requirements for imports of frozen meat and seafood. In response to the
pandemic, China has also taken measures to facilitate the imports of food and agricultural products
and simplify sanitary approval for imported special medical supplies (Box 3.1).
Chart 3.5 Main elements contained in SPS measures notified by China, 1 January 2018-
13 April
Chart 2021
3.[CHN] Main elements contained in SPS measures notified by China, 1 January 2018 to 13 April 2021
Human health
Food safety
Food additives
Feed additives
Animal feed
Animal health
Labelling
Contaminants
Packaging
MRLs
Modification of content/scope
Pesticides
Mycotoxins
Toxins
Plant health
Pests
Heavy metals
Animal diseases
Territory protection
COVID-19
Beverages
Pharmaceutical products
Aflatoxins
Territory protection
0 10 20 30 40 50 60 70 80 90 100 110 120 130 140 150
Note: This chart indicates the keywords contained in notifications in the WTO Sanitary and Phytosanitary
Information Management System. Most notifications contain more than one keyword.
Source: WTO Sanitary and Phytosanitary Information Management System. Viewed at:
3.169. During the review period, eight new STCs were raised in the SPS Committee, regarding:
(i) restrictions on imports of US beef; (ii) administrative measures for registration of overseas
manufacturers of imported food; (iii) actions related to COVID‑19 that affect trade in food and
agricultural products; (iv) restrictions related to Highly Pathogenic Avian Influenza (HPAI);
(v) recognition of equivalence for third parties as part the China-United States Phase 1 Economic
and Trade Agreement; (vi) a proposed new health certificate format for shrimp imports;
(vii) restrictions on bovine meat imports; and (viii) delays in approving requests for new listings or
reinstatements of export establishments. An additional five STCs were raised in the SPS Committee
regarding Chinese measures in place prior to this review period (Table 3.19).
Table 3.19 SPS-related STCs raised against China, 1 January 2018-13 April 2021
Member(s) raising STC, First raised/last raised,
STC (Members supporting the (number of times
concern) subsequently raised)
China's AQSIQ official certification Israel, United States, 2004/2019, (7)
requirements for food imports (Australia, Canada, Chile,
Costa Rica, European Union,
Guatemala, Japan, Republic
of Korea, Mexico, Norway,
Singapore, Switzerland, and
Thailand)
General import restrictions due to bovine European Union, 2004/2020, (39)
spongiform encephalopathy (BSE) United States, (Canada,
Switzerland, and Uruguay)
149
WTO document G/SPS/N/CHN/1173, 21 September 2020. The notification refers to GACC
Announcement on the Implementation of Emergency Preventive Measures for Foreign Manufacturers of
Imported Cold-chain Foods with Novel Coronavirus Nucleic Acid Positive Results (Announcement No. 103,
2020).
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Member(s) raising STC, First raised/last raised,

STC (Members supporting the (number of times
concern) subsequently raised)
Import restrictions due to African swine fever European Union 2015/2020, (9)
Proposed amendments to the implementation Paraguay, United States 2015/2019, (9)
regulations on safety assessment of
agricultural GMOs
Import restrictions due to HPAI European Union, 2016/2020, (11)
United States
Restrictions on imports of US beef United States 2019
Administrative measures for registration of United States, 2020, (1)
overseas manufacturers of imported food (European Union, Japan,
Switzerland, and Thailand)
Actions related to COVID‑19 that affect trade Canada, United States, 2020, (0)
in food and agricultural products (Australia, Brazil, Mexico,
Paraguay, United Kingdom)
HPAI-related restrictions Ukraine 2020, (0)
Recognition of equivalence for third parties as Australia 2020, (0)
part of the China-United States Phase 1
Economic and Trade Agreement
Proposed new health certificate format for India 2021, (0)
shrimp imports
Restrictions on bovine meat imports India 2021, (0)
Delay in approving requests for new listing Australia 2021, (0)
and reinstatement of export establishments
Source: WTO Sanitary and Phytosanitary Information Management System. Viewed at:
3.3.3.3 Inspection and quarantine
3.170. The Law on Entry and Exit Animal and Plant Quarantine and its Implementing Regulations
regulate the inspection of animals, plants, and related products that enter, exit, or transit through
China; containers, packing materials, and bedding materials that contain or carry animals, plants,
and related products; and means of transport from animal/plant epidemic or infected areas. The
Catalogue of Entry-Exit Commodities Subject to Inspection and Quarantine list all the imports and
exports subject to statutory inspection by the entry and exit inspection and quarantine authorities
prior to their commercialization (or exit) into (from) China. The current catalogue is contained in
GACC Announcement No. 220, 2019.150 During the review period, the GACC issued revised measures
for the supervision and/or inspection and/or quarantine of imports (and exports) of various products,
including cultivation media; fruit; aquatic products, feed, and feed additives; cereals; genetically
modified products; meat products, food, dairy products, and aquatic animals; propagation materials
for entry plants; animals and plants; genetic materials of animals; cotton; and non-edible animal
products.151
3.3.3.4 Genetically modified organisms (GMOs)
3.171. China has so far approved the certificates of import safety only for the following genetically
engineered crops for processing as raw materials: soybeans, corn, rapeseed, cotton, beets, and
papayas, and their products. As indicated by the authorities during China's previous Review, safety
evaluation is required for research, testing, production, processing, operation, and import of
agricultural GMOs in China.152 This is undertaken by China's National Agricultural Genetically Modified
Organisms Safety Council. China's agricultural GMO safety assessment systems are governed by the
Guidelines for the Safety Assessment of Genetically Modified Plants, Guidelines for the Safety
Assessment of Genetically Modified Animals, and Guidelines for the Safety Assessment of Genetically
Modified Microorganisms for Animals, as well as several measures on safety assessment, testing,
and regulation of agricultural GMOs.153 Reportedly in 2018, MARA amended the regulations on safety
assessment, import approval, and labelling of agricultural GMOs; apparently these regulations
150
GACC Announcement No. 220, 2019. Viewed at:
151
GACC Decrees No. 240 and No. 243, 2018.
152
153
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provide for additional in-country trials and studies on new biotech events as part of the dossier
submission process.
3.172. The Implementing Regulations of the 2019 Food Safety Law require the introduction of
conspicuous labelling requirements for genetically modified foods. China has not replaced the
Regulations on Administration of the Labelling of Agricultural Genetically Modified Organisms with
the Implementing Regulations of the Food Safety Law.
3.3.4 Competition policy and price controls
3.3.4.1 Competition policy
3.3.4.1.1 Legislative and institutional framework
3.173. During the review period, the legislative and institutional framework of the competition
regime underwent significant adjustments. Relevant adjustments are still in progress. As part of the
institutional reform of the State Council in 2018, the SAMR was established as the national
administrative body for regulating market-related issues, including competition. The previous
functions and personnel of the NDRC, the SAIC, and MOFCOM in their respective fields of competition
policy merged into the SAMR. Thus, the fragmentation of the administrative enforcement of
competition policy came to an end.154 A new Anti-Monopoly Bureau and a new Price Supervision and
Anti-Unfair Competition Bureau were established as the competition agencies within the SAMR. The
institutional structure of competition authorities at the provincial and local levels of government has
also been adjusted accordingly. The functions of the new Anti-Monopoly Bureau include:
(i) coordinating and promoting the implementation of competition policies, and organizing and
guiding the review of fair competition; (ii) formulating anti-monopoly measures and guidelines;
(iii) organizing the enforcement of anti-monopoly rules; and (iv) undertaking international
cooperation and exchanges in anti-monopoly enforcement. The State Council also established an
Anti-Monopoly Committee to organize, coordinate, and guide the anti-monopoly work across the
country. The Committee is headed by a leader of the State Council and composed of senior officials
from relevant ministries and commissions. Following the institutional reform in 2018, the SAMR now
serves as the General Office of the Committee and is responsible for its day-to-day work.155
3.174. Following the completion of the institutional adjustment, one of the priorities of the SAMR is
the adjustment of the competition policy legal framework by updating and integrating relevant
departmental rules and guidelines that had been issued by previous enforcement authorities. The
Anti-Monopoly Law (AML)156, the Anti-Unfair Competition Law157, and the Price Law remain the main
legislation in the area of competition policy. The Anti-Unfair Competition Law was revised again in
2019 to strengthen the protection of trade secrets. The SAMR issued several new integrated rules
and guidelines, and many previous rules and guidelines ceased to apply. Notably, in June 2019, the
SAMR issued new rules concerning monopoly agreements, the abuse of dominant market positions,
and the abuse of administrative monopoly. They are: (i) the Interim Provisions on Prohibiting
Monopoly Agreements (SAMR Order No. 10, 2019); (ii) the Interim Provisions on Prohibiting Abuse
of Dominant Market Positions (SAMR Order No. 11, 2019); and (iii) the Interim Provisions on
Prohibiting Abuse of Administrative Power to Eliminate or Restrict Competition (SAMR Order No. 12,
2019). These new rules are expected to unify enforcement procedures and standards in relevant
fields. Concerning concentration of undertakings, in September 2018, the SAMR updated and issued
seven guiding rules on notifications of concentration of undertakings. In October 2020, the SAMR
issued the Interim Provisions on the Examination of Concentration of Undertakings (SAMR Order
No. 30, 2020). With regard to competition issues related to IPR, in October 2020, the SAMR amended
the Provisions on Prohibiting Abuse of Intellectual Property Rights to Eliminate or Restrict
154 Since the promulgation of the Anti-Monopoly Law in 2008, the administrative enforcement of the Law
had long been divided among the NDRC, MOFCOM, and the former SAIC. There had been the academic view
that such an institutional framework had not been able to ensure the full functioning of competition policy
because it had diminished coherence in law and policy. See WTO document WT/TPR/S/375/Rev.1,
14 September 2018, paras. 3.148-3.149.
155 Before the institutional reform in 2018, MOFCOM served as the General Office of the Committee.
156
For more information about the Anti-Monopoly Law, see WTO document WT/TPR/S/375/Rev.1,
14 September 2018, paras. 3.144-3.145.
157
The Anti-Unfair Competition Law was amended in 2017 to remove its overlaps with the
Anti-Monopoly Law. Major changes were explained in WTO document WT/TPR/S/375/Rev.1,
14 September 2018, para. 3.146.
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Competition (SAMR Order No. 31, 2020). In addition, the Anti-Monopoly Committee of the
State Council issued several guidelines concerning various aspects of competition policy
enforcement. Box 3.2 presents the main applicable laws, regulations, and guidelines dealing with
competition policy issues in China.
3.175. The AML is currently under amendment. The main purpose of the amendment is to further
improve the anti-monopoly system and rules and enhance the enforcement of the Law. The SAMR
published a draft of the amended Law for public comments on 2 January 2020.158 According to the
authorities, 265 comments were received from 75 organizations and citizens. These comments
concern almost all aspects of competition policy, including monopoly agreements, abuse of dominant
market position, abuse of administrative power, notification of concentration of undertakings,
investigation, and legal liability. The draft of the Law was completed and submitted to the
State Council in December 2020.
Box 3.2 Main laws, regulations, and guidelines dealing with competition policy issues
Laws
• Anti-Monopoly Law (2007)
• Anti-Unfair Competition Law (as amended in 2019)
• Price Law (1997)
Generally applicable regulations/guidelines

• SAMR Notice on the Authorization of Anti-monopoly Law Enforcement (SAMR Anti-Monopoly Notice
No. 265, 28 December 2018)
• SAMR Notice on Special Documentation Templates in Anti-Monopoly Cases (SAMR Anti-Monopoly Notice
No. 72, 3 April 2019)
• Provisions on Prohibiting Abuse of Intellectual Property Rights to Eliminate or Restrict Competition (as
amended by SAMR Order No. 31, 23 October 2020)
• Guidelines of the Anti-Monopoly Committee of the State Council on the Definition of Relevant Market
(24 May 2009)
• Guidelines of the Anti-Monopoly Committee of the State Council on Commitments by Operators in
Monopoly Cases (4 January 2019)
• Guidelines of the Anti-Monopoly Committee of the State Council on Conformity with the Anti-Monopoly
Laws and Regulations (11 September 2020)
• Guidelines of the Anti-Monopoly Committee of the State Council on Anti-Monopoly in the Field of
Intellectual Property Rights (4 January 2019)
• Guidelines of the Anti-Monopoly Committee of the State Council on Anti-Monopoly in the Field of Internet
Platform Economy (7 February 2021)
Regulations on abuse of administrative power
• Interim Provisions on Prohibiting Abuse of Administrative Power to Eliminate or Restrict Competition
(SAMR Order No. 12, 26 June 2019)
• State Council Opinions on Establishing A Fair Competition Review System in the Development the Market
System (Guo Fa No. 34, 2016)
• NDRC, MOF, MOFCOM, SAIC and Legislative Affairs Office of the State Council Notice on Issuing the
Detailed Rules for the Implementation of the Fair Competition Review (Trial) (NDRC Notice Jia Jian
No. 1849, 2017)
• SAMR Announcement on Issuing the Guidelines for the Implementation of Third-party Assessments in
Fair Competition Reviews (SAMR Announcement No. 6, 2019)
Regulations on monopoly agreements

• Interim Provisions on Prohibiting Monopoly Agreements (SAMR Order No. 10, 26 June 2019)
• Guidelines of the Anti-Monopoly Committee of the State Council on the Application of A Leniency
Programme in Horizontal Monopoly Agreement Cases (4 January 2019)
Regulations on abuse of dominant market positions

• Interim Provisions on Prohibiting Abuse of Dominant Market Positions (SAMR Order No. 11, 26 June 2019)
Regulations on price-related monopoly

• Provisions on the Administrative Punishment of Price-related Violation (2010 Revision)
158The draft amended Law is available at:

http://www.samr.gov.cn/hd/zjdc/202001/t20200102_310120.html.
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Regulations on concentration of undertakings

• Interim Provisions on the Examination of Concentration of Undertakings (SAMR Order No. 30, 2020)
• Provisions of the State Council on Thresholds for Prior Notification of Concentrations of Undertakings
(State Council Decree No. 529, 2008)
• Notification Form of Anti-monopoly Examination on the Concentration of Undertakings (as amended by
SAMR on 29 September 2018)
• Measures for Calculating the Turnover for the Declaration of Business Concentration in the Financial
Industry (MOFCOM, PBOC, China Banking Regulatory Commission, China Securities Regulatory
Commission, and China Insurance Regulatory Commission Order No. 10, 2009)
• Guidelines on the Procedures of Anti-Monopoly Review of Concentration of Undertakings
(29 September 2018)
• Guiding Opinions on the Notification of Simple Cases of Concentration of Undertakings (as amended on
29 September 2018)
• Guiding Opinions on Prior Notification of Concentration of Undertakings (as amended on
29 September 2018)
• Guiding Opinions on Regulating Notification Names for Cases of Concentration of Undertakings (as
amended on 29 September 2018)
• Guiding Opinions on Documentations and Materials in the Prior Notification of Concentration of
Undertakings (as amended on 29 September 2018)
• Model Text of Entrustment Agreement on Monitoring the Fulfilment of Attached Remedies in Concentration
of Undertakings (non-binding) (amended on 29 September 2018)
Sectoral regulations
• Guidelines of the Anti-Monopoly Committee of the State Council on Anti-Monopoly in Automotive Industry
(4 January 2019)
Other regulations
• Interim Provisions on Regulating Sales Promotion (SAMR Order No. 32, 29 October 2020)
3.3.4.1.2 Monopoly agreements
3.176. The AML and the SAMR's Interim Provisions on Prohibiting Monopoly Agreements (SAMR
Order No. 10, 26 June 2019) prohibit six types of horizontal agreements: (i) fixing prices;
(ii) restricting the availability of products; (iii) splitting the markets; (iv) restricting the purchase or
development of new technologies; (v) joint boycotting of transactions; and (vi) other agreements
confirmed by the authorities; and three types of vertical agreements: (i) fixing the prices of products
resold to a third party; (ii) restricting the lowest prices of products resold to a third party; and
(iii) other agreements confirmed by the authorities. The prohibition applies to written or verbal
monopoly agreements or decisions and to concerted behaviour among firms without explicit written
or verbal agreement. Trade associations are prohibited from introducing charters, rules, decisions,
and standards that would eliminate or restrict competition and from organizing or promoting
monopoly agreements among their members.
3.177. The AML provides for the application of administrative penalties for concluding and
implementing a monopoly agreement, including issuing an order to discontinue the violation, the
confiscation of any unlawful gains, and the imposition of a fine of between 1% and 10% of the
turnover realized in the previous year. If the monopoly agreement has not yet been implemented,
the fine may not exceed CNY 500,000. Monopoly agreements as a result of the abuse of
administrative power are equally subject to penalties. Mitigation or exemption from the penalty may
be obtained in cases of voluntary collaboration with the investigating authority or by providing
material evidence during the investigation. On 4 January 2019, the Anti-Monopoly Committee of the
State Council published Guidelines on the Application of a Leniency Programme in Horizontal
Monopoly Agreement Cases, according to which, generally speaking, a maximum of three qualified
operators may be granted lenient treatment. The first company that applies for leniency will be given
full or no less than 80% immunity from the fine; the second company, 30%-50%; the third,
20%-30%; and others, no more than 20%.
3.3.4.1.3 Dominant market positions
3.178. The AML and the SAMR's Interim Provisions on Prohibiting Abuse of Dominant Market
Positions (SAMR Order No. 11, 26 June 2019) prohibit operators holding dominant market positions
from certain types of conduct by abusing their dominant position. For instance, these firms are
prohibited from: (i) selling products at unfairly high prices or purchasing products at unfairly low
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prices159; (ii) selling products at prices below costs without valid reasons; (iii) refusing to deal with
counterparts, or imposing anti-competitive conditions in transactions; (iv) unreasonable product
bundling; (v) applying differential prices among counterparts on an equal footing; and (vi) refusing
counterparts access to essential facilities without justified reasons.
3.179. The Interim Provisions also make it clear that operators in the public utility sectors, such as
water, electricity, gas, heating, telecommunications, cable television, postal services, and
transportation, should not abuse their dominant market position to hurt consumers.
3.180. Operators found to have violated relevant provisions may be subject to the confiscation of
any unlawful gains and to fines of 1%-10% of the turnover achieved in the previous year.
3.3.4.1.4 Mergers and acquisitions
3.181. According to the AML, the Provisions of the State Council on Thresholds for Prior Notification
of Concentrations of Undertakings (State Council Decree No. 529, 2008) and the SAMR's Interim
Provisions on the Examination of Concentration of Undertakings (SAMR Order No. 30, 2020), all
concentrations reaching certain thresholds must be notified to the SAMR for approval before any
concentration activity takes place. Concentrations may take the form of merger, acquisition, or
business control through contract. The notification thresholds are: (i) a combined worldwide
turnover of all concerned operators exceeding CNY 10 billion in the year preceding the merger, and
an individual turnover in the mainland of China of at least two of the operators exceeding
CNY 400 million; or (ii) a combined turnover in the mainland of China of all concerned operators
exceeding CNY 2 billion in the year preceding the merger, and an individual turnover in China of at
least two operators exceeding CNY 400 million. In case the SAMR concludes that the proposed
concentration has or could have the effect of eliminating or restricting competition, the SAMR will
allow the notifying operator to submit additional written comments and materials to support their
application.
3.182. Operators participating in a concentration proposal may submit to the SAMR a proposal with
a commitment to implement certain remedies that would alleviate the anti-competitive effect. The
SAMR may attach three types of remedies to an approved concentration: (i) structural remedies
requiring the disinvestment of tangible assets, IPRs, and other intangible assets, or relevant rights
and interests, etc.; (ii) behavioural remedies such as operators making available their respective
networks, platforms, and other infrastructure; licensing key technologies (including patents,
proprietary technologies, or other IPRs); and terminating exclusive agreements; and (iii) a
combination of structural and behavioural remedies. For concentrations approved subject to
additional conditions, relevant operators are obliged to report to the SAMR on how relevant
conditions are fulfilled. The SAMR may monitor and check the fulfilment by itself or through a trustee.
Trustees that have not fulfilled their monitoring obligations may face a fine of no more than
CNY 30,000.
3.183. To facilitate notification, swift review procedures were established for cases that are defined
as "simple cases". The relevant rules are contained in the SAMR's Interim Provisions on the
Examination of Concentration of Undertakings and the SAMR Guiding Opinions on the Notification of
Simple Cases of Concentration of Undertakings (as amended on 29 September 2018).160 The simple
159 Article 14 of the Interim Provisions provides that consideration may be given to prices offered by
different operators in the same market, prices offered by the same operator in the same or similar markets,
and abnormal price fluctuation in relation to production cost.
160
Article 17 of the SAMR's Interim Provisions on the Examination of Concentration of Undertakings
(SAMR Order No. 30, 2020) provides that a concentration shall be considered as a simple case when: (i) in the
same relevant market, the total market share of all business operators participating in the concentration is less
than 15%; (ii) an upstream-downstream relationship exists among the business operators participating in the
concentration, and the market share of such business operators in both the upstream and the downstream
markets is less than 25%; (iii) the business operators participating in the concentration are neither in the same
relevant market nor have any upstream-downstream relationship, and their market share in each market
relevant to the concentration is less than 25%; (iv) the business operators participating in the concentration
intend to establish a joint venture abroad, which will not engage in any economic activities within the territory
of China; (v) the business operators participating in the concentration intend to acquire the equity or assets of
an overseas enterprise that does not engage in any economic activities within China; or (vi) a joint venture
jointly controlled by two or more business operators will be controlled by one or more of the existing business
operators after the concentration.
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cases shall be published on the SAMR website for 10 days for public comment. Simple cases require
simpler documentation and less consultation and are intended to result in higher efficiency and
shorter timelines.
3.3.4.1.5 Administrative monopoly
3.184. The AML generally prohibits administrative organs or organizations empowered by law or
administrative regulation to administer public affairs from abusing their administrative power to
eliminate or restrict competition. On 26 June 2019, the SAMR issued the Interim Provisions on
Prohibiting Abuse of Administrative Power to Eliminate or Restrict Competition (SAMR Order No. 12,
2019). The Interim Provisions further elaborate on the prohibitions defined in the AML. Under the
provisions of the AML, remedies against administrative monopoly consist of rectification orders by
the superior authorities, together with punishment of officials in charge and other directly liable
persons.
3.185. To address administrative monopolies, China continuously promoted fair competition review
of all of its administrative policies and measures during the review period. The initiative started in
2016 under the guidance of the State Council Opinions on Establishing a Fair Competition Review
System in the Development the Market System (Guo Fa No. 34, 2016). It aims to tackle
anti-competitive issues such as local protectionism, regional market closure, barriers to market
entry, and illegal preference polices, which are caused by inappropriate administrative measures of
the Government. The mechanism requires that all administrative rules, norms, and measures in
relation to market access, industrial development, investment promotion, tendering activities,
government procurement, business operation norms, and qualification criteria go through fair
competition review before being introduced. Any administrative measures that have the effect of
eliminating or restricting competition should not be put into place unless they fall into the exceptions
prescribed by the State Council Opinions. In the course of policy-making and fair competition review,
the authorities should hear the viewpoints of stakeholders or collect public comments. In 2017, the
NDRC, the MOF, MOFCOM, the SAIC, and the Legislative Affairs Office of the State Council jointly
issued the Detailed Rules for the Implementation of the Fair Competition Review (Trial) (NDRC Notice
Jia Jian No. 1849, 2017). The SAMR, the NDRC, the MOF, and MOFCOM jointly published the Notice
on Clearing Policies and Measures that Impede the Single Market and Fair Competition (SAMR
Anti-Monopoly Notice No. 245, 2019) on 25 December 2019 and the Notice on Further Promoting
Fair Competition Reviews (SAMR Anti-Monopoly Notice No. 73, 2020) on 9 May 2020. The latter
requires that such clearing work be conducted periodically in the future. According to the authorities,
1.89 million documents were examined in 2019 and 2020, and nearly 30,000 of them were abolished
or revised.
3.3.4.1.6 Enforcement
3.186. Following the institutional reform of 2018, the SAMR has been the main anti-monopoly
enforcement agency in China. On 28 December 2018, the SAMR circulated the Notice on the
Authorization of Anti-monopoly Law Enforcement (SAMR Anti-Monopoly Notice No. 265, 2018) that
specifies the enforcement mechanism and the obligations of relevant authorities. According to the
Notice, the SAMR is directly responsible for cross-provincial anti-monopoly cases, anti-competitive
conduct of provincial governments involving abuse of their administrative power, and complicated
cases and cases of nationwide significance. The SAMR may delegate such responsibilities to
provincial-level administrations. The SAMR may also ask provincial-level administrations to carry out
investigations in specific cases on its behalf. These administrations are also responsible for
anti-monopoly cases within their respective regions. The Notice also requires that enforcement
agencies at different levels take a proactive approach in handling anti-monopoly cases and
preventing anti-monopoly conduct. It also emphasizes the importance of consistent enforcement
procedures and criteria, improving transparency in relevant cases, strengthening the capacity of
enforcement agencies, and enhancing competition advocacy.
3.187. In December 2020, the SAMR published its first enforcement annual report, the 2019 Annual
Report on Anti-Monopoly Enforcement in China.161 According to the Report, in 2019, the SAMR and
the provincial administrations for market regulation initiated 103 monopoly investigations, including
28 cases on monopoly agreements, 15 on abuse of dominant market positions, 24 on abuse of
administrative power, and 36 on illegal concentration of undertakings. Among those 103 cases,
161
SAMR. Viewed at: http://www.samr.gov.cn/xw/zj/202012/P020201224808232684415.pdf.
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46 were closed, and fines totalling CNY 320 million were issued. These cases mainly concerned the
following industries: natural gas, pharmaceuticals, auto parts, milk powder, transportation, storage,
and real property. Investigated undertakings include SOEs, FIEs, private companies, and industrial
associations. Concerning concentration of undertakings, the SAMR received 503 notifications,
investigated 462 cases, and concluded 465 cases. Among the closed cases, five were approved with
conditions, accounting for about 1.1%. Decisions on monopoly cases and the reviews of
concentration cases are published on the SAMR website (http://www.samr.gov.cn/fldj/tzgg/). The
2019 Annual Report on Anti-Monopoly Enforcement also presented 11 typical anti-monopoly cases,
covering different types of anti-monopoly conducts.
3.3.4.1.7 International cooperation
3.188. China has been active in international cooperation in the area of competition policy. By
mid-2020, China signed 53 international anti-monopoly cooperation documents with 32 countries
and regions and established bilateral and multilateral anti-monopoly cooperation mechanisms. Since
its establishment in 2018, the SAMR has signed bilateral memoranda of understanding (MOUs) on
anti-monopoly cooperation with the competition authorities of the European Union, Japan, the
Republic of Korea, Serbia, Belarus, the Philippines, and Morocco. China and the Russian Federation
renewed their MOU on the Implementation of the Agreement on Cooperation and Exchanges in
Anti-monopoly and Anti-Unfair Competition (2020-21). The SAMR extended the MOU on Cooperation
with BRICS Countries in the Field of Competition Laws and Policies.162 China actively participated in
the BRICS Competition Conference and furthered cooperation with BRICS countries in competition
policy. China also carried out cooperation and coordination in many merger and monopoly agreement
cases with its trade partners such as Canada, the European Union, Germany, India, the
United States, the Russian Federation, and South Africa. China also participated in the United
Nations Conference on Trade and Development (UNCTAD) activities in the area of competition and
consumer protection.
3.189. There are competition chapters in China's bilateral FTAs with seven separate countries, as
well as the Regional Comprehensive Economic Partnership (RCEP) Agreement and the Agreement
on Economic and Trade Cooperation with the Eurasian Economic Union (EAEU). Discussions on such
chapters are ongoing in the context of several other FTA or FTA upgrade negotiations, including
those with Japan and the Republic of Korea, the Gulf Cooperation Council, Norway, the Republic of
Moldova, Israel, and Peru.
3.3.4.2 Price controls
3.190. There were no changes to the legislation concerning price controls during the review period.
Article 18 of the Price Law163 authorizes the competent authorities to carry out, when necessary,
price controls over: (i) products that have a significant bearing on the national economy and people's
livelihoods; (ii) a limited number of rare products; (iii) products of natural monopoly; (iv) key public
utilities; and (v) key public services. Laws and regulations on specific industrial/service sectors may
also contain provisions on price administration that reaffirm that relevant business operators or
service providers should follow the principles and rules set out by the Price Law. These laws and
regulations include, inter alia, the Pharmaceutical Administration Law, the Railway Law, the Postal
Law, the Compulsory Education Law, the Notary Law, the Decision of the Standing Committee of the
National People's Congress on the Administration of Judicial Authentication, the Civil Aviation Law,
and the Commercial Bank Law. Laws and regulations related to price controls are summarized in
Table 3.20.
3.191. Price controls take two forms: "government-set prices" or "government-guided prices".
Government-set prices are fixed prices set by the competent authorities, while government-guided
prices are prices set by business operators within a range of prices set by the competent pricing
departments or other related government departments, within which the real price is allowed to
fluctuate. The determination of government-set prices or government-guided prices varies according
to the type of product or service. Consideration is usually given to the market situation and average
social costs, as well as economic, regional, and seasonal factors, and development and social needs.
162
BRICS countries are Brazil, the Russian Federation, India, China, and South Africa.
163MOFCOM. Viewed at:
http://english.mofcom.gov.cn/article/policyrelease/Businessregulations/201303/20130300046121.shtml.
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Table 3.20 Department rules related to price controls, 2021

Laws/regulations
Central Government Pricing Catalogue NDRC Order No. 31, 2020
Regulations on Government Pricing NDRC Order No. 7, 2017
Measures on Monitoring and Auditing the Costs in NDRC Order No. 8, 2017
Government Pricing
Measures on Hearings in Government Pricing NDRC Order No. 2, 2008
Regulations on Prohibiting Low Price Dumping State Planning Commissiona Order No. 2,
1999
Regulations on Prohibiting Price Fraud State Planning Commission Order No. 15,
2001
Provisions on Price Monitoring NDRC Order No. 1, 2003
Administrative Measures on the Price of Water Supplied by NDRC and the Ministry of Water Resources
Conservancy Projects Order No. 4, 2003
a The State Planning Commission is the predecessor of the National Development and Reform
Commission and was replaced by the latter in 2008 in the internal reorganization of the State
Council.
3.192. The commodities and services subject to price controls are listed in a Central Government
Pricing Catalogue and in Local Government Pricing Catalogues compiled by the provinces,
autonomous regions, and municipalities, and they approved by the State Council. The Catalogues
are updated regularly. The current Central Government Pricing Catalogue was issued by the NDRC
on 13 March 2020 (NDRC Order No. 31, 2020) and came into effect on 1 May 2020.164 The previous
Catalogue (NDRC Order No. 29, 2015) was replaced at the same time.
3.193. Products subject to government-set or -guided prices are listed in Table 3.21. Currently, less
than 3% of the economy is covered by price controls.
3.194. Products and services subject to prices set or guided by local governments are summarized
in Table 3.22.
Table 3.21 Products/services subject to price controls by the Central Government, 2021
Item Pricing contents Remarks
Electricity Electricity transmission-distribution price at or
transmission and above the provincial level
distribution
Oil and gas Trans-provincial (autonomous region or Except for the internal pipelines of
pipeline municipality directly under the Central enterprises
transportation Government) pipeline transportation price
Basic Railway Hard seat and hard sleeper Powered car trainsets and newly
transportation transportation passenger fares of ordinary built railway-passenger-dedicated
services passenger trains on railways lines controlled by social capital
wholly owned or controlled by investment are not included in the
the Central Government pricing range.
through stockholding
Bulk cargo and baggage The pricing range covers the
transportation prices of the transportation prices of coal, oil,
railways wholly owned or grains, fertilizers, and other full-car
controlled by the Central loads of cargos and baggage,
Government through except for cargo transportation
stockholding through newly built railways
controlled by social capital
investment.
Port services Service fees of the The pricing range covers the
monopolistic services of the entering and leaving ports, and the
main ports along the coast berthing and departing of ships,
and the main trunk of the port security, and other services.
Yangtze River and all the
other ports open to vessels of
foreign nationality
The Central Government Pricing Catalogue. Viewed at：

164
https://www.ndrc.gov.cn/xxgk/zcfb/fzggwl/202003/t20200316_1223371.html.
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Item Pricing contents Remarks

Civil aviation Passenger fares for domestic Except for first-class and business-
services civil air routes and domestic class fares
sections of international civil
air routes not eligible for
competition
Fees of the monopolistic part The pricing range covers the service
of safeguard services for civil fees of the monopolistic services of
aviation civil airports and military and civil
dual-use airports, flight inspection
service fees of civil airlines, and
civil air traffic management service
fees.
Water supply of Prices for water supplied by trans-provincial Except for the prices negotiated
major water (autonomous region or municipality directly voluntarily between suppliers and
conservancy under the Central Government) water demanders
projects conservancy projects directly under the Central
Government
Important postal Mail delivery fees Except for competitive fields
services Postal remittance fees (including volume weight-calculated
Classified mail correspondence fees packages)
Fees for the distribution of newspapers and
periodicals prescribed by the State
Mailing fees of packages with the single weight
of less than 10 kg
Important Basic service charges of commercial banks, bank The pricing range covers the basic
professional card transaction fees services of commercial banks such
services as transfer and remittance, cash
remittance and bills, and bank card
transaction services (except for
competitive links such as acquiring
service fees).
Special drugs and Special drugs Prices of narcotic drugs and
blood the first category of
psychotropic drugs
Blood Supply prices at blood banks
of blood for clinical use by
citizens
Table 3.22 Products/services subject to price controls by local governments, 2020

Product Type of control/rationale Regulation
Environment The compensated use and trading of pollutant Regulations on Urban Drainage
protection charges discharge right and hazardous wastes disposal and Sewage Treatment
charges are subject to local government pricing
regulation.
Rationale: public utilities
Urban household Urban household waste charges are subject to Circular on Implementing Urban
garbage disposal local government pricing regulation. Household Garbage Disposal
charges Rationale: public utilities Charges and Promoting Garbage
Disposal Industrialization
Sewage disposal Sewage disposal charges are subject to local Measures for the Administration
charges government pricing regulation. of Collection Standards for
Rationale: public utilities Pollutant Discharge Fees
Real estate prices Economical housing, low-price house rental, and Administrative Measures on
and charges of property service charges are subject to local Economical Housing
related services government-guided prices. Administrative Measures on Low-
Rationale: public service price House Rental
Entrance to state- Prices are subject to regulation of local Tourism Law
owned key government pricing or local government-guided
sightseeing sites prices.
Rationale: public service
3.195. The Government continues to implement the minimum procurement price (MPP) policy in
government procurements of unhusked rice and wheat in their main production areas so as to
maintain stable prices. In October 2019, the Government announced that the MPP of wheat would
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remain unchanged in 2020, with a total procurement volume of 37 million tonnes. In February 2020,
the Government announced that the MPP of unhusked rice would remain basically the same as in
the previous year with a total government procurement volume of 50 million tonnes.
3.3.5 State trading, state-owned enterprises, and privatization
3.196. China provided its last full notification on state trading enterprises (STEs) in 2018. 165 The
authorities indicate that a new notification would be submitted before mid-July 2021. The legislation
regulating state trading has not changed since 2014, nor have the reasons for maintaining this
practice or the products subject to it. According to the authorities, state trading remains in place to
ensure a stable supply and price of the products concerned, ensure food security, and protect
exhaustible and non-recyclable natural resources and the environment.
3.197. STEs in China have the exclusive right to import or export the following products: wheat,
maize, sugar, tobacco, rice, cotton, crude and processed oil, refined coal, chemical fertilizers,
tungsten and tungstate products, antimony, and silver. The authorities indicate that STEs in China
operate following the market mechanism, with no government interference.
3.198. The authorities indicate that the following companies can be considered as STEs: China
Tobacco International Inc., China National Offshore Oil Corporation, Sinochem Group, China
International Petroleum and Chemicals Co. Ltd., China National Agricultural Means of Production
Group Co., Chinatex Corporation Co. Ltd., and Xinjiang Yin Long International Agriculture
Cooperation Co. Ltd.166
3.199. In China's economy, state ownership of companies is important and coexists with diverse
forms of private ownership. State participation varies from wholly SOEs and majority state ownership
to the State acting as another shareholder. The authorities note that the preponderance of public
ownership is upheld in China's economy; the State encourage the development of a mixed-ownership
economy, which involves cross-ownership holdings and an integration between state-owned,
collective, non-public (private), and other types of capital. The private sector is dominant in
industries such as clothing, food, and assembly for export, while companies are predominantly
state-owned in sectors such as energy, utilities and transport, and financial and telecom services.
SOEs are divided into commercial entities and public welfare entities.
3.200. The authorities indicate that, while privatization of SOEs is not planned, progress has been
achieved in mixed-ownership reform. According to the authorities, in November 2020, the Central
Commission for Comprehensive Reforms approved a new proposal for a structural plan of China's
SOEs.
3.201. The number of state-owned industrial enterprises in the industrial sector increased slightly
during the past years, whereas their number in the construction sector fell (Table 3.23). Profits of
industrial SOEs increased until 2018, but fell strongly in 2019. SOEs and their subsidiaries with
mixed ownership also play an important role on the stock markets.
3.202. The State-Owned Asset Supervision and Administration (SASAC) is in charge of contributing
capital to, and appointing top managers in, SOEs under its management. It acts as a representative
of the Government and is directly subordinated to the State Council. In January 2021, the number
of SOEs under SASAC's authority totalled 97 (compared with 98 in January 2018), 428 subsidiaries
of which are listed on national or international stock exchanges. No information was available on the
number of employees or total assets of the companies controlled by SASAC. SOEs in the financial
sector are controlled by the State Council and the MOF.
3.203. The legal status of SOEs varies from fully Government-owned entities to stock companies
with the State or state agencies as the dominant stockholder. Hence, many large and formally
private companies that may even be traded on the stock market have the State as an important or
major shareholder, through direct ownership or state investment vehicles. For example, Ping An
165
WTO documents G/STR/N/16-17/CHN, 24 July 2018.
166
These companies are mentioned in WTO documents G/STR/Q1/CHN/9 and G/C/W/749, 13 December
2017.
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Insurance, China's biggest insurance company, has Shenzhen Investment as its single largest
shareholder, and several other state entities also own significant portions of the company. 167
Table 3.23 SOEs in China's economy, 2013-19

Sector 2013 2014 2015 2016 2017 2018 2019
Industrial sectora
Number of total enterprises 369,813 377,788 383,148 378,599 372,729 378,440 377,815
Number of SOEsb 18,574 18,808 19,273 19,022 19,022 18,670 20,683
% of SOEs 5.0 5.0 5.0 5.0 5.1 4.9 5.5
Total assets (CNY billion) 87,075 95,678 102,340 108,587 112,191 113,438 120,587
Total assets of SOEsb (CNY billion) 34,399 37,131 39,740 41,770 43,962 43,991 46,968
% of SOEs 39.5 38.8 38.8 38.5 39.2 38.8 38.9
Total profits (CNY billion) 6,815 6,815 6,619 7,192 7,492 6,635 6,580
Total profits of SOEsb (CNY billion) 1,592 1,451 1,142 1,232 1,722 1,858 1,607
% of SOEs 23.4 21.3 17.2 17.1 23.0 28.0 24.4
Construction
Number of enterprises 78,919 81,141 80,911 83,017 88,074 95,400 ..
Number of SOEs 3,847 3,753 3,603 3,593 3,453 3,080 ..
% of SOEs 4.9 4.6 4.5 4.3 3.9 3.2 ..
Gross output value (CNY billion) 16,037 17,671 18,076 19,357 21,394 23,509 ..
Gross output value of SOEs (CNY billion) 2,074 2,207 2,177 2,385 2,641 2,626 ..
% of SOEs 12.9 12.5 12.0 12.3 12.3 11.2 ..
.. Not available.
a Including mining, manufacturing, and production and supply of electricity, gas, and water.
b Numbers referring to SOEs including state-holding enterprises.
Source: National Bureau of Statistics, China Statistical Yearbook (various issues).
3.204. Of China's 10 largest SOEs, 3 are under SASAC's supervision (Table 3.24). The State remains
a majority shareholder in 16 of the 100 largest publicly listed Chinese companies.
Table 3.24 China's 10 largest state-owned enterprises, 2020

(USD billion)
Company name Revenue
SINOPEC Groupa 407.0
State Grid 383.9
China National Petroleuma 379.1
China State Construction Engineeringa 205.8
Industrial & Commercial Bank of China 177.1
China Construction Bank 158.9
Agricultural Bank of China 147.3
Bank of China 135.1
China Life Insurance 131.2
SAIC Motor 122.1
a Controlled by SASAC.
Source: Fortune Global 500.
3.205. SOEs are very important in China's economy, in particular for the Government's employment
and social and regional policy objectives. While no official figures exist on employment in SOEs and
their share in GDP, an academic study estimated that in 2017 their share in GDP was between 23%
and 28%, and that their share in employment was between 5% and 16%. 168 According to the IMF,
the productivity of China's SOEs is generally low compared with that of privately owned companies;
the average productivity gap between SOEs and private companies is estimated at about 20%.169
167
The authorities state that China's state-owned enterprises are all legal persons established in
accordance with the Company Law and are not part of the Government. According to the authorities, based on
commercial considerations, state-owned enterprises make independent decisions to make equity participation
into private enterprises including large listed private companies.
168
Zhang, C. (2019), How Much Do State-Owned Enterprises Contribute to China's GDP and
Employment?, World Bank document. For the industrial sector, it has been estimated that SOEs in 2017 made
up 18% of employment, 39% of assets, and 23% of sales revenue. Viewed at:
http://documents1.worldbank.org/curated/en/449701565248091726/pdf/How-Much-Do-State-Owned-
Enterprises-Contribute-to-China-s-GDP-and-Employment.pdf.
169
IMF (2021): People's Republic of China, Staff Report for the 2020 Article IV Consultation, IMF
Country Report No. 21/6. Viewed at: https://www.imf.org/en/Publications/CR/Issues/2021/01/06/Peoples-
Republic-of-China-2020-Article-IV-Consultation-Press-Release-Staff-Report-and-49992.
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The authorities state that they do not agree with the IMF's conclusion. The IMF also suggests that
SOE reform would significantly lift productivity and growth.
3.206. The importance of SOEs in China's economy, coupled with high amounts of financial support,
may affect the functioning of market-oriented policies and practices. It would appear that SOEs in
China often benefit from credits extended by state banks or other forms of financing, implicit
guarantees, capital injections, and preferential access to inputs. The authorities object to this
statement and indicate that SOEs in China operate under market conditions, with no privileges
granted by the Government.
3.207. It would appear that the China Structural Reform Fund, set up by 10 SOEs in
September 2016, aims to optimize the management of Central Government enterprises, through
the financing of SOE restructuring, overseas mergers and acquisitions, and capacity adjustment,
with a view to enhancing industrial integration and improving the performance and efficiency of
capital operations. The authorities state that the Fund is established, invested, and operated in a
market-oriented manner. According to the authorities, no information is available on the paid-in
capital of the Fund.
3.208. In July 2020, China established a bailout fund with a fundraising target of CNY 100 billion to
provide emergency funding for SOEs short on cash in order to avoid possible defaults. The authorities
indicate that the Fund is a market-based credit safeguard fund for central SOEs. No information was
available on the fund's filling rate or disbursements.
3.209. The AML stipulates that for SOEs legally enjoying exclusive rights in production and sales or
activities in sectors considered vital for China's economy and to safeguard national security, the
State shall, in order to protect the consumer interest and facilitate technological advancement:
(i) protect these business operations; and (ii) supervise and control these business operations and
the prices of relevant services and commodities provided by these operators (Section 3.3.4).
3.3.6 Government procurement
3.3.6.1 Overview
3.210. According to data provided by the authorities, the total value of government procurement in
China was CNY 3.3 trillion in 2019 (the latest year for which data were made available), accounting
for 3.3% of GDP (Table 3.25). The majority of procurement takes place at the sub-Central
Government level. Procurement by local entities accounted for 91.9% of China's total value of
government procurement in 2019; in the same year, procurement by the Central Government
accounted for 8.1%.170
Table 3.25 Government procurement by type of purchase, 2017-19

(CNY billion)
2017 2018 2019
TOTAL 3,211.4 3,586.1 3,306.7
Goods 800.2 806.5 860.7
Central Government entities 110.4 122.9 146.4
Local government entities 689.8 683.6 714.3
Construction and engineering services 1,521.1 1,571.4 1,500.4
Local government entities 1,469.1 1,511.0 1,432.9
Other services 890.2 1,208.1 945.5
Local government entities 861.3 1,167.5 892.9
Total procurement by the Central Government 191.3 224.0 266.6
Total procurement by local government entities 3,020.2 3,362.1 3,040.0
170
Among the 31 provincial-level governments that report procurement data to the Central
Government, the top 10 provinces/municipalities in terms of government procurement contract value are
Guangdong, Shandong, Jiangsu, Henan, Zhejiang, Anhui, Sichuan, Shanghai, Guangxi, and Hebei.
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3.3.6.2 Legal and institutional framework
3.211. There have been no major changes to China's legislative and regulatory regime concerning
government procurement since the previous Review. The Government Procurement Law remains the
primary legislation regulating government procurement activities.171 It applies to procurements of
goods, services, and construction works by state organs, public institutions, and social
organizations.172 The Government Procurement Law does not apply to SOEs; a large number of
infrastructure projects and public utility works carried out by SOEs are therefore excluded from the
scope of application of the Government Procurement Law. Furthermore, Article 4 of the Government
Procurement Law provides that the construction works that fall within its definition of government
procurement, i.e. those works procured by state organs, public institutions, and social organizations
(and not SOEs), must follow the tendering procedures set out by the Tendering Law when tendering
is used as the procurement method. In all events, such construction works must still follow other
policy requirements set out by the Government Procurement Law. The Tendering Law regulates
tendering procedures regardless of whether the tendering concerns a project of a government
agency or an SOE. Furthermore, according to the Government Procurement Law, the Central Military
Commission issues separate regulations concerning military procurement and administrates their
enforcement.
3.212. Both the Government Procurement Law and the Tendering Law are currently under
amendment. The draft amended Bid Invitation and Tendering Law was published online for public
comment from 3 December 2019 to 1 January 2020.173 A further revised draft reflecting those public
comments has been submitted to the State Council for review. At present, the Ministry of Justice is
organizing a legislative review of the draft amendments. According to the Explanatory Note on the
Draft174, the amended Tendering Law will, inter alia: (i) redefine its scope of application and
deregulate tendering activities in private investments; (ii) enhance transparency of tendering
activities; (iii) adjust the time periods in tendering procedures in order to improve efficiency;
(iv) restrict the use of lowest price criteria in tender evaluation and encourage life-cycle cost
assessment; (v) promote e-tendering; (vi) clarify tendering requirements in public-private
partnership (PPP) projects; and (vii) enhance anti-collusion in tendering and the monitoring of
contract performance. The draft amended Government Procurement Law was published online for
public comment from 4 December 2020 to 5 January 2021.175 According to its Explanatory Note, the
amended Government Procurement Law will, inter alia: (i) adjust the scope of application of the
Government Procurement Law176; (ii) give full play to the policy goals of government procurement
policy by including provisions on promoting innovation and safeguarding the interest of vulnerable
groups, and specify relevant competent authorities and implementation measures; (iii) improve and
clarify government procurement methods and procedures; (iv) improve the system of government
procurement contracts; (v) strengthen demand management in government procurement;
(vi) enhance the position of procuring entities; and (vii) simplify supplier qualification procedures.
According to the authorities, the revision of the two Laws will further align China's government
procurement and tendering administration systems and harmonize the application of the two Laws.
3.213. The MOF and local financial departments at different levels of the government are the
competent authorities to apply the Government Procurement Law. The NDRC and the Development
and Reform Commissions at the sub-central levels of the government are authorities that guide and
coordinate the implementation of the Tendering Law. They have issued various measures and
171
For more information on the Government Procurement Law, the Tendering Law, and their respective
Implementing Regulations, see WTO document WT/TPR/S/375/Rev.1, 14 September 2018, paras. 3.191-
3.192.
172
According to the authorities, "state organs" include organs of state power, administrative organs,
judicial organs, procuratorial organs, and military organs. The term "public institutions" refers to public service
organizations that are established by state organs or other organizations established by state-owned assets to
carry out activities in the fields of education, science and technology, culture, and hygiene. There is no
definition of "social organizations" in China's legal system.
173
NDRC. Viewed at: https://www.ndrc.gov.cn/hdjl/yjzq/yjfk/zbtbf/202001/t20200103_1218432.html.
174
The Explanatory Note on the Draft was published together with the draft amended Law.
175
Ministry of Finance. Viewed at:
http://tfs.mof.gov.cn/zhengcefabu/202012/t20201204_3632547.htm.
176
The amended draft Law provides that government procurement refers to the act of obtaining goods,
construction works, and services by state organs, public institutions, social organizations, and other procuring
entities, for the purpose of fulfilling government affairs and public services, via contract means with fiscal funds
or other public resources.
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guidelines to implement the two Laws and their Implementation Regulations. The departments
responsible for industry and information technology, housing and urban-rural development,
transport, railways, water resources, commerce, and civil aviation under the State Council issued
their own administrative measures and/or guidelines on the application of the two Laws. The SASAC
and local state-owned assets supervision and administration departments at different levels of the
government guide SOEs to improve their internal control systems and regulate their operation from
an investor representative's perspective so as to ensure their full compliance with relevant laws,
regulations, and institutional requirements. Table 3.26 provides a list of major government
procurement-related laws, regulations, and administrative measures applicable nationwide.
Table 3.26 Government procurement-related laws, regulations, and administrative

measures
Promulgation Latest
Law/Regulation
year amendment
Government Procurement Law 2002 2014
Regulations for the Implementation of the Government Procurement 2015
Law
Administrative Measures on Tendering for Government Procurement MOF Order MOF Order
of Goods and Services No. 18, 2004 No. 87, 2017
Administrative Measures on Government Procurement by Non-Bid MOF Order
Procurement Methods No. 74, 2013
Measures for the Administration of Government Procurement of MOF Notice Cai Ku
Imported Products No. 119, 2007
Administrative Measures on Release of Government Procurement MOF Order MOF Order
Information No. 19, 2004 No. 101, 2019
Measures on Government Procurement Challenges and Complaints MOF Order MOF Order
No. 20, 2004 No. 94, 2017
Administrative Measures on Government Procurement of Public- MOF Notice Cai Ku
Private Partnership Projects No. 215, 2014
Measures on Promoting the Development of Small and Medium MOF Notice Cai Ku
Enterprises through Government Procurement No. 46, 2020
Notice of the Ministry of Finance, the National Development and MOF Notice Cai Ku
Reform Commission, the Ministry of Ecology and Environment and No. 9, 2019
the State Administration for Market Regulation on Adjusting and
Optimizing Execution Mechanisms for Government Procurement of
Energy-saving Products and Environmentally Labelled Products
Notice of the Ministry of Finance and the Ministry of Ecology and MOF Notice Cai Ku
Environment on Environmentally Labelled Product Categories and No. 18, 2019
Items for Government Procurement
Notice of the Ministry of Finance and the National Development and MOF Notice Cai Ku
Reform Commission on Energy-Saving Product Categories and Items No. 19, 2019
for Government Procurement
Notice of the Ministry of Finance on Promoting Fair Competition and MOF Notice Cai Ku
Optimizing the Business Environment in Government Procurement No. 38, 2019
Notice of the Ministry of Finance on the Public Disclosure of MOF Notice Cai Ku
Government Procurement Intentions No. 10, 2020
Notice of the General Office of the Ministry of Finance on Printing and MOF Notice Cai
Issuing the Standard Format for Government Procurement Ban Ku No. 50,
Announcements and Publicizing Information (2020) 2020
Tendering Law 1999 2017
Regulations for the Implementation of the Tendering Law 2011 2017, 2018,
and 2019
Provisions on Construction Projects Subject to Mandatory Tendering NDRC Order
No. 16, 2018
Provisions on Infrastructure and Utilities Projects Subject to NDRC Order Fa
Mandatory Tendering Gai Fa Gui
No. 843, 2018
Notice on Improving the Implementation of the Provisions on NDRC Notice Fa
Construction Projects Subject to Mandatory Tendering and the Gai Ban Fa Gui
Provisions on Infrastructure and Utilities Projects Subject to No. 770, 2020
Mandatory Tendering
Administrative Measures for Franchising Projects in Infrastructure NDRC Order
and Public Utilities No. 25, 2015
Interim Provisions on Bid Evaluation Committees and Bid Evaluation SDPC Order
Methods No. 2, 2001
Measures for Electronic Tendering Order No. 20 of
eight ministries,
2013
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Promulgation Latest
Law/Regulation
year amendment
Measures for Handling Complaints about Tendering Activities in Order No. 11 of
Engineering Construction Projects seven ministries,
2004
Measures for Goods Tendering in Engineering Construction Projects NDRC Order
No. 27, 2005
Measures for Surveying and Designing Tendering in Engineering Order No. 2 of
Construction Projects eight ministries,
2003
Measures for Construction Tendering in Engineering Construction Order No. 30 of
Projects seven ministries,
2003
Measures for the Administration of Bid Evaluation Experts and SDPC Order
Comprehensive Bid Evaluation Experts Databases No. 29, 2003
Administrative Measures for Tendering Announcement and Release of NDRC Order
Public Information No. 10, 2017
Interim Provisions on Standard Documents of Prequalification and NDRC Order
Tendering in Engineering Construction Projects No. 56, 2007
Notice of National Development and Reform Commission, Ministry of NDRC Notice Fa
Industry and Information Technology, Ministry of Finance, Ministry of Gai Fa Gui
Housing and Urban-Rural Development, Ministry of Transport, No. 3018, 2011
Ministry of Railways, Ministry of Water Resources, National Radio and
Television Administration and Civil Aviation Administration of China
on Printing and Distributing Concise Standard Construction Tendering
Documents and Standard Designing Construction General Contract
Tendering Documents
Notice on Printing and Distributing Five Standard Tendering NDRC Notice Fa
Documents Including the Standard Equipment Procurement Gai Fa Gui
Tendering Document No. 1606, 2017
Budget Law 1994 2014 and
2018
Regulations for the Implementation of the Budget Law 1995 2020
Civil Code 2021
3.214. The Regulations for the Implementation of the Tendering Law were amended in 2017, 2018,
and 2019. The 2017 Revision deleted the content regarding the professional qualification for
tendering personnel; the 2018 Revision deleted the content regarding the qualification for the
tendering agency; and the 2019 Revision removed the requirement for financial departments to
supervise the budgetary performance of government procurement construction projects that are
subject to tendering. According to the authorities, those Revisions have exerted no impact on trade.
The Administrative Measures on Release of Government Procurement Information was amended in
2019 (MOF Order No. 101, 2019). The new Measures further strengthen the information release
system and provide that a designated Internet media is the principal channel for publishing
government procurement information. They specify that the Government Procurement website
( www.ccgp.gov.cn ) and its subordinate provincial-level websites should serve as the platform for
the collection and publication of government procurement information. They also emphasize
enhanced enforcement of relevant rules in this regard.
3.215. The authorities have also been promoting the use of PPPs in investments in infrastructure
and public utilities. Franchising is the main form of PPP in China.177 Article 15 of the Administrative
Measures for Franchising Projects in Infrastructure and Public Utilities (NDRC Order No. 25, 2015)
provides that franchisees should be selected through competition. The NDRC Notice on
Strengthening the Administration of the Investment and Construction of PPP Projects in Accordance
with Laws and Regulations (NDRC Notice Tou Zi Gui No. 1098, 2019) further specifies that public
tendering should be the main method in selecting franchisees. Franchisees who are selected through
tendering procedures and have the capacity to implement the projects on their own can carry out
the projects by themselves without going through tendering procedures again. The Administrative
177
Article 3 of the Administrative Measures for Franchising Projects in Infrastructure and Public Utilities
(NDRC Order No. 25, 2015) defines franchising as agreements between the Government and legal persons or
other organizations, either domestic or foreign, under which the latter invest, build, and operate infrastructure
and public utilities to provide public goods and services within certain periods and geographical areas. The
agreements define rights and obligations of the Government and the franchisees and risk distribution between
the two. Franchisees are entitled to gain profits from such projects.
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Measures on Government Procurement of Public-Private Partnership Projects (MOF Notice Cai Ku

No. 215, 2019) apply to PPP projects. Foreign investors are allowed to participate in PPP projects
and, according to the authorities, there are already numerous such cases in practice.
3.216. The administrative measures on promoting green procurement and SMEs' participation in
government procurement were also amended in 2019 and 2020 (Section 3.3.6.4).
3.217. The authorities note that China does not introduce special policies for government
procurement activities under the BRI, including economic corridor projects. China does not have
special government procurement policies in its PFTZs either.
3.3.6.3 Procurement methods and e-procurement
3.218. During the review period, there were no changes to the procurement methods and
procedures.178 The Government Procurement Law, its Implementing Regulations, and relevant
Administrative Measures provide for six procurement methods: (i) public tendering; (ii) selective
tendering; (iii) price inquiry; (iv) competitive negotiations; (v) competitive consultations; and
(vi) single-source procurement. According to data provided by the authorities, in 2019, procurement
through public tendering accounted for 78.31% of total procurement, selective tendering for 0.99%,
price inquiry for 1.41%, competitive negotiations for 3.55%, and single-source procurement for
6.19%. The value under single-source procurement decreased from CNY 552.7 billion in 2017 to
CNY 204.6 billion in 2019 (Table 3.27).
Table 3.27 Government procurement by procurement method, 2017-19

(CNY billion)
Procurement method
Single-
Year Public Selective Price Competitive Competitive
Total source
tendering tendering inquiry negotiations consultations
procurement
2017 3,211.4 2,170.1 24.9 73.9 133.0 180.8 552.7
2018 3,586.1 2,528.8 39.4 83.6 129.6 298.7 423.3
2019 3,306.7 2,589.6 32.6 46.7 117.5 204.7 204.6
3.219. With regard to e-procurement, China planned to fully implement e-tendering by end-2020.
In 2017, six ministries jointly issued the "Internet + Tendering/Procurement" Action Plan (2017-19)
(NDRC Notice No. 357, 2017). In 2019, the MOF issued the new Administrative Measures on Release
of Government Procurement Information (MOF Order No. 101, 2019). The old Measures (MOF Order
No. 19, 2004) were repealed at the same time. All government procurement notices and relevant
information should be published in the standard format announced by the MOF in 2020 (Cai Ban Ku
No. 50, 2020). The NDRC Administrative Measures for Tendering Announcement and Release of
Public Information (NDRC Order No. 10, 2017) also require that tendering notices and other relevant
information of a project subject to mandatory tendering be published on the China Tendering Public
Service Platform or the provincial e-tendering platforms. The State Council further requires that all
such information, upon publication, should also be transferred to and published in real time on the
National Public Resources Trading Platform.179 According to the authorities, most regions and most
industrial areas have fully implemented e-tendering.
3.220. To enhance predictability of government procurement and facilitate suppliers' awareness of

market opportunities, the MOF issued a Notice on Disclosure of Future Government Procurement
Plans (MOF Notice Cai Ku No. 10, 2020), which requires that all procuring entities should disclose
their procurement plans in advance where possible. The MOF notes that, during the review period,
it organized a third-party evaluation of the work of local governments regarding the disclosure of
178 For more information on the procurement methods and procedures, see WTO document
WT/TPR/S/375/Rev.1, 14 September 2018, paras. 3.197-3.207.

179
The National Public Resources Trading Platform is the general hub for sharing public resources
trading data in China. Information published on this platform contains, but is not limited to, government
procurement. It also collects and publishes information on transactions of land use rights, mining rights, and
state-owned property rights.
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information about government procurement. The evaluation shows that the transparency of
government procurement has been significantly improved across the country.
3.3.6.4 Other policy considerations in government procurement
3.221. China maintains buy-national policies in government procurement. Article 10 of the

Government Procurement Law provides that unless the subject matter cannot be obtained within
the territory of China or cannot be obtained with reasonable commercial terms, or the procurement
is for use outside the territory of China, the procuring entities shall procure domestic goods, services,
and construction works. The Measures for the Administration of Government Procurement of
Imported Products (Cai Ku No. 119, 2007) further require that in each specific case, the conditions
that allow procurement of imported products need to be verified by the financial authorities.
3.222. It is also noted that the buy-national requirement does not apply to procurements by SOEs,
as they are not considered as government procurement in China and are not bound by the
Government Procurement Law. Therefore, the authorities state that there is no differential treatment
of foreign goods, services, and suppliers in SOEs' procurements, including those in the areas of
infrastructure and public utilities. In addition, Article 16 of the new Foreign Investment Law (FIL)
(promulgated in March 2019) provides that "the State shall guarantee that foreign-invested
enterprises can participate in government procurement activities through fair competition; products
produced and services provided by foreign-invested enterprises within the territory of China shall be
treated equally in government procurement".
3.223. Furthermore, Article 9 of the Government Procurement Law provides that government
procurement shall be carried out to facilitate the realization of the economic and social development
policy goals of the State, including environmental protection, assistance to underdeveloped or ethnic
minority regions, and promoting the development of SMEs. According to the authorities, SMEs
became more active in participating in government procurement activities in the past 10 years. More
than 70% of China's government procurement in value terms is currently performed by SMEs. 180 To
address issues arising in the implementation of previous Measures181, China issued the new Measures
on Promoting the Development of Small and Medium Enterprises through Government Procurement
(MOF Circular Cai Ku No. 46, 2020) on 18 December 2020.182 The new Measures came into force on
1 January 2021, and the previous Measures ceased to apply at the same time. Compared with the
previous measures, the new Measures provide more details on the SME contract set-aside policy.
They require that, in principle, small-value contracts, i.e. goods and services contracts below
CNY 2 million and construction work contracts below CNY 4 million, be set aside for SMEs. For
contracts above the aforementioned thresholds, no less than 30% of them in value terms should be
performed by SMEs. In contracts set aside for SMEs, no less than 60% should be performed by small
and micro enterprises. The goal shall be achieved through contract set-asides, contract splitting,
consortium bidding, or subcontracting. As regards the grant of price preferences to SMEs, the new
Measures maintain the preference margins for procurements where the tender evaluation is based
on the lowest price criterion.183 Additionally, they set out rules on granting preferences to SMEs in
the procurement of construction works where the tender evaluation is based on the criterion of the
180 Ministry of Finance. Viewed at:

http://gks.mof.gov.cn/guizhangzhidu/202012/t20201228_3637423.htm.
181 Interim Measures on Promoting the Development of Small and Medium Enterprises through
Government Procurement (MOF Circular Cai Ku No. 181, 2011). For more information about policies in favour
of SMEs under the previous Interim Measures, see WTO document WT/TPR/S/375/Rev.1, 14 September 2018,
para. 3.212.
183 In tender evaluation for procurement of goods and services, the tender submitted by a small or micro
enterprise will compete with other tenders based on a price 6%-10% lower than the original price offered by it.
When the contract is delivered, it will be paid the full original price. For procurement of construction works, the
price preference margin is 3%-5%. For joint tendering where small or micro enterprises' share accounts for
more than 30% of the contract value and for a large enterprise that intends to subcontract more than 30% of
the contract value to small or micro enterprises, the tender will benefit from a price preference margin of
2%-3% for procurement of goods and services, and 1%-2% for procurement of construction works.
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most advantageous tender.184 The new Measures also contain provisions to support SMEs through
contract payment and credit guarantees.
3.224. With regard to environmental protection, China maintains policies to provide more
favourable treatment to energy-saving products and environmentally friendly products in
government procurement. Such policies were first introduced in 2004 and 2006. During the review
period, China adjusted implementation measures in this regard. Specifically, in 2019, the MOF, the
NDRC, the MEE, and the SAMR jointly issued a Notice on Adjusting and Optimizing Execution
Mechanisms for Government Procurement of Energy-Saving Products and Environmentally Labelled
Products (Cai Ku No. 9, 2019).185 Under the old measures, relevant authorities published not only
the catalogues but also the lists of brands and models that had been granted conformity certificates
for such purposes.186 Under the new measures, the authorities publish only the generic catalogues
and energy conservation and environment protection standards187, and not the lists of brands and
models. Product brands and models that have been granted certificates by recognized certification
agencies are eligible for favourable treatment in government procurement. According to the
authorities, such adjustments made it unnecessary for suppliers to apply for being included on the
list and provide more equal opportunities for suppliers. The new Measures also enhance the
obligation of procuring entities to implement such policies.
3.225. In addition, in 2020, relevant authorities published green packaging standards and green
express mail packaging standards relating to government procurement. Procuring entities are
required to specify in their procurement documentation that the packaging should be recyclable,
organic, and renewable.188
3.226. The authorities note that, during the review period, no specific government procurement
policies were introduced to promote innovation.
3.3.6.5 COVID‑19-related government procurement measures
3.227. To address the COVID‑19 pandemic, China established "green channels" for government
procurement in relation to the prevention and control of the pandemic. On 26 January 2020, the
MOF circulated the Notice on Facilitating Procurement for Pandemic Prevention and Control (Cai Ban
Ku No. 23, 2020) which requires that state organs, public institutions, and social groups at all levels
should open "green channels" for the procurement of goods, services, and construction works for
pandemic prevention and control.189 The Notice also requires that sound internal control mechanisms
be established and maintained for emergency procurement. On 6 February 2020, the MOF circulated
the Notice on Government Procurement-related Matters during the Period of Pandemic Prevention
and Control (Cai Ban Ku No. 29, 2020).190 This Notice focuses on the protection of the health and
184 For procurement of construction works where the tender evaluation is based on the criterion of the
most advantageous tender (not the lowest price), the tender submitted by small and micro enterprises will
benefit from a 3%-5% mark-up in its price points. For joint tendering where small or micro enterprises' share
accounts for more than 30% of the contract value and for a large enterprise that intends to subcontract more
than 30% of the contract value to small or micro enterprises, such a tender will benefit from a 1%-2%
mark-up in its price points.
186 For more information about the previous measures, see WTO document WT/TPR/S/375/Rev.1,
14 September 2018, para. 3.213.

187 The product lists are published through the joint Notice of the Ministry of Finance and the Ministry of
Ecology and Environment on Environmentally Labelled Product Categories and Items for Government
Procurement (Cai Ku No. 18, 2019) and the joint Notice of the Ministry of Finance and the National
Development and Reform Commission on Energy-saving Product Categories and Items for Government
Procurement (Cai Ku No. 19, 2019).
188 These measures are contained in the joint Notice of the Ministry of Finance General Office, the
Ministry of Ecology and Environment General Office, and the State Post Bureau General Office on Commodity
Packaging Standards for Government Procurement (Trial Edition) and the Express Mail Packaging Standards for
Government Procurement (Trial Edition) (Cai Ban Ku No. 123, 2020).
189
Ministry of Finance. Viewed at:
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safety of procurement professionals and suppliers during the pandemic and encourages the use of
electronic means in government procurement.
3.3.6.6 Supplier complaint mechanism
3.228. The supplier complaint mechanism remained unchanged during the review period.191 The
Government Procurement Law and the Measures for Handling Challenges and Complaints against
Government Procurement (MOF Order No. 94, 2017) require that the finance authorities at different
levels of government review suppliers' complaints regarding government procurement activities at
their respective levels.192 The results of complaint reviews are published in designated media.
3.3.6.7 Accession to the GPA and other international cooperation
3.229. China became an Observer in the WTO Committee on Government Procurement in 2002. It
initiated its GPA accession negotiation in 2007. During the review period, significant progress was
made on the accession. China submitted its 6th revised market access offer on 20 October 2019.193
The new offer, for the first time, included non-sensitive military procurement. It also added
seven provinces and municipalities, 16 SOEs, and 36 local universities. No minority autonomous
regions at the provincial level were included in the new offer, and some SOEs in the infrastructure
and public utility sectors are missing. Some services sectors are not included in the offer. On
29 May 2020, China circulated its updated Replies to the Checklist of Issues, which contain
comprehensive information on China's government procurement regime. 194 Consultations continue
between China and GPA Parties to address the remaining issues in the accession process.
3.230. China has not included any market access commitments in the area of government
procurement in the context of any of the FTAs that it has negotiated with trading partners. According
to the authorities, it remains China's priority to conclude its GPA accession before liberalizing its
government procurement market through bilateral/regional tracks.
3.3.7 Intellectual property rights
3.3.7.1 Overview
3.231. During the review period, China's intellectual property (IP) regime and institutional
framework continued to evolve, adjusting to technological developments and new business practices.
China also made efforts to mainstream IP into its economy and adjust its programmes to enhance
their effectiveness and compliance with international commitments.
3.232. In 2019, China was recognized as one of the top four economies in innovation capability.195
In 2020, China was the 8th most performing economy in economic transformation priorities196, and
was ranked as the 14th of the 131 economies featured in the Global Innovation Index. 197 These high
rankings on IP-intensive indicators underpin the positive evolution of the Chinese IP regime.
3.233. China's participation in trade in IP has increased, as shown by the growth in total receipts
of fees for the use of IP from USD 14 billion in 2010 to USD 41 billion in 2019. The trade deficit in
this rubric has incrementally narrowed down since 2010, reflecting the export activity related to
royalties and licensing fees (Chart 3.6).
191
For more information about the supplier complaint mechanism, see WTO document
WT/TPR/S/375/Rev.1, 14 September 2018, paras. 3.215-3.216.
192 For more information in this regard, see WTO document WT/TPR/S/375/Rev.1, 14 September 2018,
paras. 3.215-3.216.
193 WTO document GPA/ACC/CHN/51, 21 October 2019.
194 WTO document GPA/ACC/CHN/8/Rev.1, 2 June 2020.

195
WEF (2019), The Global Competitiveness Report 2019, p. 7. Viewed at:
http://www3.weforum.org/docs/WEF_TheGlobalCompetitivenessReport2019.pdf.
196
WEF (2020), The Global Competitiveness Report, Special Edition 2020, p. 45. Viewed at:
http://www3.weforum.org/docs/WEF_TheGlobalCompetitivenessReport2020.pdf.
197
WIPO, 2020 Global Innovation Index. Viewed at:
https://www.wipo.int/edocs/pubdocs/en/wipo_pub_gii_2020/cn.pdf.
- 107 -
Chart3.6
Chart 3.[IPExports
EXIM fees]
andExports and imports
imports of feesoffor
feesthe
for use
the use
of of
IP,IP,2010-19
2010-19
USD billion
40
Exports Imports
35
30
25
20
15
10
0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Source: WTO
Source: WTO Data
Data Portal.
Portal.Viewed
Viewedat:at: https://data.wto.org/.
https://data.wto.org/
3.3.7.2 Institutional reforms and IP-related policies
3.234. During 2018 and 2019, China undertook wide-ranging domestic reforms that included its
IP regime, the infrastructure of IP courts, and amendments to the Trademark Law, the Patent Law,
and the Anti-Unfair Competition Law, which govern trade secrets (Section 3.3.7.5.8). As part of
these reforms, in 2018, the State Intellectual Property Office became the China National Intellectual
Property Administration (CNIPA). The authorities state that the CNIPA is under the authority of the
SAMR and is responsible for: (i) promoting IP protection; (ii) improving the IP protection system;
(iii) registering and making administrative decisions on trademarks, patents, and geographical
indications (GIs); and (iv) providing guidance on enforcement of trademarks and patents. The law
enforcement staff of market supervision is responsible for the enforcement of trademarks and
patents.
3.235. In 2019, the CNIPA, together with other relevant authorities responsible for the Innovation
Policy, issued the Notice on Further Strengthening Intellectual Property Pledge Financing, which
implements support measures to improve the service system of IP pledge financing, strengthen
service innovation, enhance risk management, and improve supporting measures. It also establishes
an online channel to facilitate the registration of patent pledges. In 2020, there were 12,039 patent
and trademark pledge financing cases, totalling CNY 218 billion in loans, an increase of 43.8% for
patents and 43.9% for trademarks from 2019.198
3.236. Building on previous work, the CNIPA published the Plan for Further Implementation of the
National Intellectual Property Strategy to Accelerate the Construction of an Intellectual Property
Power Country in May 2020. The Plan listed 100 measures related to, inter alia, the creation, use,
protection, management, service, and international cooperation of IP, which aim to reduce subsidies
or rewards for utility model, design, and trademark applications; cut examination periods for
trademark and patent applications; reduce low-quality patent applications and malicious filing of
trademarks; and ensure that decisions to grant awards or to promote or appoint staff in universities
are not solely based on patent filings and grant rates.
3.237. Regarding IP-related issues, the 14th Five-Year Plan for Economic and Social Development
aims to promote modernization through innovation and technological advancements and promote
high-end, intelligent, and green production. Investment in R&D would have an important role in the
areas of artificial intelligence, quantum information, integrated circuits, life and health sciences,
neuroscience, biological breeding, and aerospace technology.
Summary of 2020: Chinese IP System to a New Height, 28 January 2021. Viewed at:
198
http://english.ipraction.gov.cn/article/ns/202101/334627.html.
- 108 -
3.238. The China Manufacturing 2025 strategy highlights, inter alia, the importance of IP protection
and enforcement to promote IP-intensive sectors such as robotics, information technology, and clean
energy.
3.239. China amended its Anti-Unfair Competition Law in April 2019 and its Trademark Law in
November 2020. The amendments to the Patent Law were reviewed twice by the NPC Standing
Committee in October 2020 and are expected to be implemented from 1 June 2021. The Copyright
Law was revised in November 2020. Other IP-related laws have remained unchanged since the
previous Review (Table A3.3).199
3.3.7.3 International context
3.240. China is a member state of the World Intellectual Property Organization (WIPO), and
participates in a number of international conventions and treaties related to IPRs (Table A3.4).
During the review period, China acceded to the Beijing Treaty on Audiovisual Performances, which
entered into force on 28 April 2020.200
3.241. The China-United States Phase 1 Economic and Trade Agreement contains specific provisions
related to: (i) protecting trade secrets; (ii) strengthening pharmaceuticals-related IP; (iii) adjusting
and extending patent terms; (iv) preventing piracy and counterfeit on e-commerce platforms;
(v) increasing transparency in the protection of GIs; (vi) preventing manufacture and export of
counterfeit goods; (vii) ensuring adequate and effective protection and enforcement of trademark
rights, particularly against bad-faith trademark registrations; and (viii) increasing bilateral
cooperation on IP protection.201
3.242. China is a party to several bilateral trade agreements and RTAs that include IP chapters.
Notably, in November 2020, China and other 14 Asia Pacific economies finalized the negotiations of
the RCEP Agreement. Its IP chapter covers a wide range of topics such as copyrights, trademarks,
GIs, patents, designs, genetic resources, traditional knowledge and folklore, protection against
unfair competition, enforcement, cooperation, transparency, and technical assistance.
3.243. In February 2019, the CNIPA and the Saudi Authority for Intellectual Property (SAIP) signed
an MOU, which covers exchanges and cooperation in the development of the IP regime, capacity-
building, data exchange, trademarks, and GIs.
3.244. A two-year pilot collaboration project between the CNIPA and the European Patent Office
(EPO) started in December 2020. It allows Chinese nationals and residents to select the EPO as the
International Searching Authority for English-language international patent applications filed at the
CNIPA or WIPO.
3.3.7.4 Copyright and related rights
3.245. The legal framework for the protection of copyrights and related rights is provided in the
Copyright Law and relevant regulations, e.g. the Regulations for the Implementation of Copyright
Law, the Regulations for the Protection of Computer Software, the Regulations on Collective
Copyright Management, the Regulations on the Protection of the Right of Dissemination via
Information Network, and the Interim Measures for the Payment of Remuneration for the Broadcast
of Sound Recordings by Radio and Television Stations. Copyright owners or owners of related rights
may authorize collective non-profit copyright management organizations to exercise their rights.
3.246. The National Copyright Administration administers copyright registration nationally. In the
case of computer software, the Copyright Protection Centre of China registers copyrighted works.
199
WTO documents IP/N/1/CHN/P/2, 21 December 2010; IP/N/1/CHN/P/3, 26 August 2011;
IP/N/1/CHN/C/1 (2001 Version), 8 July 2002; IP/N/1/CHN/L/1/Rev.1, 13 October 2003; IP/N/1/CHN/9 (2013
Amendment), 19 October 2017; and IP/N/1/CHN/T/5 (2019 Amendment), 30 January 2020; and information
provided by the authorities.
200
WIPO IP Portal, WIPO-Administered Treaties: Contracting Parties: China. Viewed at:
https://wipolex.wipo.int/en/treaties/ShowResults?country_id=38C.
201
Government of China. Viewed at: http://www.gov.cn/guowuyuan/2020-
01/16/content_5469650.htm.
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3.247. The procedure of registration under the Copyright Law has remained unchanged since the
previous Review. Registration is voluntary and is not a requirement for copyright protection.202 The
Copyright Law provides for copyright licensing and transfer of rights, unchanged since the previous
Review. Copyright infringement can be sanctioned with fines.
3.248. The term of copyright protection for natural persons, as well as for certain works 203, is life
plus 50 years.204 Software copyright exists from the date on which its development is completed.
The term of protection for typographical designs is 10 years. The authorities state that the term of
protection for photographic works is the life of the author plus 50 years, and audio-visual works are
protected for 50 years.
3.249. As at January 2021, there were five copyright collective management organizations in China:
Music Copyright Society of China; China Audio-Video Copyright Association; China Written Works
Copyright Society; the Images Copyright Society of China; and China Film Copyright Association
(Table 3.28).
Table 3.28 Copyright collective management organizations – fees and membership

Fees collected
Organization No. of members
(CNY million)
Music Copyright Society of China 404 10,031
China Audio-Video Copyright Association 270 247 (including unit members and individual
members)
China Written Works Copyright Society 19.31 10,046
Images Copyright Society of China 5.59 20,500
China Film Copyright Association 0.0274 88
3.3.7.5 Industrial property
3.3.7.5.1 Trademarks
3.250. The legal framework for the protection and enforcement of trademarks is provided by the
Trademark Law. Amendments to the Trademark Law entered into force in November 2019.
The objectives of these amendments are to curb bad-faith applications, strengthen protection, and
foster a favourable business environment. In order to implement the amendments, the Rules on
Regulating Applications for Registration of Trademarks were developed and came into force in
December 2019. The authorities indicate that the amendments and/or the regulations do not contain
new provisions regarding parallel imports.
3.251. Since the reform of 2018, the CNIPA has been responsible for the examination of trademark
applications, registration and administration.
3.252. Registration is a prerequisite for protection, and ownership is determined on a first-to-file

basis. According to Article 18 of the Trademark Law, foreign businesses are required to appoint a
Chinese trademark agent. The period of protection is 10 years. According to the authorities, the
request to renew the registration is to be filed 12 months before the date of expiration.
3.253. Foreign brand owners have the possibility to file trademark applications either as national
applications or international registrations under the Madrid Protocol.205 China adopted the Nice
202
The copyright on the works of Chinese citizens, legal entities, or other organizations are
automatically protected; this protection also applies to the copyright of foreigners whose works are first
published in China. Copyright protection for works published abroad has remained unchanged since the
previous Review.
203
These include works of a legal entity or other organization, works created in the course of
employment and the copyright of which is held by a legal entity or other organization, and cinematographic
and photographic works. Audio and video productions, broadcasting, and public performances are also granted
protection for 50 years from the first day of production, broadcasting, or performance.
204
In the case of more than one right holder, protection is granted for 50 years after the death of the
last surviving right holder.
205
WIPO, Madrid – The International Trademark System. Viewed at: https://www.wipo.int/madrid/en/.
- 110 -
Classification of Goods and Services for the Purposes of the Registration of Marks.206 In addition, the
CNIPA also developed a sub-class system, whereby goods and services under each Nice class are
classified into sub-classes, and some sub-classes are further categorized into different groups. The
sub-classes are listed in the Chinese Classification Manual.
3.254. The China-United States Phase 1 Economic and Trade Agreement contains provisions
regarding bad-faith trademark registrations; with a view to strengthening trademark protection,
both Parties shall ensure adequate and effective protection and enforcement of trademark rights,
particularly against bad-faith trademark registrations.
3.255. During the review period, trademark applications and registration continued to increase.
In 2019, residents accounted for 97% of trademark applications and 96% of registrations
(Table 3.29).
Table 3.29 Trademark applications and registrations, 2017-19

Trademarks 2017 2018 2019
Applications Resident 5,538,980 7,127,032 7,582,356
Non-resident 209,195 243,677 255,085
Madrid System submitted by Chinese applicants 4,810 6,900 6,491
Registrations Resident 2,656,039 4,796,851 6,177,791
Non-resident 136,033 210,544 228,049
3.3.7.5.2 Geographical indications
3.256. GIs can be protected as certification marks or collective marks under the Trademark Law or
by a sui generis system contained in the Provisions on the Protection of Geographical Indication
Products, administered by the CNIPA. In 2020, the CNIPA established the Technical Sub-committee
on Geographical Indications of the National Technical Committee on Knowledge and Intellectual
Property Management Standardization.
3.257. According to the authorities, GIs that have not been officially registered are still protected
by the relevant laws, e.g. the Trademark Law, the Anti-Unfair Competition Law, the Food Safety
Law, and the Law on Quality and Safety of Agricultural Products.
3.258. The China-United States Phase 1 Economic and Trade Agreement contains GI-related
provisions, particularly: (i) using relevant factors when making determinations for genericness,
including usage of a term in dictionaries, newspapers, and websites; how the good referred to by a
term is marketed and used in trade; and whether the term is used in relevant standards; (ii) not
providing GI protection to individual components of multi-component terms if the individual
component is generic; and (iii) publicly identifying which individual components are not protected
when granting GI protection to multi-component terms. The CNIPA published Guidelines on
Determining Common Names in Geographical Indication Protection (Draft) in 2020, clarifying the
determining factors, cancellation, and other aspects of common names in terms of the common
name determination in GI protection.207
3.259. In September 2020, China and the European Union signed a bilateral agreement to protect
100 European GIs in China and 100 Chinese GIs in the European Union against infringement. During
the four years after its entry into force, the agreement will expand in scope to cover an additional
175 GIs from both sides. These GIs will have to follow the same approval procedure as the
100 names originally covered by the agreement (i.e. assessment and publication for comment). 208
The authorities indicate that the agreement entered into force on 1 March 2021.
3.260. In 2018, 12 new applications for GI protection were accepted, 67 GI protection products
were granted, 223 companies were approved to use special signs of GI products, and 961 GIs were
registered in the form of collective marks and certification marks. The authorities indicate that in
206
WIPO, Nice Classification. Viewed at: https://www.wipo.int/classifications/nice/en/.
207
01/16/content_5469650.htm.
208
MOFCOM. Viewed at: http://tfs.mofcom.gov.cn/article/zscq/202009/20200903002354.shtml.
- 111 -
2019, five new applications for GI protection were accepted, 301 companies were approved to use
special signs of GI products, and 462 GIs were registered in the form of collective marks and
certification marks. In 2020, 10 applications for GI protection were filed and 6 were granted;
1,052 companies were authorized to use GI signs, and 765 GI trademarks were registered.209
3.3.7.5.3 Patents
3.261. The Patent Law and its Rules for Implementation provide the legal framework for the
protection of inventions, utility models, and industrial designs.210 Parallel imports of patented goods
are allowed, as provided by Article 69 of the Patent Law. Articles 48-58 relate to compulsory licence
provisions. Compulsory licences of patents may be granted in the public interest, or in the event of
a national emergency or extraordinary circumstances. So far, no compulsory licences have been
granted in China.
3.262. The CNIPA is the authority responsible for receiving and processing patent applications and
granting patents. The person concerned is free to request a People's Court or administrative
authority to settle disputes with respect to patents. The period of protection is 20 years.
3.263. During the review period, several regulations were amended. The amendments to the
Regulations on Patent Agencies came into force in March 2019. Their objective is to improve the
provisions regarding qualifications for practitioners, the code of conduct, and services supervision.
According to the authorities, the revised Administrative Measures for Patent Agencies were
implemented in May 2019; the revised Measures for the Patent Agent Qualification Examination were
effective as at June 2019. In September 2019, the CNIPA issued the Administrative Regulations of
Collective Patent Examination, which aim to improve the examination efficiency and quality of
important patent applications. "Collective Patent Examination" means the collective processing of a
group of patent applications focusing on the same key technology by the same applicant(s). 211 The
CNIPA also amended the Patent Examination Guidelines in order to clarify the examination standard
in patent applications involving artificial intelligence and other new industries. The amendment
entered into force in February 2020.
3.264. Amendments to the Patent Law were prepared with the objectives of improving protection,
boosting the application and use of patents, and enhancing the patent system. The NPC Standing
Committee approved the amendments in October 2020; they are expected to enter into force on
1 June 2021.
3.265. In November 2020, the CNIPA issued draft amendments to the Implementing Regulations
of the Patent Law for public consultation. The deadline for submitting opinions was 11 January 2021.
The CNIPA will further complete the draft according to the opinions, and then submit the final draft
to the legislature for review.
3.266. UNCTAD reported in 2019 that, in the 156 high-tech development zones established in China
by end-2017, the ratio of R&D expenditures to total production value was 6.5%, three times the
average in the national economy. Patents granted to enterprises within such high-tech development
zones accounted for 46% of all business patents granted nationwide.212
3.267. The National Bureau of Statistics reported that the added value of China's patent-intensive
industries reached approximately USD 1.53 trillion, contributing 11.6% to the GDP, in 2018. The
equipment manufacturing sector contributed to 30.7% to the added value of the patent-intensive
sectors. It was followed by information technology for manufacturing and services, manufacture of
new materials, healthcare, high-technology services, and environmental protection industries. Data
209
CNIPA, 2020 Statistics, 25 January 2021. Viewed at:
210
Other patent-related regulations notified to the TRIPS Council are listed in WTO documents
IP/N/1/CHN/3, 15 December 2010; IP/N/1/CHN/P/2, 21 December 2010; IP/N/1/CHN/4, 24 August 2011; and
IP/N/1/CHN/P/3, 26 August 2011.
211
CCIPT Patent and Trademark Office, China: CNIPA Issued Regulations on Collective Patent
Examination, 18 November 2019. Viewed at: https://www.mondaq.com/china/patent/864738/cnipa-issued-
regulations-on-collective-patent-examination.
212
WTO (2020), World Trade Report 2020, p. 115. Viewed at:
https://www.wto.org/english/res_e/booksp_e/wtr20_e/wtr20_e.pdf.
- 112 -
provided by the authorities indicate that in 2019 the added value of China's patent-intensive
industries reached CNY 11.4631 trillion, up by 7.0% compared with the previous year (including
price factors), contributing 11.6% to GDP, equal to the previous year.
3.268. In 2019, the CNIPA was ranked as the top IP office, reaching 43.4% of world's total patent
applications213 with 1.4 million filings, composed of 1.2 million filed by residents and 0.2 million by
non-residents (Chart 3.7).214
3.269. In 2019, there was a total of 452,804 patent grants: 360,969 patents were granted to
residents and 91,885 to non-residents (Chart 3.8).215
3.270. According to information from WIPO, in 2019, 10% of patents were granted in the field of
computer technology, followed by 8% in measurement; 8% in electrical machinery, apparatus, and
energy; and 7% in digital communication technologies. Chart 3.9 shows the top 15 fields of
technology.
Chart
Chart3.7
3.[ Patent
] Patentapplications, 2010-19
applications, 2010-19
Million of applications
1.6
Resident Non-resident
1.4
1.2
1.0
0.8
0.6
0.4
0.2
0.0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Source: WIPO IP Portal, WIPO IP Statistics Data Center. Viewed at: https://www3.wipo.int/ipstats/.
Source: WIPO IP Statistics Data Center. Viewed at: https://www3.wipo.int/ipstats/
Chart 3.8
Chart 3.[ ] Patent
Patent grants,
grants, 2010-19
2010-19
400,000
Resident Non-resident
350,000
300,000
250,000
200,000
150,000
100,000
50,000
0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
213
WIPO (2020), WIPO IP Facts and Figures 2020. Viewed at:
https://www.wipo.int/edocs/pubdocs/en/wipo_pub_943_2020.pdf.
214
WIPO IP Portal, WIPO IP Statistics Data Center. Viewed at: https://www3.wipo.int/ipstats/.
215
WIPO IP Portal, WIPO IP Statistics Data Center. Viewed at: https://www3.wipo.int/ipstats/.
- 113 -
Chart 3.[ ] Patent grants by top fields of technology, 2019
Chart 3.9 Patent grants by top fields of technology, 2019
9.7% Computer technology
Measurement
8.1% Electrical machinery, apparatus, energy

31.4% Digital communication
Machine tools
Civil engineering
8.0% Transport
Audio-visual technology
Materials, metallurgy
Other special machines

7.5%
Semiconductors
2.5% Handling
2.5% Chemical engineering

4.2%
2.9% Medical technology
3.8%
2.9% Optics
3.0% 3.7%
3.1% 3.4% Other sectors
3.3%
3.271. The China-United States Phase 1 Economic and Trade Agreement contains provisions
regarding patent term extensions to compensate for unreasonable patent office and marketing
approval delays that cut into the effective patent term, and to permit the use of supplemental data
to meet relevant patentability criteria for pharmaceutical patent applications. It also establishes a
mechanism for the early resolution of potential pharmaceutical patent disputes, including a cause of
action to allow a patent holder to seek expeditious remedies before the marketing of an allegedly
infringing product.216 Accordingly, China has formulated measures for the implementation of the
early settlement mechanism for drug patent disputes in accordance with the provisions of the
Agreement and the relevant provisions of the Patent Law. The measures were published for comment
on 11 September 2020, and revised on the basis of domestic and foreign opinions. Articles 42 and
76 of the fourth revision to the Patent Law touch upon "Effective Patent Term Extension" and
"Effective Mechanism for Early Resolution of Patent Disputes", specified in the China-United States
Phase 1 Economic and Trade Agreement. The 22nd session of the NPC Standing Committee adopted
a decision on revising the Patent Law, and the revised Patent Law is expected to come into force on
1 June 2021. In addition, on 14 December 2020, the CNIPA published Announcement No. 391 on
amending the Patent Examination Guidelines, which was implemented on 15 January 2021;
according to the authorities, it further clarified the examination standard for submitting experiment
data after the application deadline.
3.272. In response to the challenges posed by the COVID‑19 pandemic, the China Patent
Information Center (CNPAT) developed in collaboration with the Patent Examination Cooperation
(Beijing) Center of the Patent Office and the CNIPA to jointly develop an information-sharing public
platform for patents related to the prevention of COVID‑19. The platform provides precise patent
information on almost 10,000 patents.217
3.3.7.5.4 Utility models
3.273. The applications and registrations of utility models continued to grow during the review
period. Resident applicants represented 99% of applications and registrations (Table 3.30).218
216
Government of China. Viewed at: http://www.gov.cn/guowuyuan/2020-01/16/content_
5469650.htm.
217
CNPAT, Information Sharing Platform for Patents on Pandemic Prevention against COVID-19. Viewed
at: https://ncp.patentstar.cn/en.
218
WIPO IP Portal, WIPO IP Data Center. Viewed at: https://www3.wipo.int/ipstats/.
- 114 -
Table 3.30 Utility models – Applications and registrations, 2017-19

(million)
Utility models 2017 2018 2019
Applications Resident 1.68 2.06 2.26
Non-resident 0.01 0.01 0.01
Registrations Resident 0.97 1.47 1.57
Non-resident 0.01 0.01 0.01
Source: WIPO IP Portal, WIPO IP Statistics Data Center. Viewed at: https://www3.wipo.int/ipstats.
3.3.7.5.5 Industrial designs
3.274. The applications and registrations of industrial designs continued to grow during the review
period. Resident applicants represented 97% of total applications and 96% of registrations
(Table 3.31).
Table 3.31 Industrial designs – Applications and registrations, 2017-19

Industrial designs 2017 2018 2019
Applications Resident 610,817.00 689,097.00 691,771.00
Non-resident 17,841.00 19,702.00 19,846.00
Registrations Resident 426,442 517,693 539,282
Non-resident 16,554 18,558 17,247
Source: WIPO IP Portal, WIPO IP Statistics Data Center. Viewed at: https://www3.wipo.int/ipstats.
3.3.7.5.6 Layout-designs of integrated circuits
3.275. Layout-designs of integrated circuits are protected under the Regulations on the Protection
of Layout-Designs of Integrated Circuits and under the Rules for Implementing the Regulations on
the Protection of Layout-Designs of Integrated Circuits.
3.276. The CNIPA is responsible for the registration of layout-designs of integrated circuits. The
authorities state that a layout-design shall no longer be protected 15 years after the date of the
completion of its creation, regardless of its registration or commercial exploitation.
3.277. Data provided by the authorities indicate that in 2018, the CNIPA received 4,431 registration
applications of layout-designs of integrated circuits, a year-on-year increase of 37.3%, and issued
certificates for 3,815 layout-designs of integrated circuits, a year-on-year increase of 42.9%; in
2019, it received 8,319 registration applications of layout-designs of integrated circuits, a year-on-
year increase of 87.7%, and issued certificates for 6,614 layout-designs of integrated circuits, a
year-on-year increase of 73.4%. And in 2020, 14,375 applications were submitted, a 72.8% increase
from the previous year, and 11,727 registrations were granted, a yearly increase of 77.3%. 219
3.3.7.5.7 New plant varieties
3.278. The legal framework for the protection of new plant varieties is provided for by the
Regulations on the Protection of New Varieties of Plants (1997) and a body of implementing rules
(Table A3.5). China acceded to the 1978 Act of the International Convention for the Protection of
New Varieties of Plants in 1999.
3.279. The period of protection is 20 years from the date of authorization in the case of vines, forest
trees, fruit trees, and ornamental trees, and 15 years for other plants. The Implementation Rules
(Agriculture Part) and the Implementation Rules (Forestry Part) stipulate rules for protection of new
plant varieties in agriculture and forestry, respectively, and Rules for the Review Board on New Plant
Varieties regulate the review procedures for the authorization of new plant varieties.
3.280. The protection of new plant varieties in China is carried out by MARA and the National
Forestry and Grassland Administration (NFGA). The Office of Plant Variety Protection of MARA is
responsible for reviewing new varieties of agricultural plants and other related matters, including
219
CNIPA, 2020 Statistics, 25 January 2021. Viewed at:
- 115 -
grain, cotton, oil-bearing plants, bast-fibre plants, sugar, vegetables (including watermelon and
musk melon), tobacco plants, mulberries, tea plants, fruit trees (except dry fruits), ornamental
plants (except ligneous plants), grasses, green manure, herbaceous medicinal plants, edible fungi,
algae, rubber trees, and other plants. The NFGA Science and Technology Development Center is
responsible for the receipt, examination, and authorization of new varieties of forestry plants and
other related matters.
3.281. Over the past 20 years, protection has expanded to a growing number of plant varieties.
The number of applications has also increased annually, making China the country with the largest
number of annual applications for agricultural plant varieties. According to the data released by the
Office of Plant Variety Protection of MARA, since 1999, the number of applications and registrations
for plant varieties has increased rapidly. In early 2019, the cumulative number of applications had
reached 26,000 and the total number of grants was 12,000. In 2018, the number of applications for
new varieties of agricultural plants reached more than 4,800, which is equivalent to the total number
of applications in the last 10 years.220 The numbers of applications for new varieties of agricultural
plants in 2017, 2018, and 2019 were 3,842, 4,854, and 7,032, respectively, and the total number
of grants reached 1,486, 1,990, and 2,288, respectively.
3.282. The NFGA released 7 lists of new varieties protection, covering 284 varieties, most of which
are active in forestry breeding. The number of applications for new varieties of forestry plants has
also increased annually. By 2020, the total number of applications for new varieties of forestry plants
reached 5,566, and the total number of authorizations reached 2,643. In 2017, 2018, and 2019,
there were, respectively, 623, 906, and 802 applications and 160, 145, and 439 authorizations for
new varieties of forestry plants.
3.283. The authorities started reviewing the Regulations on the Protection of New Varieties of Plants
in 2019. The Supreme People's Court plans to issue a judicial interpretation on the Provisions on
Application of Law in the Trial of Disputes over New Plant Variety Rights in 2021. 221
3.3.7.5.8 Undisclosed information and trade secrets
3.284. The legal framework governing the protection of undisclosed information and trade secrets
is composed by the Anti-Unfair Competition Law (last amended in 2019), the Administrative
Licensing Law (last amended in 2019), the Criminal Law (last amended in 2020), the Labour Law,
the Regulations for the Implementation of the Law on Drug Control, and the Regulations on
Administration of Agricultural Chemicals.
3.285. The Anti-Unfair Competition Law, as amended in 2019, contains revised provisions on trade
secrets. Article 9 defines "trade secrets" as "technical information, business operation information,
and other commercial information that are not known to the public, have commercial value, and for
which the trade secret owner has adopted corresponding measures to maintain its confidentiality".
3.286. The amendment adds new types of trade secret infringements, particularly the acquisition
of trade secrets through "cyber invasion"; prohibits indirect infringement of trade secrets that
"instigates, induces, or helps others to obtain, disclose, use, or allow others to use the trade secrets
of the rights holders in breach of confidential obligations or in violation of the requirements of the
relevant rights holder on keeping confidential trade secrets"; expands the scope of persons who are
subject to the provisions of trade secret infringement to include all individual and legal persons;
adds punitive damages for malicious trade secret infringement; and increases the administrative
fines that may be imposed for trade secret infringement.
3.287. Serious infringement of trade secrets constitutes a crime under the Criminal Law. In
December 2020, the NPC Standing Committee passed the Criminal Law Amendments, which covered
infringement of trade secrets. Specifically, the maximum and minimum penalty for this crime was
increased, and the maximum penalty was increased from 7 to 10 years. The conviction and
sentencing standards were revised, and actual losses will not be considered as the only prerequisite
220
Twelve Tables Law Firm, "Introduction to the Protection of New Plant Varieties in China", 18 July
2019. Viewed at: https://www.lexology.com/library/detail.aspx?g=b012e1f4-d0a3-4ba3-9715-
f045afc8118c#:~:text=China%20has%20established%20a%20legal,1%20of%20the%20same%20year.
221
AFD China Intellectual Property Law Office, New Plant Varieties Protection in China, 26 October 2020.
Viewed at: https://www.lexology.com/library/detail.aspx?g=2d8f77dd-bb01-463c-9783-41e1fa6bd0c0.
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for constituting a crime. According to the authorities, the definition of trade secrets in the Criminal
Law was deleted, and its definition was mentioned in the corresponding provisions of the Anti-Unfair
Competition Law revised in 2019.
3.288. According to Article 23 of the FIL, implemented in March 2019, administrative agencies and
their employees shall keep confidential, according to the Law, the trade secrets of foreign investors
and foreign-funded enterprises to which they have access in performing their duties, and neither
divulge nor illegally provide others with such secrets. Article 39 of the FIL stipulates that during the
promotion, protection, and administration of foreign investment, where an employee of an
administrative agency divulges or illegally provides others with any trade secret to which he or she
has access in performing his or her duties, disciplinary action shall be taken against the employee
according to the Law; and if it is criminally punishable, the employee shall be held criminally liable
according to the Law. In April 2019, the Administrative Licensing Law, which governs business
licences and certain regulatory approvals, was amended to incorporate similar content as that in the
FIL. Article 5 prohibits that individuals (including government officials and external experts) involved
in licensing procedures to disclose trade secrets and other confidential business information without
the consent of the applicant, except in situations required by law or justified under national security
or public interest grounds.
3.289. The China-United States Phase 1 Economic and Trade Agreement required China to
enumerate additional prohibited acts that constitute trade secret misappropriation, including:
(i) electronic intrusions; (ii) breach or inducement of a breach of duty not to disclose information
that is secret or intended to be kept secret; and (iii) unauthorized disclosure or use that occurs after
the acquisition of a trade secret under circumstances giving rise to a duty to protect the trade secret
from disclosure or to limit the use of the trade secret. In addition, the agreement provides for burden
shifting to an accused party in civil proceedings for misappropriation when the holder of a trade
secret has produced prima facie evidence, including circumstantial evidence, of a reasonable
indication of trade secret misappropriation by the accused party. Other measures include the use of
preliminary injunctions, clarifying criminal enforcement of misappropriation, and preventing
unauthorized disclosure of trade secrets by government entities.222
3.3.7.6 Enforcement
3.3.7.6.1 Overview
3.290. The IP enforcement regime continued to evolve in response to the challenges posed by the
shift from brick-and-mortar stores to virtual marketplaces and the implementation of international
agreements. In China, IP holders have the possibility of bringing action against the infringer either
directly in a court or by requesting the competent administrative authority to handle the case. An
administrative resolution is not necessary prior to the judicial resolution. All public security
authorities above the prefecture and city levels have IPR crime-coordinating activities and lead
organizations to arrange and coordinate action to crack down on infringement and counterfeiting
activities. The Ministry of Public Security has cooperation agreements with other agencies
(e.g. Customs) to facilitate the prompt reporting of and intervention on IP-related infringements.
The SAMR launched the "Iron Fist" Intellectual Property Law Enforcement Action to crack down on
trademark infringement, counterfeit patents, and other illegal activities. Table 3.32 provides an
overview of enforcement actions taken by the authorities during the review period.
3.291. Regarding IP enforcement, the China-United States Phase 1 Economic and Trade Agreement
contains provisions aimed to: (i) provide effective and expeditious action against infringement in the
online environment, including requiring expeditious takedowns and ensuring the validity of notices
and counternotices; (ii) take effective action against e-commerce platforms that fail to take
necessary measures against infringement; (iii) take effective enforcement action against counterfeit
pharmaceuticals and related products, including active pharmaceutical ingredients; (iv) increase
actions to stop the manufacture and distribution of counterfeits with significant health or safety
risks; (v) provide that the judicial authorities shall, except in exceptional circumstances, order the
forfeiture and destruction of pirated and counterfeit goods, as well as the materials and implements
predominantly used in their manufacture; (vi) significantly increase the number of enforcement
actions against pirated and counterfeit goods at physical markets in China and those that are
exported or in transit; (vii) ensure, including through third-party audits, that government agencies
222
Government of China. Viewed at: http://www.gov.cn/guowuyuan/2020-01/16/content5469650.htm.
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and SOEs only use licensed software; (viii) provide deterrent-level civil remedies and criminal
penalties for IP theft, including increasing the range of minimum and maximum pre-established
damages, sentences of imprisonment, and monetary fines; (ix) require the transfer of cases from
administrative authorities to criminal authorities when there is a reasonable suspicion of a criminal
violation; (x) ensure expeditious enforcement of judgments for violations of IPR; (xi) provide legal
presumptions of copyright ownership and waive certain other requirements for bringing copyright
infringement claims; (xii) eliminate or streamline requirements for foreign litigants to authenticate
evidence for use in Chinese courts; and (xiii) provide a reasonable opportunity to present witnesses
and to cross-examine opposing witnesses in civil proceedings.223
Table 3.32 IP enforcement, 2018-20

2018 2019 2020
Cases dealt with by governmental agencies
(administrative level)
Patents
Number of disputes 66,700 77,300 39,000
Copyright
Number of disputes/administrative penalties 3,033 2,539 ..
Imposition of fines (CNY million) 16 24 ..
Cases transferred to judicial agencies 203 186 ..
Businesses inspected 522,135 384,641 ..
Illegal operation units banned 2,361 1,224 ..
Underground dens detected 203 152 ..
Trademarks
Number of disputes 30,200 31,900 31,300
Cases transferred to judicial agencies 172 236 709
Value of fine (CNY million) 470 514 445
Cases handled by Customs at the border
Cases dealt with by courts
First-instance civil IPR cases accepted 201,039 283,414 399,031
First-instance civil IPR cases closed 192,938 273,945 394,521
Patent cases accepted 16,010 21,699 22,272
Patent cases closed 14,254 19,151 23,071
Trademark cases accepted 37,946 51,998 65,209
Trademark cases closed 35,816 49,367 64,784
Copyright cases accepted 137,267 195,408 293,066
Copyright cases closed 133,357 192,385 289,029
Technical contract cases accepted 2,098 2,680 3,135
Technical contract cases closed 2,214 2,452 3,181
Unfair competition cases accepted 2,429 4,080 4,128
Unfair competition cases closed 2,179 3,207 3,902
Other IPR cases accepted 5,289 7,549 11,221
Other IPR cases closed 5,118 7,382 11,445
Second instance civil IPR cases accepted 21,818 27,621 49,704
Second instance civil IPR cases closed 20,525 26,288 48,710
.. Not available.
3.292. China also released five judicial interpretations, including trade secret protection, patent
licensing and confirmation, online IP infringement, criminal protection for IPRs, and evidence in
IP-related civil proceedings, as well as providing three guiding opinions on IP protection for
e-commerce platforms, strengthening the efforts of punishing IP infringements, and reinforcing the
protection of copyrights and related rights.
3.3.7.6.2 Administrative procedures
3.293. Copyright administrative authorities have been established in all provinces, autonomous
regions, municipalities, and certain cities to administer local copyright affairs including copyright
enforcement. In 2018, local copyright law enforcement departments had 3,033 cases, of which
203 were transferred to criminal judicial agencies. More than 7.4 million pirated products were
seized. Special measures to crack down on copyright infringement and piracy included the Sword
223
01/16/content_5469650.htm.
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Network 2018 and Sword Network 2019 strategies to promote copyrights in key areas such as
network reprinting, short videos, movies, streaming media, and images. Data provided by the
authorities indicate that 994 network infringement cases were investigated.
3.294. During the review period, copyright surveillance of large-scale video, music, and literature
websites, as well as online storage service providers, was strengthened. In 2018 and 2019, early
warnings for 14 batches of key works, and 139 films and television works, were issued. These were
reaffirmed by resident and non-resident right holders. The authorities have actively implemented
outreach and training activities on enforcement and produced specific publications to inform the
public.
3.295. During the review period, the CNIPA organized and launched IP protection campaigns and
led nationwide efforts to crack down on infringements of trademarks, GIs, and patents. In 2018, the
CNIPA joined MARA and four other departments to curb counterfeit, low-quality food in rural areas.
In 2019, the CNIPA distributed the Special Action Plan for IP Law Enforcement and Protection. Also
in 2019, the SAMR issued the Iron Fist Action Plan for IP Enforcement for 2019 and 2020; according
to the authorities, it launched law enforcement actions against trademark infringement, counterfeit
patents, and other illegal activities, and issued the Implementation Measures for Reinforcing IP Law
Enforcement in Online Shopping and Imports and Exports jointly with the Ministry of Public Security,
MARA, the GACC, the National Copyright Administration, and the National Intellectual Property
Administration.
3.296. According to the authorities, since 2018, the CNIPA has taken the initiative to crack down
on infringements in the area of forestry plant varieties. There is a plan to amend the Measures for
Administrative Law Enforcement on the Protection of New Varieties of Forestry Plants to strengthen
the protection of plant variety rights.
3.3.7.6.3 Judicial measures
3.297. During the review period, China continued its efforts to strengthen the capability of judicial
enforcement. In January 2019, the new IP Court of the Supreme Court was established and has
national jurisdiction over technical IP appeals. This is a major milestone in the Chinese IP litigation
system. The IP Court implemented the Uniform Judgment Standard System Project and explored
the simultaneous trial mode of administrative and civil cases, as well as optimized the trial
mechanism of technical IP cases. Data provided by the authorities indicate that the IP Courts in
Beijing, Shanghai, and Guangzhou have accepted more than 100,000 cases.
3.298. Since 2017, intermediate courts in 21 municipalities have set up special judicial agencies for
first-instance IP cases. According to the authorities, local IP courts have improved the conduct of
trials. Table 3.33 shows the number of judicial cases related to IP during 2018 and 2019.
Table 3.33 Judicial measures, 2018-19

Cases/growth 2018 2019
New cases received 334,951 481,793
Cases concluded 319,651 475,853
Percentage growth 2018-19 44.16% 48.87%
3.299. The courts have implemented the Opinions on Strengthening the Protection of Intellectual
Property Rights, improved the timeliness and suitability of judicial remedies, and made efforts to
achieve coordination and proportionality between compensation for infringement damages and the
market value of IPRs. According to the authorities, the quality and effectiveness of trials have been
improved, and the leading role of courts in IPR enforcement has become more prominent.
3.300. According to the authorities, the Opinions of the Supreme People's Court on Promoting the
"Three-in-One" Trial of Civil, Administrative and Criminal Cases Involving Intellectual Property Rights
in Courts Nationwide were put into practice. The Supreme People's Court reinforced its guidance on
the "three-in-one" reform nationwide; researched IP-related criminal cases and revised relevant
judicial interpretations; appointed a national database of technical investigators and experts; and
issued the Technical Investigator Work Manual (2019) to provide work guidelines for courts. Courts
- 119 -
at all levels have further clarified how staff members could participate in technical fact-finding
investigations.
3.301. The judicial system has worked to improve transparency by implementing the work
requirements called "Disclosure as Principle and Non-Disclosure as Exception" and widening the
scope of public hearings.
3.302. In April 2020, the Supreme People's Court released the list of the top 10 IP law cases of
2019. The cases cover patents (invention and industrial design), trademarks, copyrights, and unfair
competition. The cases were adjudicated by courts throughout China at different appeal levels.
3.3.7.6.4 Customs measures
3.303. The legal framework for IP enforcement at the border is provided by the Customs Law, the
Regulations on Customs Protection of Intellectual Property, and the Rules of the Customs for
Implementing the Regulations on Customs Protection of Intellectual Property.
3.304. Ex officio or active IPR enforcement upon entry into China requires recording the information
of the relevant IPRs with the GACC. This procedure is free and allows customs officials to monitor
suspicious activities, inspect import and export shipments, and work directly with the right holder to
identify infringing goods. The GACC has the authority to suspend the customs clearance of suspected
infringing goods, detain the shipment at the request of the IPR holder, and investigate the
infringement. If no determination on infringement is possible, the IPR holder can still pursue the
case in court. If an IPR holder has not registered with the GACC, the customs authority is not in a
position to investigate. The IPR holder can request that customs detain a shipment by providing
evidence of the infringement and a deposit equivalent to the value of the goods. The IPR holder
would need to file a case in court within 20 working days or the customs authority would release the
goods. About 50,000 valid IPR registrations have been recorded with the GACC up to
September 2019. In 2017, China Customs applied 22,500 IP protection measures, resulting in
seizures of 19,100 shipments of goods suspected of IPR infringement. In 2018, China Customs
applied 49,700 border protection measures, resulting in seizures of 47,200 shipments of goods
suspected of IPR infringement. In 2019, China Customs applied 55,600 IP protection measures,
resulting in seizures of 51,600 shipments of goods suspected of IPR infringement. Between 2017
and 2019, more than 97% of the seizures were based on China Customs' ex officio actions, while
only around 3% was initiated by brand owners under passive protection scheme.
3.3.7.6.5 Criminal procedures
3.305. In December 2020, the Standing Committee of the National People's Congress adopted the
amendments to the Criminal Law, which provide for stronger criminal penalties for IPR
infringements, raising the maximum prison term for trademark and copyright infringements from
7 to 10 years; added the protection of service marks; and supplemented the types of criminal acts
that infringe on trade secrets, adding "industrial espionage crime". The amendment is scheduled to
enter into force in March 2021.224
224
China's Website for the Campaign against IPR Infringements and Counterfeits, "China Amends
Criminal Law", 28 December 2020. Viewed at: http://english.ipraction.gov.cn/article/ps/202012/331706.html.
- 120 -
4 TRADE POLICIES BY SECTOR
4.1 Agriculture, Forestry, and Fisheries
4.1.1 Overview
4.1. The contribution of agriculture, animal husbandry, forestry, and fisheries to current GDP
gradually decreased during the review period. The real growth rate fluctuated year-on-year, and
employment (as a percentage of total employment) also gradually declined. Farming and animal
husbandry continue to account for the majority of gross value output (over 81.3% in 2020)
(Table 4.1).
Table 4.1 Principal indicators for agriculture, animal husbandry, forestry, and fisheries,
2015-20
2015 2016 2017 2018 2019 2020
Contribution to current GDP (%) 8.7 8.4 7.8 7.3 7.4 6.0
Real growth rate (%) 3.9 3.3 4.0 3.5 3.2 1.1
Employment (percentage of total employment)a 28.3 27.7 27.0 25.1 .. ..
Share of gross output value (%)b
Farming 55.6 54.8 55.8 57.1 56.2 52.1
Forestry 4.5 4.6 4.8 5.0 4.9 4.3
Animal husbandry 29.4 30.0 28.2 26.6 28.1 29.2
Fishery 10.6 10.7 11.1 11.3 10.7 9.3
.. Not available.
a Percentage of employment of the primary industry in total employment not including mining; data
for employment in agriculture, forestry, animal husbandry, and fisheries were not available.
b Including auxiliary services.
Note: The farming output data for 2020 are estimated data.
4.1.2 Agriculture
4.1.2.1 Features and market development
4.2. Over the period 2015-19, the overall value of production of agriculture and animal husbandry
increased steadily (Table 4.2). Longer term trends are contained in Chart 4.1 and Chart 4.2.
Table 4.2 Agricultural production, 2015-19

Value of production
of agriculture and Cerealsa Pork Poultry Fruits Vegetables Cotton
animal husbandry
CNY million
2015 8,285,466 1,418,998 1,285,965 739,547 961,309 2,009,154 104,142
2016 8,612,106 1,429,738 1,413,344 777,516 929,945 1,851,000 79,010
2017 8,742,095 1,473,846 1,296,611 732,987 1,049,366 1,871,516 81,162
2018 9,015,000 1,460,160 1,120,265 816,272 1,102,956 2,037,395 81,216
2019 9,913,080 1,479,773 1,320,716 959,815 1,243,312 2,175,413 77,934
'000 tonnes
2015 .. 618,184 56,454 19,195 245,246 664,251 5,907
2016 .. 616,665 54,255 20,017 244,052 674,342 5,343
2017 .. 615,205 54,518 19,817 252,419 691,927 5,653
2018 .. 610,036 54,037 19,937 256,884 703,467 6,103
2019 .. 613,697 42,553 22,386 274,008 703,467 5,889
.. Not available.
a Main cereals produced are rice, wheat, and corn.
Source: National Bureau of Statistics, China Statistical Yearbook 2019. Viewed at:
http://www.stats.gov.cn/tjsj/ndsj/2019/indexeh.htm; WTO document WT/TPR/S/375/Rev.1,
14 September 2018; and data provided by the authorities.
- 121 -
Chart 4.1 Value

Chart 4.[CHN] Value of of production
production ofand
of agriculture agriculture and
animal husbandry, animal husbandry, 2009-19
2009-19
CNY trillion
10,000
9,000
Other
8,000
Cotton
7,000 Vegetables
6,000 Fruit and nuts
5,000 Poultry
Pork
4,000
Cereals
3,000
2,000
1,000
0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Source: National Bureau of Statistics and data provided by the authorities.

Source: National Bureau of Statistics, China Statistical Yearbook 2019. Viewed at:
http://www.stats.gov.cn/tjsj/ndsj/2019/indexeh.htm; and data provided by the authorities.
Chart 4.2 Volume

Chart 1.[CHN] of production,
Volume of production, 2009-2019 2009-19
Index (2008=100)
150
140
130
Cereals
120 Pork
110 Poultry
Fruit
100
Cotton
90
80
70
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Source: National
Source: National Bureau
Bureau of Statistics,
of Statistics China by
and data provided Statistical Yearbook 2019. Viewed at:
the authorities.
http://www.stats.gov.cn/tjsj/ndsj/2019/indexeh.htm; and data provided by the authorities.
4.3. China continues to be a net importer of agricultural products, although agricultural imports
represented only 6.4% of total merchandise imports in 2020. As at the time of China's previous
Review, China's main agricultural exports by tariff line (at the HS 4-digit level) are fruits and
vegetables. Imports of agricultural products continue to be dominated by soya beans, although their
share in imports dropped between 2017 and 2020 (Table 4.3).
Table 4.3 Agricultural exports and imports, 2015-20

2015 2016 2017 2018 2019 2020
Exportsa (USD million) 50,425.8 52,491.7 54,576.6 57,619.8 58,490.6 57,486.6
% of total exports 2.2 2.5 2.4 2.3 2.3 2.2
Growth rate (%) 0.2 4.1 4.0 5.6 1.5 -1.7
Top 10 exports at HS 4-digit level (% of total)
0703 Onions, garlic, fresh or chilled 4.7 6.0 5.0 3.4 4.5 4.6
2008 Fruit and nuts prepared/preserved, 5.1 4.8 5.0 5.1 4.5 4.4
n.e.s.
2106 Food preparations, n.e.s. 2.5 2.6 2.7 3.2 3.5 4.0
0712 Dried vegetables 5.6 6.2 7.3 7.0 5.0 3.7
0808 Apples, pears and quinces, fresh 2.9 3.7 3.7 3.2 3.1 3.7
2309 Preparations of a kind used in 3.2 3.2 3.4 3.7 3.3 3.6
animal feed
0902 Tea 2.7 2.8 2.9 3.1 3.5 3.5
- 122 -
2015 2016 2017 2018 2019 2020

2005 Other prepared/preserved 3.7 3.8 3.9 3.8 3.7 3.5
vegetables
1302 Vegetable saps and extracts, etc. 2.5 2.4 2.5 2.6 2.7 2.8
2103 Sauces; mixed condiments and 2.0 1.8 2.0 2.1 2.2 2.7
seasonings
Importsa (USD million) 108,526.1 102,992.2 115,441.9 123,793.3 132,583.1 157,424.1
% of total imports 5.8 6.5 6.5 6.3 5.8 6.4
Growth rate (%) -5.1 -5.1 12.1 7.2 7.1 18.7
Top 10 imports at HS 4-digit level (% of total)
1201 Soya beans 32.1 33.0 34.3 30.8 26.7 25.1
0203 Meat of swine, fresh, chilled or 1.3 3.1 1.9 1.7 3.4 7.5
frozen
0202 Meat of bovine animals, frozen 2.1 2.4 2.6 3.8 6.0 6.2
1901 Food preparations of cereals, flour 2.7 3.4 3.9 4.4 4.4 3.7
or milk
1511 Palm oil and its fractions 3.4 2.8 3.0 2.7 3.1 2.6
0810 Fresh fruit, n.e.s. in chapter 8 1.8 1.8 1.7 2.0 2.4 2.6
2106 Food preparations, n.e.s. 1.2 1.4 1.7 2.2 2.4 2.5
5201 Cotton, not carded or combed 2.4 1.5 1.9 2.6 2.7 2.3
0207 Meat of poultry, fresh, chilled or 0.9 1.2 0.9 0.9 1.5 2.2
frozen
0402 Milk and cream, concentrated or 1.4 1.5 1.9 2.0 2.4 2.1
containing added sugar
a WTO definition.
Note: Top 10 agricultural exports and imports by HS 4-digit level are sorted by the year 2020.
Source: WTO Secretariat calculations, based on trade figures from UN Comtrade database.
4.4. Farmland continues to be owned by villagers' collectives that had a 15-year ownership for a
first round and a 30-year ownership for a second round under the household contract responsibility
system set up in the late 1970s and early 1980s. Having signed the contract, farmers are guaranteed
the right to occupy, use, and profit from the tenure of the farmland during the period covered by
the contract. Rural households can transfer the land management right in exchange for income
through the "three-rights" separation system, which was embedded in law through amendments to
the Rural Contract Law in 2018.1 According to the authorities, this system facilitated a more efficient
allocation of land management rights to support appropriately scaled management and the
development of modern agriculture. Reportedly, the registration and certification of 200 million rural
households' contracted land rights have been completed, and, by the end of 2019, 550 million mu
(1 mu being 667 m2) of rural contracted land had been transferred. During the review period, a
greater emphasis was placed on experimenting with a similar approach to underused or unused rural
homesteads, to promote housing use and densification, as well as to liberate construction land for
new industries. Homesteads are collective rural construction lands owned by the village collectives
and allocated for villagers to build homes and supporting facilities.2 The authorities indicate that pilot
programmes for rural homestead reform have been carried out in 33 counties (cities or districts)
since 2015. Following the requirement of acquisition in a lawful and fair manner, economic and
intensive use, and voluntary paid exit, pilot projects have explored guaranteeing housing for all rural
households, establishing homestead paid use and exit mechanisms, delegating homestead approval
authority, and improving the homestead management system. Some of the results gained from pilot
programmes were incorporated into the newly revised Land Management Law. In 2018, the
Government announced a policy to explore the three-rights separation system for homesteads.3 In
June 2020, China adopted the Pilot Program for Deepening the Rural Homestead System Reform,
Under a pilot three-rights separation system initiated in 2014, the right of collective ownership, the
1
contracting right of farmer households, and the operating right of rural land were separated. The objective was
to optimally utilize farmland considering increasing levels of urbanization and a corresponding underutilization
of farmlands owned by farmers no longer living in rural areas and thus enable active farmers or agri-
businesses to work the land (CTGN, China's "No. 1. Document" to Continue Land Reforms as Part of
Revitalization Strategy, 4 February 2018. Viewed at: https://news.cgtn.com/news/7751444e31677a6333566
d54/index.html). In 2016, China adopted the Opinions on Improving the System for Separating Rural Land
Ownership, Contract Rights and Management Rights, making a systematic and comprehensive institutional
arrangement for the "separation of three rights" of the rural contracted land, proposing to speed up the
liberalization of land management rights, and establish and perfect a standardized management system for
land transfer.
2
The authorities indicate that, in the context of this Review, the Government has not yet calculated the
total area of homesteads; however, in the future, MARA will establish a nationwide homestead survey system
and make the survey results public, according to law.
3
MDPI, "Report from a Chinese Village 2019: Rural Homestead Transfer and Rural Vitalization", MDPI
Sustainability Journal, 18 October 2020. Viewed at: https://www.mdpi.com.
- 123 -
which requires the relevant authorities to explore the implementation of homestead collective
ownership, the protection of rural households' entitlement to homestead and housing property
rights, and the moderate relaxing of specific paths/measures regarding the rights of use of
homesteads and rural houses while safeguarding and developing the rights and interests of farmers.
4.1.2.2 Legal and institutional framework
4.5. The Government is responsible for establishing the general agricultural policy framework and
the rules for its implementation. As part of the Government's restructuring in 2018, various
institutional changes were made. The Ministry of Agriculture (MOA) was renamed the Ministry of
Agriculture and Rural Affairs (MARA) and falls under the responsibility of the State Council. Its
priorities are resolution of the "three-rights" issues (Section 4.1.2.1), agricultural and rural
development, implementation of the rural revitalization strategy (Section 4.1.2.3), promotion of
agricultural upgrading, farmer development, and acceleration of agricultural and rural
modernization. MARA took over the responsibilities of the MOA, as well as the management
responsibilities for the agricultural investment projects of the National Development and Reform
Commission (NDRC), the comprehensive agricultural development projects of the Ministry of
Finance, the farmland investment projects of the Ministry of Land and Resources, and the farmland
water conservancy construction projects of the Ministry of Water Resources. The National Food and
Strategic Reserves Administration (NAFRA) was also established under the purview of the NDRC,
with a view to strengthening the overall planning and building of a unified national material reserves
system, enhancing the supervision and management of the central grain and cotton reserves, and
improving the national reserve's capacity to respond to emergencies. The NAFRA is responsible for:
(i) implementing the purchase, storage, rotation, and management of emergency reserves in
accordance with the overall development plan and the catalogue of the national reserves system;
(ii) constructing and managing related infrastructure; and (iii) supervising and inspecting
government and enterprise reserves and the implementation of the reserve policies. It is also
responsible for industry guidance of grain distribution and administrative management of the central
reserves of grain and cotton. The State Administration of Grain was dissolved. Additionally, the
Ministry of Science and Technology (MOST), which has a lead role in supporting the development of
the biotechnology industry, took responsibility for China's National Science Foundation, a public
science funding body. MARA, together with, inter alia, the NDRC, the Ministry of Finance, and the
Ministry of Commerce (MOFCOM), is in charge of implementing agricultural policy.
4.6. Among the central state-owned enterprises (SOEs) and their subsidiaries under the
State-owned Assets Supervision and Administration Commission's (SASAC) supervision operating in
the agriculture sector and related sectors, such as food processing and the production of seeds,
fertilizers, and pesticides, are: the China Agriculture Development Group; COFCO Corporation; the
China Grain Storage Group; China Salt Industry Group; Sinochem; China National Chemical Group;
and the China National Seed Group.
4.7. Key laws in the agriculture sector are set out in Table 4.4.
4.8. In 2018, amendments to the Law on the Contracting of Rural Land were made to legally
upgrade the institutional arrangements on the "three-rights" separation system of rural contracted
land (Section 4.1.2.1). Major changes to the Land Administration Law in 2019 were made to narrow
the scope of land requisition, allow collective operating construction land to enter the market,
establish the means of protecting rural land designated for housing, and strengthen the protection
of arable land (especially permanent basic farmland). Amendments to the Law and Safety of
Agricultural Products in 2018 reflected institutional changes. The main change to the Law on the
Organization of Villagers' Committees in 2018 was to change the term of a Villagers' Committee
member from three to five years. The 2018 revision to the Agricultural Mechanization Promotion Law
did not involve any substantial changes.4
4.9. Since China's previous Review, FDI restrictions on companies selecting and cultivating new
varieties of crop and producing seeds have been eased, except for soybean and rice; the requirement
for Chinese parties to be controlling shareholders now applies only to corn. With respect to wheat,
the Chinese shareholding threshold has been reduced to 34% (Table A2.3).5
4
The revision merged the first and second paragraphs of Article 12.
5
See also WTO document WT/TPR/S/375/Rev.1, 14 September 2018, Table A2.3.
- 124 -
Table 4.4 Main agriculture-related laws, December 2020

Law
Coverage
(date of last amendment)
Agriculture Law, 1993 (2012) Principles for agriculture development, management, and preservation.
Agriculture encompasses crop-plantation, forestry, animal husbandry,
and fisheries.
Law on Specialized Farmers' Regulations on norms and behaviour of specialized farmers'
Cooperatives, 2006 (2017) cooperatives.
Law on Promotion of Agricultural Provisions to encourage and support peasants and agricultural
Mechanization, 2004 (2018) production and operation organizations to use advanced machines,
promote mechanization, and develop modern agriculture.
Law on the Contracting of Rural Provisions to stabilize and perfect the two-level operation system that is
Land, 2002 (2018) based on the responsibility system of contracting by households
supplemented by unified management, entitling peasants to a long-term
and guaranteed right to land use.
Law of Agricultural Engineering Provisions to strengthen agricultural engineering extension, and
Extension, 1993 (2012) advance agricultural scientific research and new technology to ensure
agricultural development and modernization.
Land Administration Law, 1986 Provisions on the ownership and land use rights, land use planning,
(2019) protection of cultivated land, land for construction, and supervision and
inspection.
Law on the Quality and Safety of Provisions on quality and safety standards, origin, production, packing
Agricultural Products, 2006 and labelling, and supervision and inspection of agricultural products.
(2018)
Law on the Organization of Provisions on composition and responsibilities of villagers' committees,
Villagers' Committees, 1998 election of village committees, villagers' meetings, and democratic
(2018) supervision and management.
Source: FAOLEX Database, China. Viewed at: http://www.fao.org/countryprofiles/index/en/?iso3=CHN; Land

Administration Law. Viewed at: http://www.moj.gov.cn/Department/content/2019-09/18/592_3232
173.html; Agricultural Mechanization Promotion Law. Viewed at: http://www.moa.gov.cn/gk/zcfg/fl/
202007/t20200716_6348748.htm; Law on Quality and Safety of Agricultural Products. Viewed at:
http://www.moj.gov.cn/Department/content/2019-01/17/592_226992.html; Law on the
Organization of Villagers' Committees. Viewed at: http://www.moj.gov.cn/Department/content/
2019-01/17/592_227048.html; and Rural Contract Law. Viewed at:
http://www.npc.gov.cn/npc/c30834/201901/cd063e4c0f19465e9d41946001fe839c.shtml.
4.1.2.3 Policy objectives and reforms
4.10. The main agricultural strategy in China is the Strategic Plan for Rural Revitalization (2018-22)
released in 2018.6 The reasons for issuing the Plan were to build on improvements achieved in the
agricultural sector and to address challenges relating to improving the quality and effectiveness of
agricultural development, developing rural talents, lagging construction of rural public facilities, and
closing the large gap between urban and rural public services and the income of urban and rural
residents. According to the authorities, the Plan gives priority to agricultural and rural development,
and the overall requirement of making the countryside prosperous in terms of industrial
development, liveable in terms of ecological environment, civilized in terms of conduct, effective in
terms of governance, and well off in terms of the standard of living. Under the Plan, institutional
mechanisms and policy frameworks for integrated development of the urban and rural areas are
being developed to accelerate the modernization of rural governance systems and capabilities, as
well as of agricultural and rural areas. Various plans were released to implement the goals contained
in Strategic Plan, including China's No. 1 Central Documents on Agriculture and Rural Development
of 2018, 2019 and 20207; the Development Plan for Digital Agriculture and Rural Areas (2019-25)8;
and a white paper on food security in China.9
6
Strategic Plan for Rural Revitalization. Viewed at: http://www.gov.cn/zhengce/2018-09/26/content_
5325534.htm.
7
For an explanation of the contents of these documents, as well as a link to the official texts, see FAO,
China No. 1 Central Document of 2018. Viewed at: http://www.fao.org/faolex/results/details/en/c/LEX-FAOC
179223; China No. 1 Central Document of 2019. Viewed at: http://www.fao.org/faolex/results/details/en/c/
LEX-FAOC192851; and China No. 1 Central Document of 2020. Viewed at: http://www.fao.org/faolex/results/
details/en/c/LEX-FAOC192850.
8
FAO (2019), Development Plan for Digital Agriculture and Rural Areas (2019-2025). Viewed at:
9
FAO (2019), White Paper: Food Security in China. Viewed at:
- 125 -
4.11. Policy objectives for modernizing the agricultural sector are also contained in China's
13th Five-Year Plan for Economic and Social Development (2016-20), which has four main elements:
(i) strengthening the capacity for ensuring the safety of agricultural products; (ii) establishing a
modern agricultural operations system; (iii) improving technology and equipment and increasing
information technology (IT) application in agriculture; and (iv) improving systems for providing
support and protection for agriculture. It also contains goals for developing the agricultural
biotechnology segment, including genetically modified crops. In the 14th Five-Year Plan for Economic
and Social Development, policy objectives in agriculture included: implementing the strategy of rural
revitalization, strengthening the use of industry to supplement agriculture, and promoting the
formation of a new type of urban-rural relationship between industry and agriculture. The authorities
state that steps to implement the goals/reforms contained in the above-mentioned plans include
promotion of large-scale construction of high-standard farmland, demarcation of functional areas of
grain production and essential production areas for agricultural products, strengthened innovation
in agricultural science and technology, and promotion of whole-process mechanized production of
major crops. Additionally, support is being given to establishing modern agricultural industrial parks
and townships and industry clusters, and developing new business models (i.e. leisure agriculture,
rural tourism, and rural e-commerce). Other areas of focus include encouraging clean agricultural
production, developing a three-year action plan to protect and restore the rural environment,
promoting rural culture, and improving transport infrastructure, utilities, and public service delivery.
4.12. In July 2020, MARA issued a 2020-25 National Plan for Rural Industrial Development10, which
sets out the goals and revenue targets for rural industrial development over the period, with
priorities including upgrading agricultural product processing industries, expanding rural speciality
industries, improving agricultural tourism, developing new-type rural service industries, promoting
synergies between vertical integration of agriculture and rural industries development, and
advancing entrepreneurship and innovation in rural areas.
4.1.2.4 Policy instruments
4.1.2.4.1 Border measures
4.13. Agricultural products (WTO definition) are, with the exception of some animal products,
subject to ad valorem applied rates.11 In 2021, the average most-favoured nation (MFN) applied
tariff on agricultural products was 12.7% (14.8% in 2017). The product groups subject to
higher-than-average tariff protection included sugars and confectionery (30.6%); cotton (22.0%);
cereals and preparations (19.7%); beverages, spirits and tobacco (14.9%); and coffee and tea
(13%). The simple average tariff for oilseeds, fats, and oils (including soybeans, one of China's
major imports) was the lowest among agricultural products, at 10.1% (10.5% in 2017). In addition,
the variability of agricultural tariffs, with a standard deviation (SD) of 10.1, was higher than that of
non-agricultural products (SD 4.6). Variability was particularly high for cereals and preparations
(SD 20.4) and sugars and confectionery (SD 16.2), followed closely by beverages, spirits and
tobacco (SD 15.8) and cotton (SD 14.7) (Table A3.1).
4.14. China continues to make use of tariff rate quotas (TRQs), which are administered through
import licences (Section 3.1.5).12 Except for uncombed cotton, in-quota and out-of-quota tariff rates
are ad valorem. China applies an interim rate in the form of a sliding duty to a certain amount of
uncombed cotton (HS 5201.0000) imported out of quota, with the sliding duty rate capped at 40%
(i.e. the bound rate for cotton). Taking 2021 as an example, the sliding duty rate in the year depends
on the base price (CNY 14/kg). If the dutiable value of the cotton imported is equal to or higher than
the base price, a specific duty of CNY 0.28/kg is levied, and if the import price is lower than the base
price, an ad valorem rate based on the sliding-scale duty formula applies. Since 2018, the
implementation rate of tariff quotas has fluctuated, along with domestic and foreign market
conditions. In 2018, the tariff quota fill rates for wheat, corn, and wool tops were relatively low at
32%, 39%, and 13%, respectively (Table 4.5). In 2019, fill rates for wheat, rice, and wool tops were
36%, 48%, and 17%, respectively. The authorities indicate that fluctuating fill rates are due to
10
MARA. Viewed at: http://www.moa.gov.cn/govpublic/XZQYJ/202007/t20200716_6348795.htm.
11
These products are six tariff lines under HS 0207 – frozen meat and edible offal of fowls of the
species Gallus domesticus (poultry), and one line under HS 0504.00.21 – frozen gizzard. Three tariff lines carry
alternate/mixed rates under HS 4001 – natural rubber; those three alternate rates are interim duties.
12
- 126 -
changes in domestic and international market conditions; they note a higher fill rate of 87% for
wheat in 2020.
Table 4.5 TRQs on agricultural products and their utilization, 2018-19

Out-of- In-quota imports
In-quota Tariff quota
quota
Products rates quantity 2018 2019
rates
(%) (tonnes)
Wheat (7 lines) 9,636,000 3,098,719 3,487,626
Wheat and meslin (4 lines) 65 1
Wheat or meslin flour (1 line) 65 6
Groats and meal of wheat (1 line) 65 9
Pellets of wheat (1 line) 65 10
Corn (5 lines) 7,200,000 2,827,288 4,793,424
Maize (corn) seed (1 line) 20 1
Maize (corn) other than seed (1 line) 65 1
Maize (corn) flour (1 line) 40 9
Groats and meal of corn (1 line) 65 9
Rolled or flaked corn (1 line) 65 10
Rice (14 lines) 5,320,000a 3,076,644 2,545,726
Rice, other than broken (8 lines) 65 1
Broken rice (2 lines) 10 1
Rice flour (2 lines) 40 9
Meal of rice (2 lines) 10 9
Sugar (7 lines) 50 15 1,945,000 1,945,000 1,945,000
Wool (6 lines) 38 1 287,000 253,832 277,166
Wool tops (3 lines) 38 3 80,000 10,307 13,961
Cotton (2 lines) 40 1 894,000 894,000 894,000
a Tariff quota quantity is 2,660,000 tonnes for short- and medium-grain rice combined and 2,660,000
tonnes for long-grain rice.
Note: The number of tariff lines in brackets (HS 8-digit level) refers to the 2018-19 customs tariff.
Source: WTO documents G/AG/N/CHN/55, 7 December 2020; and G/AG/N/CHN/50, 6 November 2019; and
Ministry of Finance (2019), Customs Tariff of Imports and Export of the People's Republic of China.
4.15. The NDRC is responsible for allocating TRQs for grains and cotton, and MOFCOM allocates the
rest. Some products subject to TRQs (i.e. grains, cotton, and sugar) are also subject to state trading.
In these cases, one part of the quota is allocated to state trading enterprises and the other part to
other enterprises. The administration methods of the TRQs as described by China in its notification
to the WTO remained unchanged.13
4.16. The importation of grain (wheat, maize, and rice), sugar, tobacco, and cotton is subject to
state trading.14
4.17. The VAT rate on agricultural domestic and imported goods stood at 9% in 2020 (reduced from
11% in 2017).15 Self-produced agricultural products sold by agricultural producers are VAT exempt
(Table 3.4). Tobacco leaf (i.e. sun-dried leaf tobacco and toasted leaf tobacco) purchased in China
is subject to a 20% tobacco leaf tax.16 The authorities state that this tax is not levied on imported
tobacco leaf.
4.1.2.4.2 Measures affecting exports
4.18. China notified the WTO that export subsidies were not granted to agricultural products during
the calendar years 2018 and 2019.17 The authorities did not provide an update as to whether export
subsidies were provided in 2020. As indicated in its previous Review, China replied to the
questionnaire on export competition, circulated on 31 October 2016, that it provides export financing
WTO document G/AG/N/CHN/2, 25 September 2003, Table MA:1.

13
WTO documents G/STR/N/16/CHN and G/STR/N/17/CHN, 24 July 2018. The period covered by the
14
notification is 2015-17. The authorities confirm that this remains the case as at early 2021.
15
State Taxation Administration, together with the Ministry of Finance, issued the Circular on Policies for
Simplifying and Consolidating Value-added Tax (VAT) Rates (Cai Shui No. 37, 2017), which reduced the
applicable tax rate from 13% to 11% for agricultural products.
16
Tobacco Tax Law of 2017. This Law replaced the Interim Regulation on Tobacco Tax. The 20% tax
rate did not change.
17
WTO documents G/AG/N/CHN/51, 6 November 2019; and G/AG/N/CHN/53, 7 December 2020.
- 127 -
programmes (i.e. export credit, export credit guarantees, and insurance programmes) covering,
inter alia, agricultural goods.18 With respect to the questionnaire on export competition circulated
on 17 January 2020, the authorities indicate that the related information would be disclosed in its
coming notification. No data were available on food aid provided by China during the review period.
4.19. Export taxes are levied on four tariff lines (at the HS 8-digit level) relating to products of
animal origin, and two tariff lines on raw hides and skins (Table 3.11).19
4.20. Exports of cotton, rice, maize, and tobacco are subject to state trading. 20 These products,
except for tobacco, are also subject to export quotas, which are managed by the NDRC and MOFCOM,
and are allocated only to state trading enterprises. Wheat is also subject to export quotas
(Table 4.6).
Table 4.6 Agricultural products subject to export quotas and licensing in 2020
Products Type of licence Comment
Goods subject to quota and licensing
Rice, maize, wheat, and cotton Export quota licence The quota is allocated by the
NDRC and MOFCOM, and the
licence is issued by MOFCOM.
Live cattle and swine (for export to Hong Kong, Export quota licence The quota is allocated by
China and Macao, China); live chicken for export to MOFCOM.
Hong Kong, China; and flour of maize rice and
wheat
Goods subject to licensing
Live cattle and swine (for markets other than Hong Export licence A licence is granted if the
Kong, China or Macao, China) and chicken (for exporter has the relevant
markets other than Hong Kong, China) and frozen export contract.
and chilled beef, pork, and chicken meat
4.21. Table 4.7 describes the size of the export quotas for maize, rice, and wheat flour in 2018,
2019, and 2020.
Table 4.7 Export quotas for maize, rice, and wheat flour, 2018-20
(Tonnes)
Product 2018 2019 2020
Maize flour 20,500 330 420
Rice flour 2,500 50 60
Wheat flour 329,600 154,200 155,540
4.1.2.4.3 Internal measures
4.1.2.4.3.1 Support measures
4.22. Central Government support to farmers takes the form of tax incentives (Table 4.8) or fiscal
appropriations (Table 4.9). In 2018, China notified the WTO Agriculture Committee of the support
given to the agriculture sector over the period 2011-16 (Section 4.1.2.4.4).21 Support programmes
covering the period 2017-18 were notified by China under the Agreement on Subsidies and
Countervailing Measures (SCM Agreement). The only new notified programme introduced in 2018
was the subsidy for a new round of returning cultivated land to forests and grassland. With respect
to tax incentives, no information was provided on revenue forgone from Central Government tax
incentives (Table 4.8), as apparently China does not collect tax expenditures. Information was also
18
19
The lines concerned are 0506.10.00 (ossein and bones treated with acid); 0506.90.11, 0506.90.19,
and 0506.90.90 (powder and waste of bones); and 4103.90.11 and 4103.90.19 (dried hides and skins of
goats).
20
WTO documents G/STR/N/16/CHN and G/STR/N/17/CHN, 24 July 2018.
21
WTO documents G/AG/N/CHN/42-47, 14 December 2018.
- 128 -
not provided on which incentive schemes remain in force as at early 2021 and, in several cases, the
form that fiscal appropriations take (i.e. grants, preferential loans, etc.).
Table 4.8 Central Government tax incentives provided to the agriculture sector, 2018
Title Start
Objective Subsidy
Legal basis date
Projects of agricultural, forestry, animal, To support the development of Enterprise income tax 2008
and fishery agriculture exemption/reduction from
Law of the People's Republic of China on income derived by an enterprise
Enterprise Income Tax (2007); from stipulated projects of
Regulations for the Implementation of preliminary processing related
the Law of the People's Republic of to farming, forestry, animal
China on Enterprise Income Tax (2007); husbandry, and fisheries
MOF Circular Cai Shui No. 149, 2008;
MOF Circular Cai Shui No. 26, 2011;
MOF Circular Cai Shui No. 73, 2016
Imported products for the purpose of To support the replacement of the VAT and tariff exemption for 2000
replacing the planting of poppies planting of poppies in the border approved imported products
MOF Circular Cai Shui No. 63, 2000 areas in Yunnan province
Imports of seeds (seedlings) To introduce and promote VAT exemptions for approved 2006
MOF Circular Cai Shui No. 26, 2016 improved breeds, strengthen the imported seeds (seedlings),
protection of species resources, breeding stock (fowl), fish fries
and develop high-quality, (breeds), and wild animals
productive, and efficient
agriculture and forestry industries
Preferential tax treatment for tea sold in To reduce costs of ethnic VAT exemption for tea sold in 2016
the border areas minorities living in border areas to border areas produced or
MOF Circular Cai Shui No. 73, 2016 purchase border-selling tea, and distributed by designated
ensure sufficient supply of border- enterprises/distribution entities
selling tea at border areas
inhabited by ethnic minorities
Source: WTO documents G/SCM/N/343/CHN, 19 July 2019; and G/SCM/N/343/CHN/Corr.1, 31 July 2019.
Table 4.9 Central Government fiscal appropriations for the agriculture sector, 2018
Budgetary
Title Start
Objective(s) Subsidy allotments
Legal basis date
(CNY million)
Fund for development To promote agricultural Provided to farmers, family 2017 2018: 193,650
of agriculture production, optimize farms, farmer cooperatives,
MOF Circular Cai Nong industrial structure, and agriculture machinery
No. 41, 2017 facilitate integration of service providers for green
industries, and improve and efficient technology
agricultural efficiency promotion service and
agricultural production
development
Subsidy for agricultural To strengthen agricultural Provided to local governments 1988 2018: 39,540
comprehensive infrastructure and for eligible agricultural
development ecological construction, comprehensive development
MOF Decree No. 60 improve comprehensive projects
(date not provided) agricultural production
capacity, promote the
adjustment of agricultural
structures, and increase
farmers' incomes
Fund for poverty To improve production, Provided to local governments 1980 2018: 106,095
alleviation (in Sanxi income, and living for development-oriented
Area and for state- conditions of poor farmers, projects in Sanxi Area, and
owned poverty- and accelerate economic state-owned poverty-stricken
stricken farms and and social development in farms and forestry farms
forestry farms) poverty-stricken areas
MOF Circular Cai Nong
No. 8, 2017
Fund for water To support rural areas to Provided to provincial 1983 2018: 30,694.76
resources development develop small farmland governments for farmland
(for farmland water water conservation water and soil conservation
and soil conservation projects to prevent water projects
projects) and soil erosion
No. 181, 2016
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Budgetary
Title Start
Objective(s) Subsidy allotments
Legal basis date
(CNY million)
Fund for disaster To support the response to To be allocated to 2017 2018: 7,060.5
prevention and relief agricultural disasters, beneficiaries that are to be
for agriculture, flood floods, and droughts determined in accordance with
control, and drought the disaster situation
No. 91, 2017
Fund for agricultural To be used for agricultural Provided to provincial 2017 2018: 24,536
resources and resource conservation, governments to be allocated
ecological protection ecological protection, and to eligible farmers, herdsmen,
MOF Circular Cai Nong benefit compensation new types of agricultural
No. 42, 2017 entities, and units and
individuals that undertake
project tasks
Subsidy for a new To improve the ecological Provided to provincial 2018 2018: 12,789
round of returning environment and promote governments to be distributed
cultivated land to sustainable development to farmers to return cultivated
forests and grassland land to forests and grassland
No. 66, 2018
Note: Forestry-related subsidies are not included in this table, with the exception of those related to
turning cultivated land into forest.
4.23. The authorities indicate that pending China's new notification, which is apparently being
prepared, information on new support programmes introduced during the review period (which are
not covered in China's latest SCM notification) was not available. However, it would appear that
since 2018, at least two additional new programmes have been introduced: (i) an environmental tax
exemption for farming enterprises under which a temporary environmental protection tax exemption
is provided for agricultural production pollutant discharges (excluding large-scale breeding)22; and
(ii) a subsidy fund for farmland construction that aims to optimize the layout of farmland and improve
its quality, and to attract talent and social capital to invest in agricultural development. With respect
to the latter, it would appear that farmland construction subsidy funds (comprising investment
subsidies and loan discounts) are used for the construction of high-standard farmland and farmland
water conservation. Target beneficiaries include small farmers, rural collective economic
organizations, family farms, farmer cooperatives, large professional farms, and agricultural
enterprises in grain production functional areas and important agricultural production protection
areas.23 The budgetary allotments were CNY 67,392 million in 2019 and CNY 68,280 million in 2020.
4.24. A few subsidy programmes to support farmers at the sub-Central Government level were also
notified to the WTO.24 Pending China's submission of its new notification to the SCM Committee,
information was not available on whether these programmes remained in force as at early 2021 or
if any new programmes have been introduced at the sub-Central Government level since 2018.
4.1.2.4.3.2 Price controls and market price support systems
4.25. As noted in previous Reviews, China implements a minimum purchase price policy for rice
and wheat, considered to be the two most important grain varieties, in major producing areas. The
authorities state that, in general, farmers sell grain at market prices. Only when the market prices
of rice and wheat fall below the minimum procurement prices (MPPs) can farmers sell the
commodities that meet quality requirements to designated enterprises, so as to reduce losses caused
by falling grain prices. These prices, as well as limited total purchase volumes, are set on a yearly
basis by the NDRC in consultation with MARA and other government agencies. The MPP of rice in
22
Environmental Protection Tax Law of the People's Republic of China 2018, Article 12(1). Viewed at:
https://www.ecolex.org/details/legislation/environmental-protection-tax-law-lex-faoc162625.
23
MARA, Cai Nong No. 46, 2019. Viewed at:
http://www.moa.gov.cn/gk/zcjd/201909/t20190904_6327227.htm.
24
These programmes were: (i) a grant for returning farmland to forests or pastures (Shanxi Province); (ii) a
subsidy for tobacco industry development (Fuling District of Chongqing Municipality); (iii) a reward for
agricultural science parks (Qinghai Province); (iv) a fund for treating domestic sewage in farming and pastoral
areas (Qinghai Province); and (v) a grant for turning the cultivated land into forestry (Dalian City, Liaoning
Province).
- 130 -
2018 was substantially lowered, while the MPPs of wheat in both 2018 and 2019 were slightly
lowered. (Table 4.10).
Table 4.10 Minimum procurement prices, 2016-21

(CNY/tonne)
2016 2017 2018 2019 2020 2021
Wheat 2,360 2,360 2,300 2,240 2,240 2,260
Rice – early long-grain non-glutinous 2,660 2,600 2,400 2,400 2,420 ..
Rice – late long-grain non-glutinous 2,760 2,720 2,520 2,520 2,540 ..
Rice – round-grained non-glutinous 3,100 3,000 2,600 2,600 2,600 ..
.. Not available.
Source Information provided by the authorities.
4.26. Grain reserves of maize, rice, soya beans, and wheat are maintained by the Central
Government and local governments; according to the authorities, the reserves are used only to cope
with major natural disasters or other emergencies.
4.1.2.4.3.3 Other measures
4.27. Under a subsidized agricultural insurance scheme, insurance premiums are subsidized by the
Central Government and local governments, so that farmers pay only a balance of 20%-30% of the
premium. The insurance scheme covers natural disasters such as rainstorms, floods, and droughts,
but not income or levels of production. The distribution of financing between the Central Government
and local governments varies by crop (Table 4.11). Data on total expenditures were not available.
Table 4.11 Distribution of the financing of the agricultural insurance scheme between
central and local authorities
Tibetan
Non-commercial Commercial
Crops Breeding varieties and
forestry forestry
natural rubber
Central 40% in central 50% in central and 50% 30% 40%
Government and western western regions;
regions; 35% in 40% in the eastern
the eastern region region
Local 25% 30% 40% 25% 25%
governments
4.28. The authorities indicate that all banks are allowed to provide financing to agricultural projects
based on commercial conditions. Following on from efforts taken by the People's Bank of China
(PBOC) to increase access to finance in rural areas as reported in China's previous Review, in
April 2020, the PBOC cut the Required Reserve Ratio by 1 percentage point, with a cut of
0.5 percentage points on 15 April and again on 15 May, for rural credit cooperatives, rural
cooperative banks, and village banks, as well as city commercial banks operating solely within
provincial-level administrative regions.
4.1.2.4.4 Levels of support
4.29. In December 2018, China notified its domestic support commitments for the calendar
years 2011 to 2016.25 These notifications show no support under the Blue Box (production limiting
schemes) until 2016, when China notified corn producer subsidies paid, based on fixed area and
yields. Support notified under the Green Box increased year-on-year. Support under the Amber Box
(including de minimis) increased from 2011 to 2015 and then decreased significantly in 2016
(Chart 4.3).
4.30. The OECD continues to calculate estimates of support to agriculture in China that provide
more up-to-date indicators over the review period (with data available up to 2019) than do China's
support notifications to the WTO (which cover up to 2016). However, the authorities indicate that
25
WTO documents G/AG/N/CHN/42-47, 14 December 2018.
- 131 -
OECD data do not reflect China's official position and that they could not confirm OECD estimates;
they do not agree with the methodologies or data source of the estimation.
Chart 4.3 Green

Chart 4.[CHN] andand
Green Amber Box
Amber Boxsupport, 2011-16
support, 2011-16
(CNY billion)
1,400 Infrastructure services
Thousands
1,200 Extension and advisory services
Research, pest and disease

1,000
control, training
All other general services
800
Environmental programmes
600
Public stockholding for food
security
400
Payments for relief from natural
disasters
200 Regional assistance programmes
0 Decoupled income support,

2011 2012 2013 2014 2015 2016 domestic food aid
350
300
Corn
250 Rice
Wheat
200
Cotton
150 Soybean
Pigs, sheep, cows

100 Root crops, peanuts
Rapeseed
50
Sugar
0 Non-product specific
2011 2012 2013 2014 2015 2016
Source: WTO documents G/AG/N/CHN/42-47, 14 December 2018.
Source:Compared
4.31. WTO Secretariat
with notifications: G/AG/N/CHN/42used
the WTO's methodology to 47.
to calculate the level of support provided under
the Amber, Blue, and Green Boxes, the OECD's annual monitoring and evaluation reports on
agricultural policies use a different methodology to calculate the value of support that is expressed
in a number of indicators, including: (i) the Producer Support Estimate (PSE) for gross transfers
from consumers and taxpayers to agricultural producers; (ii) the Total Support Estimate (TSE) for
transfers to the agricultural sector in general; and (iii) the Single Commodity Transfers (SCT) for
transfers to specific commodities. As noted in previous Reviews, the PSE represents the value of
transfers to producers, unlike support under the Amber, Blue, and Green Boxes that measure
compliance with WTO commitments. Therefore, the value of support as notified to the WTO is neither
compatible nor comparable with the values calculated by the OECD. 26
4.32. According to the OECD, total support to agriculture over the past decade peaked at
CNY 2,676.7 billion in 2015, dropped to CNY 1,462.4 billion by 2018, and then picked up slightly
in 2019. Most of the total support to agriculture is from market price support arising from tariff
protection, government purchases, and other programmes (Chart 4.4). While domestic prices
remain, in general, greater than import prices, the gap has closed for certain products like wheat
and milk, which at the time of China's previous Review had high producer nominal protection
coefficients (the ratio of the price received by the producers to the border price). For wheat, the
OECD (2017), Agricultural Policy Monitoring and Evaluation 2017, OECD Publishing, Paris. Viewed at:
26
http://dx.doi.org/10.1787/agr_pol-2017-en.
- 132 -
producer nominal protection coefficient was 1.82 in 2016 and decreased to 1.18 in 2019. For milk
at its peak, the coefficient was 1.94 in 2016 and fell to 1.46 in 2019 (Table 4.12).
Chart 4.4 OECD measurement of support, 2010-19

Chart 4.[CHN] OECD measurement of support, 2010-19
CNY billion
12,000
Total value of production (at farm gate)
10,000 Producer support estimate
Market price support

8,000
Total support estimate
6,000
4,000
2,000
0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Source:
Source: OECD. Viewed
OECD, at: http://www.oecd.org/agriculture/topics/agricultural-policy-monitoring-and-evaluation/
Agricultural Policy Monitoring and Evaluation. Viewed at: .
http://www.oecd.org/agriculture/topics/agricultural-policy-monitoring-and-evaluation/.
Table 4.12 OECD indicators for support to agriculture in China, 2010-19

(CNY billion, except nominal protection coefficient)
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Total value 5,776.7 6,775.9 7,413.0 7,993.3 8,372.8 8,285.5 8,612.1 8,742.1 9,015.0 10,166.9
of
production
TSE 902.3 804.1 1,273.0 1,461.4 1,523.7 1,676.7 1,653.8 1,633.4 1,462.4 1,521.8
PSE 762.2 659.6 1,102.4 1,269.1 1,302.3 1,391.9 1,403.0 1,374.6 1,225.3 1,284.8
MPS 529.3 388.4 788.0 939.5 961.4 1,013.7 999.0 937.9 783.0 834.8
Producer 1.15 1.10 1.17 1.18 1.18 1.19 1.18 1.18 1.15 1.14
nominal
protection
coefficient
Wheat
Value of 230.0 246.6 265.4 291.5 309.5 308.9 297.5 313.2 294.9 300.0
production
SCT 64.9 35.2 79.7 83.6 105.0 111.2 134.1 111.5 71.9 46.2
MPS 64.9 35.2 79.7 83.6 105.0 111.2 134.1 111.5 71.9 46.2
Producer 1.39 1.17 1.43 1.40 1.51 1.56 1.82 1.55 1.32 1.18
nominal
protection
coefficient
Maize
Value of 357.2 448.3 510.2 540.7 558.7 499.4 405.9 425.7 451.6 467.1
production
SCT 74.5 11.1 60.2 128.9 156.3 133.5 81.5 80.1 102.6 96.0
MPS 74.5 11.1 60.2 128.9 156.3 133.5 71.0 70.2 92.4 85.8
Producer 1.26 1.03 1.13 1.31 1.39 1.36 1.21 1.20 1.26 1.22
nominal
protection
coefficient
Rice
Value of 462.0 540.8 564.0 555.9 580.8 574.8 566.5 586.3 549.1 523.5
production
SCT -2.3 -56.3 162.1 176.3 185.2 204.8 165.5 157.6 59.5 34.1
MPS -2.3 -56.3 162.1 176.3 185.2 204.8 165.5 157.6 59.5 34.1
Producer 1.00 0.91 1.40 1.46 1.47 1.55 1.41 1.37 1.12 1.07
nominal
protection
coefficient
- 133 -
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Soya beans
Value of 55.9 57.8 60.9 54.0 51.0 41.0 43.7 53.3 55.5 63.1
production
SCT 10.1 7.3 4.7 3.8 2.7 11.0 11.2 17.3 16.1 19.1
MPS 10.1 7.3 4.7 3.8 2.7 7.7 5.2 4.5 3.4 6.3
Producer 1.22 1.15 1.08 1.08 1.06 1.23 1.14 1.09 1.06 1.11
nominal
protection
coefficient
Milk
Value of 105.9 116.9 127.5 135.2 143.3 133.8 136.3 114.7 113.3 124.2
production
SCT 10.2 15.0 34.1 34.3 33.7 58.9 65.2 40.3 37.0 37.4
MPS 10.2 15.0 34.1 34.3 33.7 58.9 65.2 40.3 37.0 37.4
Producer 1.12 1.15 1.38 1.36 1.33 1.82 1.94 1.55 1.52 1.46
nominal
protection
coefficient
Beef and veal
Value of 184.8 225.9 300.7 346.8 341.5 330.5 339.3 303.8 321.7 367.4
production
SCT 23.5 29.9 39.2 44.7 43.8 42.3 43.5 39.2 40.9 47.0
MPS 23.5 29.9 39.2 44.7 43.8 42.3 43.5 39.2 40.9 47.0
Producer 1.16 1.16 1.16 1.16 1.16 1.16 1.16 1.16 1.16 1.16
nominal
protection
coefficient
Pig meat
Value of 783.0 1,149.7 1,061.7 1,082.4 1,018.3 1,125.8 1,311.0 1,095.7 941.9 1,116.2
production
SCT 93.8 157.4 117.7 110.4 99.3 123.8 152.3 122.9 99.3 132.7
MPS 93.8 157.4 117.7 110.4 99.3 123.8 152.3 122.9 99.3 132.7
Producer 1.16 1.16 1.16 1.16 1.16 1.16 1.16 1.16 1.16 1.16
nominal
protection
coefficient
Poultry meat
Value of 326.6 364.0 347.9 368.2 370.0 361.3 365.9 399.2 476.9 577.3
production
SCT 41.4 52.5 44.5 43.8 46.1 46.3 50.5 61.0 69.8 86.1
MPS 41.4 52.5 44.5 43.8 46.1 46.3 50.5 61.0 69.8 86.1
Producer 1.17 1.17 1.17 1.17 1.18 1.18 1.18 1.20 1.19 1.19
nominal
protection
coefficient
Source: OECD, Agricultural Policy Monitoring and Evaluation. Viewed at:

http://www.oecd.org/agriculture/topics/agricultural-policy-monitoring-and-evaluation/.
4.1.3 Fisheries
4.1.3.1 Features and market developments
4.33. China is one of the world's largest fish-producing country. According to the UN Food and
Agriculture Organization (FAO), it accounted for 35% of global fish production in 2018. In the same
year, it accounted for around 15% of total global capture, and its share in world aquaculture
production was 57.9%.27
4.34. During the period between 2015 and 2019, there was a downward trend in employment, the
number of registered fishing vessels, and the marine catch. Aquaculture production remained
relatively stable (Table 4.13).
4.35. During the same period, fish exports (WTO definition) accounted for between 0.8% and 1.0%
of the value of its total exports. Imports of fish gradually increased from 0.4% to 0.7% of total
imports over the same period (Table 4.14). Data provided by the authorities indicate that, in 2019,
China imported 6.3 million tonnes of fish and exported 4.3 million tonnes. The simple average tariff
on fish and fishery products (WTO definition) was 6.8% in 2021, with tariffs ranging from 0%-15%
27
FAO (2020), The State of the World Fisheries and Aquaculture 2020. Viewed at:
http://www.fao.org/3/ca9229en/online/ca9229en.html#chapter-1_1.
- 134 -
(Table A3.1). Export duties are levied on one tariff line for fish and crustaceans, namely live eels,
fry (HS 0301.92.10) (Table 3.11).
Table 4.13 Fisheries indicators, 2015-19

2015 2016 2017 2018 2019
Employment 9,045,338 8,795,228 8,692,042 8,514,503 8,253,274
Fishing vessels (of which 1,042,489 1,011,071 946,160 863,892 731,169
motorized fishing vessels) (672,416) (654,154) (599,331) (556,150) (468,312)
Marine catch ('000 tonnes) 17,617.476 17,588.591 15,393.376 14,665.968 14,012.888
(of which algae) (26.177) (24.311) (20.349) (18.349) (17.445)
Aquaculture production ('000 49,379.012 51,423.931 49,059.903 49,910.590 50,790.728
tonnes) (2,098.078) (2,178.103) (2,235.012) (2,350.810) (2,543.861)
(of which algae)
Note: The number of fishing vessels and the figures on the marine catch include China's distant water fleet
and the catch on these vessels. Motorized fishing vessels include production fishing vessels and
auxiliary fishing vessels, of which production fishing vessels include fishing vessels and culturing
vessels. Fish catches include domestic marine fishing volume, pelagic fishing volume, and freshwater
fishing volume. Aquaculture production includes mariculture output and freshwater aquaculture
output.
Table 4.14 Fishery exports and imports, 2015-20

2015 2016 2017 2018 2019 2020
Exportsa (USD million) 19,802.4 20,205.2 20,601.7 21,740.3 20,163.0 18,589.4
% of total exports 0.9 1.0 0.9 0.9 0.8 0.7
Growth rate (%) -6.0 2.0 2.0 5.5 -7.3 -7.8
Top five exports at HS 4-digit level
(% of total):
1604 Prepared/preserved fish; 15.1 14.4 15.0 16.9 18.6 22.4
caviar and caviar substitutes
1605 Crustaceans, molluscs, etc., 16.5 16.8 19.8 21.3 18.4 18.7
prepared/preserved
0304 Fish fillets and other fish 21.6 21.0 21.4 20.6 21.3 18.0
meat, fresh, chilled or frozen
0307 Molluscs, live, fresh, chilled, 17.2 18.2 16.5 15.1 14.6 14.6
frozen, salted or in brine
0303 Fish, frozen, excluding fish 12.8 13.6 13.3 13.2 14.1 12.8
fillets and other fish meat of
heading 0304
Importsa (USD million) 8,489.0 8,850.0 10,711.9 14,377.4 17,996.6 14,920.2
% of total imports 0.4 0.5 0.6 0.6 0.7 0.9
Growth rate (%) -0.5 4.3 21.0 34.2 25.2 -17.1
Top five imports at HS 4-digit level
(% of total):
0306 Crustaceans, live, fresh, 21.9 24.0 23.5 30.4 39.0 39.6
chilled, frozen, salted or in brine
0303 Fish, frozen, excluding fish 36.3 36.6 34.7 31.7 27.4 26.3
fillets and other fish meat of
heading 0304
230120b Flours, meals and pellets 21.2 18.3 20.8 15.5 11.0 13.2
of fish or crustaceans /molluscs etc.
0307 Molluscs, live, fresh, chilled, 9.7 10.3 9.7 8.7 8.7 7.9
frozen, salted or in brine
0304 Fish fillets and other fish 1.6 1.7 2.1 3.1 3.6 3.5
meat, fresh, chilled or frozen
a WTO definition.
b Shown at HS 6-digit level since only the 6-digit level code 230120 under 2301 is a fishery item.
Note: Top five fishery exports and imports by HS 4-digit are sorted by the year 2020.
Source: WTO Secretariat calculations, based on trade figures from UN Comtrade database.
4.1.3.2 Legal, institutional, and policy framework
4.36. MARA leads the preparation of draft laws and regulations related to fisheries, develops
departmental regulations, and guides fishery law development. Local governments are in charge of
fisheries affairs in their respective administrative areas, including marine fisheries in contiguous sea
- 135 -
areas (unless the State Council designates otherwise). Official information was not provided on the
presence of SOEs in the shipping sector.
4.37. The main law governing the fisheries sector is the 2005 Fisheries Law, last amended in 2013.
A revision to the Fisheries Law was drafted and comments were solicited in 2019; as at April 2021,
the draft law was being revised. The Rules for the Implementation of the Fisheries Law were
amended in 2020, with changes relating to approval reequipments for constructing artificial reefs. 28
In 2018, MARA revised the Provisions on the Administration of Fishing Licences (MARA Decree No. 1,
201829), and certain articles of these Provisions were further amended in 2020.30 The objective was
to strengthen the management of fishing vessels and fishing licences; protect fishery resources;
adapt to the Government's requirement for decentralization, regulation, and service; and address
problems such as illegal shipbuilding, inconsistent ship certificates, and off-site anchoring, which
have made supervision difficult. Changes include bringing the method for classifying fishing vessels
into conformity with international management rules; stipulating central and local entities
responsible for examining, approving, and controlling vessels' catch quotas and net devices used;
and stipulating the sea areas where the different-sized vessels may fish in. The Provisions also
include specific guidance on fishing log contents, submission methods, and punitive measures for
violations. According to the authorities, first steps are being taken to introduce a total allowable
catch system. However, further details were not provided.
4.38. Under the Fisheries Law, foreigners and foreign fishing vessels engaging in fishery production
in waters under China's jurisdiction must be approved by MARA. If the vessels belong to China's
trading partners that have signed relevant treaties/agreements with China, the matters are handled
in accordance with these treaties.31 The Special Administrative Measures for the Access of Foreign
Investment in the Pilot Free Trade Zones (2019) (FTA Negative List) lifted restrictions on foreign
investment in aquatic product fishing in seas and inland waters under China's jurisdiction. The
authorities indicate that the Government currently imposes no restrictions on FDI in aquaculture
production.
4.39. The main government strategy for the fishing sector implemented during the review period
was the 13th Five-Year Plan on Fishery Development (2016-20).32 The Plan sought to tackle some of
the main challenges facing the sector, including infrastructure weaknesses and old fishing vessels,
and requirements in the areas of fisheries insurance and the development of a legal framework for
fisheries and its enforcement. The Plan's basic principles are to: (i) adhere to ecology as a priority
and promote green development, with a shift in focus from quantity growth to improving quality and
efficiency; (ii) promote innovation and scientific development; (iii) implement a "going out" strategy
involving, inter alia, the orderly development of deep-sea fisheries, improvements to the industrial
chain, and strengthening of bilateral and multilateral fishery cooperation; (iv) adhere to people-
oriented development so those who are engaged in fishing are participants in and benefit from
fishery modernization; and (v) strengthen the rule of law in the sector, through improved laws,
regulations, and enforcement mechanisms. One of the elements of the Plan is to increase public
financial investment in the fisheries sector to, inter alia, establish a policy support system that is
conducive to the development of modern fisheries. Elements include reform and improvement of the
fishery oil price subsidy and a focus on supporting the reduction in the number of boats, the
renovation and transformation of fishing vessels, the construction of artificial reefs, the maintenance
and transformation of fishing ports, the standardization of ponds, the further development of factory-
based aquaculture, and subsidies for banned fishing.33 The Plan also stipulates the continued
implementation of support policies for: (i) multiplying and releasing healthy aquaculture breeding
stock; (ii) ensuring special funds for fishery administration, resource investigation34, species
28
Rules for the Implementation of the Fisheries Law (2020), amended through State Council Decree
No. 726. Viewed at: http://www.gov.cn/zhengce/2020-12/25/content_5574001.htm.
29
MARA Decree No. 1, 2018. Viewed at:
http://www.yyj.moa.gov.cn/bjwj/201904/t20190419_6197470.htm.
30
MARA Order No. 5, 2020. Viewed at:
http://www.moa.gov.cn/nybgb/2020/202008/202010/t20201020_6354689.htm.
31
Fisheries Law, Article 8.
32
MARA, China's 13th Five-Year Plan on Fishery Development. Viewed at:
http://www.moa.gov.cn/nybgb/2017/derq/201712/t20171227_6131208.htm.
33
Subsidies for banned fishing refer to the livelihood subsidy for fishermen and -women affected by
fishing moratoria and fishing bans.
34
Resource investigation refers to the investigation of the reproduction, growth, death, migration,
distribution, quantity, habitat, prospects, and means of exploitation of individuals or groups of aquatic animals.
- 136 -
resource protection, disease prevention and control, quality and safety supervision, fishing port
supervision, safety production supervision, and fishing vessel inspection supervision; (iii) increasing
aquatic breeding, disease prevention, resource conservation, fishery equipment, and other
technological innovations and promotion support. The fisheries sector objectives in the 14th Five-Year
Plan for Economic and Social Development include: achieving a breakthrough in a number of key
core technologies in areas such as marine engineering, marine resources, and marine environment;
cultivating and expanding marine engineering equipment and marine biomedicine industries;
optimizing offshore green breeding and building marine pastures; building a number of marine
economic development demonstration zones and characteristic marine industrial clusters; and
improving the development of the three major marine economic circles in the north, east, and south.
4.1.3.3 Government support to the fisheries sector
4.40. Support to the sector is provided by both the Central Government and local/provincial
governments. China's latest notification to the WTO covers the period 2017-18 and contains
six incentives/support programmes at the Central Government level; these relate to fuel subsidies
and supporting fish processing, enhancing fish stocks, supporting aquatic breed improving farms,
preventing aquatic animal disease, and scrapping and renovating fishing vessels (Table A4.1).
According to the authorities, the Government will shortly issue a new policy to terminate fuel and
boat construction subsidies, with the last of these pay-outs being made at end-2020.
4.41. Twenty-three programmes over the period 2017-18 were notified to the WTO regarding
measures in place in the coastal provinces of Hebei, Jilin, Jiangsu, Zhejiang, Fujian, Shandong,
Guangdong, and Liaoning. These included support for marine economic development, marine and
fishery structural adjustment, aquatic breeding, supporting fishermen during the closed season,
fishery insurance, fishery management and industry development, fishing vessel standardization
and scrapping, processing, aquaculture, and distant water fisheries (Table A4.1). Pending China's
new notification to the SCM Committee, information was not available on any new support/incentive
schemes introduced at the local government level from the beginning of 2019. The authorities
indicate that the notification is being prepared.
4.42. The authorities note that fisheries insurance has not been incorporated in the policy-based
agricultural insurance.
4.1.3.4 Fisheries conservation measures
4.43. China is a major player in the distant water fisheries segment. As indicated by the FAO, China
reported about 2.26 million tonnes from its "distant water fishery" in 2018; however, this is
considered to be an underestimate, as the report provided details on species and fishing areas only
for catches marketed in China (about 40% of the total of distant water catches).35 The authorities
indicate that China has taken measures recently to strengthen monitoring and control of fishing
vessels, enhance its international compliance capability, fulfil its international obligations to conserve
high-seas fishery resources, and prevent illegal, unreported, and unregulated (IUU) fishing activities
(Box 4.1). They also indicate that China has undertaken investigations into various kinds of illegal
fishing activities, and punished illegal enterprises and fishing vessels in accordance with the law.
According to the authorities, between January 2018 and early 2021, the Government imposed
different levels of penalties on 84 deep-sea fishing vessels belonging to 51 enterprises.
4.44. China has acceded to various international conventions or agreements related to fisheries.36
During the review period, China became a signatory to the Southern Indian Ocean Fisheries
35
FAO (2020), The State of the World Fisheries and Aquaculture 2020. Viewed at:
http://www.fao.org/3/ca9229en/online/ca9229en.html#chapter-1_1.
36
These conventions/agreements include: (i) the International Convention for the Conservation of
Atlantic Tunas (ICCAT); (ii) the Agreement for the Establishment of the Indian Ocean Tuna Commission
(IOTC); (iii) the Convention on the Conservation and Management of Highly Migratory Fish Stocks in the
Western and Central Pacific Ocean (WCPFC); (iv) the Inter-American Tropical Tuna Commission Convention for
the Strengthening of the Inter-American Tropical Tuna Commission Established by the 1949 Convention
between the United States of America and the Republic of Costa Rica "Antigua Convention" (IATTC); (v) the
Convention for the Conservation of Antarctic Marine Living Resources (CCAMLR); (vi) the Convention on the
Conservation and Management of High Seas Fishery Resources in the South Pacific Ocean (SPRFMO); (vii) the
Convention on the Conservation and Management of High Seas Fisheries Resources in the North Pacific Ocean
(NPFC); and (viii) the International Convention for the Regulation of Whaling.
- 137 -
Agreement in October 2019. China has not acceded to the FAO's Port State Measures Agreement;
the authorities state that they are studying this possibility and that the Government has included
the list of IUU fishing vessels released by the acceding regional fisheries organizations into the
controlling scope of Chinese ports. They note that China prohibits fishing vessels on the list from
entering Chinese ports; refuses such fishing vessels to refuel, resupply, or repair in Chinese ports;
and refuses the catches carried by such fishing vessels to be unloaded, transhipped, packed, or
processed in Chinese ports.
Box 4.1 Fisheries conservation measures, 2018-20
1. January 2019 – Notice on Further Strictly Adhering to International Tuna Management Measures issued by
MARA. Objective: to implement resource conservation and management measures adopted by the
International Tuna Conservation Organization.
2. January 2019 – List of IUU fishing vessels approved by relevant regional fishery organizations provided by
MARA and Ministry of Foreign Affairs, the Ministry of Communications, the General Administration of Customs
(GACC), and other domestic departments and commercial and fishing ports. Objectives: to implement Port
State Measures and tackle illegal fishing activities. This list was updated in June 2020.
3. August 2019 – Measures for the Monitoring and Management of Positions of Ocean Fishing Vessels revised
by MARA. Objective: to strengthen supervision of ocean fishing vessels by increasing the frequency of
reporting positions of fishing vessels from every 4 hours to every hour.
4. November 2019 – Notice on Trial Implementation of Performance Evaluation of Pelagic Fishery Enterprises
issued by MARA. Objectives: to establish a performance evaluation system for pelagic fisheries to strengthen
fishery management and improve performance capability of pelagic fishery enterprises.
5. April 2020 – Revised Regulations on the Management of Pelagic Fishery implemented. Objectives: to
strengthen supervision and management, and sustainable utilization of fishery resources; and to prevent IUU
fishing activities.
6. May 2020 – Notice on Strengthening the Management of High-Seas Transfer of Pelagic Fisheries issued by
MARA. Objectives: to further standardize high-seas transfer activities and promote scientific conservation of
high-seas fishery resources.
7. July 2020 – Government implementation of a fishing moratorium on high-seas squid fisheries and take all-
around management measures to protect high-seas squid resources and spawning population. Objective: to
strengthen conservation of high-seas squid resources.
4.2 Mining and Energy
4.2.1 Mining
4.45. China has an abundance and a large variety of mineral resources. By end-2018, 173 kinds of
minerals had been discovered, including 13 kinds of energy minerals, 59 kinds of metal minerals,
95 kinds of non-metal minerals, and 6 kinds of water and gas minerals.37 The main mining production
is described in Table 4.15.
Table 4.15 Main mining production, 2017-19

Mineral products 2017 2018 2019
Crude oil (million tonnes) 192 189 191
Natural gas (billion m3) 133.0 141.5 150.9
Shale gas (billion m3) 9.0 10.9 15.4
Coal (billion tonnes) 2.78 3.04 3.13
Ferrous metals (billion tonnes) 0.575 0.591 0.624
of which iron ore (billion tonnes) 0.567 0.583 0.613
Non-ferrous metal (million tonnes) 327.69 361.70 376.13
Precious metal (million tonnes) 94.09 91.41 88.67
Rare elements, rare earth elements and scattered elements (million tonnes) 12.98 42.70 34.91
Metallurgical auxiliary materials (e.g. cannonite) (million tonnes) 111.49 127.80 142.55
Chemical materials (million tonnes) 276.26 269.49 296.40
Construction materials and other non-metal mineral (billion tonnes) 3.90 4.08 4.45
Underground water and mineral water (million tonnes) 12.06 12.87 12.80
37
MNR (2019), China Mineral Resources. Viewed at:
http://www.chinaminingtj.org/images/document/2019/CM_Resources_2019_en.pdf.
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4.46. The legal framework for mining did not change substantially during the review period. To a
large extent, mining activities continue to be regulated under the Mineral Resources Law
(promulgated in March 1986, and revised in August 1996 and August 2009) and a large body of
implementing measures: the Rules for the Implementation of the Mineral Resources Law (State
Council Decree No. 152, 26 March 1994); the Regulations for Registering to Explore for Mineral
Resources Using the Block System (State Council Decree No. 240, 12 February 1998; amended on
29 July 2014); the Procedures for Administration of Registration of Mining of Mineral Resources
(State Council Decree No. 241, 12 February 1998, amended on 29 July 2014); and the Measures for
the Administration of Transfer of Mineral Exploration Right and Mining Right (State Council Decree
No. 242, 12 February 1998, amended on 29 July 2014). Other regulations in the sector include the
Regulation on the Exploitation of Continental Petroleum Resources in Cooperation with Foreign
Enterprises (State Council Decree No. 131, 7 October 1993, amended on 18 July 2013) and the
Regulations on the Exploitation of Offshore Petroleum Resources in Cooperation with Foreign
Enterprises (amended on 18 July 2013). The Law on the Exploration and Development of Resources
in Deep Seabed Areas (adopted on 26 February 2016 and entered into force on 1 May 2016)
regulates the exploration and exploitation of deep seabed resources. A Resource Tax Law was
adopted in 2019.
4.47. The Ministry of Natural Resources (MNR) was established in 2018. Its area of competence
consolidates the responsibilities of the former Ministry of Land and Resources and those of the
National Administration of Surveying, Mapping and Geoinformation.
4.48. China continued to liberalize its mining sector during the review period. For example, the
2019 National Negative List and Pilot Free Trade Zones (PFTZs) Negative List removed foreign
investment prohibitions on the exploration or mining of molybdenum, tin, antimony, and fluorite. In
the 2018 PFTZ Negative List, the measure that oil and natural gas exploration and development shall
be restricted to equity joint ventures or contractual joint ventures was abolished, and the same
measure was abolished nationally in 2019. No modification pertaining to mining was made to the
2020 editions of National and PFTZ Negative Lists. The only foreign investment limitation in mining
consists of prohibition of foreign investment in the exploration, exploitation, and processing of rare
earths, radioactive minerals, and tungsten.
4.49. The Constitution proclaims state ownership of all minerals. However, the Government may
transfer to a qualified holder the right to possess, use, and benefit from the mineral resources. The
Civil Code protects the exploration and mining rights obtained according to the law. Methods and
processes for obtaining mining rights did not change substantially during the review period. 38 Mining
rights can be acquired through tender, auction, or listing, or agreements in limited cases. Subject
to the Negative List for the Access of Foreign Investments (Table 4.16), China allows foreign
companies and individuals to invest in exploration and exploitation of the mineral resources within
its territory and sea areas under its jurisdiction. They operate in the exploration and exploitation of
minerals under the same condition as their domestic counterparts.
4.50. Steps were taken in the recent years to reform administrative procedures with respect to
mining rights allocation. In 2017, the Ministry of Land and Resources issued four normative
documents39 aiming to, inter alia: (i) improve the approval, registration, and management system
of mineral exploration and mining rights; and (ii) streamline the mineral rights application process.40
Along the same lines, efforts were made by the authorities to encourage allocation of mining rights
through competitive procedures. In fact, the Opinion of the MNR on Several Matters Concerning
Promoting the Reform of Mineral Resources Administration (for Trial Implementation) (published on
31 December 2019), in line with the Overall Programme for the Reform of the Ecological Civilisation
System (published on 21 September 2016), seeks to abolish the application for prior distribution of
mineral resources, reduce the proportion of mineral resources allocated through agreements, and
promote the competitive allocation of mineral resources. While the Opinion requires the competent
authorities to implement tender, auction, and listing methods to grant mineral rights, it imposes
strict restrictions on the granting of mineral rights via agreements. At the same time, it stipulates
38
39
These documents are: (i) Mineral Rights Transfer Rules; (ii) Notice on Further Standardizing Approval,
Registration and Management of Mineral Resources Exploration; (iii) Notice on Further Standardizing Mineral
Rights Application Materials; and (iv) Notice on Improving Issues Related to Approval, Registration and
Management of Mineral Resources Exploitation.
40
MNR (2018), China Mineral Resources. Viewed at: https://www.gov.cn/xinwen/2018-10/22/5333589/
files/01d0517b9d6c430bbb927ea5e48641b4.pdf.
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that the exploration rights and mining rights for key construction projects approved by the State
Council, or projects related to exploration and exploitation of rare earths and radioactive minerals,
may be granted by the agency in charge of natural resources through agreements.
Table 4.16 Mining industry foreign investment regime, 2017 and 2020
2017 2020
Encouraged Exploration and exploitation of oil and natural gas as Exploration and exploitation of oil and
well as utilization of mine gas (limited to Chinese- natural gas, as well as utilization of mine gas
foreign equity or contractual joint ventures)
Improvement in enhanced oil recovery (in the form Same as in 2017
of engineering services), as well as development and
application of related new technologies
Development and application of new technologies for Same as in 2017
oil exploration and exploitation in areas such as
geophysical prospecting, drilling, well logging, mud
logging, and down-hole operation
Development and application of new technologies for Same as in 2017
enhancing utilization rate of mine tailings and the
comprehensive application of ecological restoration
technology in mining areas
Exploration and exploitation of mines in short supply Same as in 2017
in China (such as mines of sylvite and chromite) and
mineral separation
Restricted Exploration and exploitation of oil and natural gas Not listed
(including coal-bed gas and excluding oil shale, oil
sand, shale gas, etc.) (limited to Chinese-foreign
equity or contractual joint ventures)
Exploration and exploitation of special and rare kinds Not listed
of coal (with Chinese party as the controlling
shareholder)
Exploration and exploitation of graphite Not listed
Smelting and separation of rare earths (limited to Not listed
Chinese-foreign equity or contractual joint ventures);
smelting of tungsten
Prohibited Exploration and exploitation of tungsten, Not listed
molybdenum, tin, stibium, and fluorite
Exploration, exploitation, and ore dressing of
tungsten
Exploration, exploitation, and ore dressing of rare Same as in 2017
earths
Exploration, exploitation, ore dressing, and smelting Exploration, exploitation and ore dressing of
of radioactive minerals radioactive minerals
Source: MOFCOM and the NDRC, Catalogue for the Guidance of Foreign Investment Industries 2017,
Catalogue of Encouraged Industries for Foreign Investment (2020 edition), Special Administrative
Measures on Access to Foreign Investment (2020 edition); and 2020 National Negative List.
4.51. According to the authorities, in 2018 alone, 1,248 mining rights were granted, of which
772 were allocated through competitive procedures, 55 through agreements, and the remainder
through automatic allocation to the holders of the related exploration rights. Three hundred
sixty exploration rights were granted, of which 175 were funded by the Government, 90 were
granted through competitive procedures, 37 were filed through prior applications, and 58 were
granted through agreements.
4.52. Some specific measures were adopted to further standardize and strengthen the approval
management of rare earth and tungsten exploration and mining. On 14 December 2018, the MNR
issued the Notice on Further Regulating the Approval Administration of Mineral Rights on Rare Earths
and Tungsten, which stipulates, inter alia, the continued suspension of the acceptance of new
applications for rare earth exploration and mining registration; and the establishment, renewal,
change of registration, transfer, reservation, and termination of rare earth and tungsten exploration
and mining rights. The Notice also specifies the principle for determining the total production quotas
of rare earths and tungsten, and the distribution of annual production quotas in various provinces.
4.53. The Mineral Resources Law stipulates that mining rights allocation is subject to fixed charges.
Therefore, in April 2017, the State Council issued the Reform Plan for Mineral Royalty System
(Guo Fa No. 29, 2017) to protect the nation's mineral interests and create a fair mineral market
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environment.41 It provides that mineral rights holders must pay the following fees to the competent
authorities: (i) the mineral rights grant proceeds for obtaining such mineral rights; (ii) the mineral
rights occupancy fee (i.e. the rental fee that mineral rights holders must pay each year, which is
determined according to block size); and (iii) the resource tax for the sale of mineral products. In
line with the State Council's reform plan, in June 2017, the Ministry of Finance and the former
Ministry of Land and Resources issued the Interim Measures for Administrating the Collection of
Proceeds from Granting Mineral Rights (Cai Zong No. 35, 2017). The Measures stipulate that the
proceeds from granting mineral rights represent the rights and interests of state owners; it also
clarifies specific regulations on the collection of such proceeds.
4.54. With respect to taxation, on 26 August 2019, the National People's Congress adopted the
Resource Tax Law, which entered into force on 1 September 2020. It replaces the Provisional
Regulations on Resource Tax of 25 December 1993 (amended on 30 September 2011 and
implemented from 1 November 2011). Among the taxable resources specified by the Law
(Tables A4.3 and A4.4), some resources, including crude oil, natural gas, and shale gas, are subject
to single rates that are applicable nationwide. For those resources with the range of rates specified,
the Law grants provincial-level governments the power to propose the actual rates to be applied.
The new law introduces unified tax items, clarifies the authorization for determining tax rates, and
standardizes tax reduction and exemption policies.42
4.55. Regarding trade in mineral resources, according to the Catalogue of Commodities Subject to
the Administration of Export Licences for 2020, exports of certain mineral products, including coal
and oil (excluding lubricating oil), are subject to an export quota and an export licence, while exports
of rare earth minerals, tin and tin products, tungsten and tungsten products, molybdenum and
molybdenum products, antimony and antimony products, indium and indium products, coke,
lubricating oil, and fluorite are subject to an export licence.
4.2.2 Energy
4.2.2.1 Overview including environmental policy
4.56. China is the world's largest energy producer and consumer. In 2019, its total primary energy
production was 3.97 billion tonnes of standard coal equivalents (SCEs). The energy self-sufficiency
rate was 78.5%. China's energy consumption structure continued to change during the review
period, as the proportion of coal declined, accounting for 57.7% of the total energy consumption,
down from 63.8% in 2015. Petroleum accounts for 18.9%, natural gas accounts for 8.1%, and
primary electricity and other energy such as hydropower, nuclear power, and wind power account
for 15.3%.43
4.57. Charts 4.5 and 4.6 describe the evolution of the energy mix of the total primary supply of
energy, and its consumption by type of users.
4.58. The National Energy Commission (NEC), headed by the Premier of the State Council, acts as
the coordinating and consultation body responsible for drafting the national energy strategy, and
reviews key issues associated with national energy security and development. The National Energy
Administration (NEA) is administered by the NDRC. The NEA is responsible for formulating and
implementing energy development strategies, plans, and policies; makes recommendations on
institutional reforms in the energy sector; and performs executive functions as the regulator and as
the general office of the NEC.44
41
State Council, State Council to Reform Mineral Resource Equity Benefit System, 20 April 2017. Viewed
at: http://english.www.gov.cn/policies/latest_releases/2017/04/20/content_281475632183056.htm.
42
State Council, China's Resource Tax Law to Take Effect on Sept 1, 1 September 2020. Viewed at:
http://english.www.gov.cn/statecouncil/ministries/202009/01/content_WS5f4d96dec6d0f7257693b5fc.html.
43
http://www.mnr.gov.cn/sj/sjfw/kc_19263/zgkczybg/202010/P020201022612392451059.pdf.
44
In principle, the NEA has a broad mandate over the whole energy sector, i.e. coal, oil, gas, electricity
(including nuclear power), new energy, and renewable energy (including hydropower). The NEA is also the
regulator of the oil refinery, coal fuel, and fuel ethanol industries. Petrochemical and coal chemical industries
that are not under the jurisdiction of the NEA are regulated by the MIIT.
- 141 -
Chart 4.5 Total consumption of energy and its composition, 2015 and 2019
Chart 4.5 Total consumption of energy and its composition, 2015 and 2019
2015 2019
Petroleum
Petroleum 18.9%
18.4%
Natural gas
8.1%
Natural gas
5.8%
Primary electricity Primary electricity

& other energy & other energy
12.0% 15.3%
Coal
63.8% Coal
57.7%
Total: 434,113 Total: 487,000

10,000 tonnes of SCE 10,000 tonnes of SCE
Source: Data provided by the authorities.

Source: Data provided by the authorities.
Chart 4.6 Total energy consumption by sector, 2015 and 2018
Chart 4.6 Total energy consumption by sector, 2015 and 2018
2015 2018
Construction Construction
1.7% 1.8%
Industry Industry
68.2% Transport & storage 65.9% Transport & storage
8.9% 9.2%
Commercea Commercea
2.6% 2.8%
Residential
Residential
11.6%
12.8%
Other Other
5.1% 5.6%
Agriculture, Agriculture,
forestry & fishery forestry & fishery
1.9% 1.9%
Total: 434,113 Total: 471,925

10,000 tonnes of SCE 10,000 tonnes of SCE
aa Commerce
Commerce refersrefers to wholesale
to wholesale and retail
and retail trade,
trade; andand
hotels hotels and catering.
catering.
Source: National Bureau of Statistics. Statistical Yearbook 2020.
Source: National Bureau of Statistics China. Statistical Yearbook 2020.
4.59. The authorities indicate that a new Energy Law is currently being drafted.
4.60. The authorities state that China regards the development of clean and low-carbon energy as
the main direction for adjusting the energy mix. China intends to gradually reduce its proportion of
coal consumption, increase its proportion of non-fossil energy consumption, reduce carbon dioxide
and pollutant emission levels, and optimize the distribution of energy production. The country is
actively pursuing a policy of decoupling of economic growth and energy consumption, through
increased energy efficiency. In the context of the 13 th Five-Year Plan for Economic and Social
Development (2016-20), the national objective for the reduction of energy consumption per unit of
GDP is 15%, and intermediary objectives are set on an annual basis. In 2015, energy consumption
per unit of GDP dropped by 5.3%, surpassing the objective of 3.1%, and in 2016 it dropped by 4.8%
(objective of 3.4%). The authorities indicated that the energy consumption per unit of GDP dropped
by 3.5% in 2017, 3% in 2018, and 2.5% in 2019.
- 142 -
4.61. The 13th Five-Year Plan for Energy Development represents the basic outline of China's energy
policy for 2016-20.45 It aims to optimize China's energy system, promote energy product and
consumption reform, and build a clean, decarbonized, safe, and efficient modern energy system.
Along the same lines, Five-Year Plans have been launched for energy subcategories such as
electricity, coal, natural gas, renewable energy, and energy technology.
4.62. The broader objectives set for green and low-carbon energy development in the 13th Five-Year
Plan for Energy Development include that by 2020: (i) the proportion of non-fossil energies in total
energy consumption should be over 15%; and (ii) the carbon dioxide emission per unit of GDP should
decrease by 18% compared with that in 2005. In the context of this Review, the authorities state
that at the 75th United Nations General Assembly in September 2020, China pledged that it would
strive to have carbon dioxide emissions peak by 2030 and to achieve carbon neutrality by 2060.
Furthermore, China announced that the carbon dioxide emission per unit of GDP should decrease by
65% compared with the level of 2005, and the proportion of non-fossil energy consumption should
reach about 25%. According to the authorities, as at 2019, non-fossil energy and natural gas
accounted for 15.3% and 8.1%, respectively, of total energy consumption.
4.63. In December 2017, China launched the construction plan for the National Carbon Emission
Right Trading Market (Power Generation Industry) to start building its National Carbon Emission
Trading System. According to the plan, the power generation industry will be the first to carry out
transactions on the national carbon market, which will be gradually expanded to other industries.
In 2018, the work of responding to climate change was adjusted and incorporated into the mandates
of the newly formed Ministry of Ecology and Environment.
4.64. In December 2020, China issued the Regulations on Carbon Emission Trading (Trial) and the
Implementation Plan on National Carbon Emission Trading Quota Determination and Distribution for
2019-2020 (Power Generation Industry). The Regulations provided a list of key emission units in the
power generation industry that are included in the quota management, as well as the specific
requirements for quota allocation and compliance, and officially launched the first compliance cycle
of the national carbon market.
4.65. Other measures regarding the promotion of clean energy included the Notice on Establishing
and Improving the Safeguard Mechanism of Renewable Energy Power Consumption, which was
jointly adopted on 10 May 2019 by the NEA and the NDRC. It provides a general framework for,
inter alia, setting renewable electricity consumption quotas as a share of total power consumption
in each province, defining quota setting methods, and monitoring quota trading. 46 The authorities
note that a number of periodic monitoring and evaluation reports have been issued to guide
provincial authorities in formulating their local renewable energy power consumption plans. The
same efforts will continue in 2021, as the authorities are calculating the 2021 consumption quota,
according to the broad national objective of achieving carbon neutrality by 2060.
4.66. On 1 January 2018, China implemented a new environmental tax policy aimed at promoting
environmental protection and reducing pollution.
4.67. Subject to the Negative List for the Access of Foreign Investments, China allows foreign
investment in the energy sector. Since 2018, in terms of foreign investment access in the oil and
natural gas field, restrictions on the exploration and development of oil and natural gas (except for
oil shale, oil sands, and shale gas) have been removed, including those requirements that such
investment projects must be joint ventures and cooperatives and that the construction and operation
of gas pipeline networks in cities with a population of more than 500,000 must be controlled by
Chinese shareholders.
4.2.2.2 Coal
4.68. Coal, an abundant and relatively cheap resource in China, continues to represent a large part
of the country's primary energy, and it is also the main cause of air pollution. Its share in national
energy consumption was 57.7% in 2019 (down from 63.8% in 2015). China's coal production ranks
45
The 13th Five-Year Plan for Energy Development targets are aligned with objectives of the
13th Five-Year Plan for Economic and Social Development.
46
NEA. Viewed at: http://zfxxgk.nea.gov.cn/auto87/201905/t20190515_3662.htm.
- 143 -
first in the world, reaching 3.85 billion tonnes in 2019. Newly discovered reserves of coal amounted
to 30.01 billion tonnes, which brough the total to 1,738.58 billion tonnes.47
4.69. The authorities note that, in recent years, China implemented policy measures to strictly
control the new capacity of coal-fired power. In 2019, China's coal-fired power installed capacity
stood at 1.04 TW. Its growth rate dropped by 30% on average over the period 2016-20 compared
with the period 2011-15. The proportions of installed capacity and power generation of coal-fired
power have been declining steadily year-on-year. Between 2018 and 2019, over 20 GW of coal-fired
power units were shut down. The authorities also note that China's new power demand in recent
years was mainly supplied through renewable energy.
4.2.2.3 Oil
4.70. In 2019, newly discovered geological reserves of oil were 1.12 billion tonnes, of which, the
increased proven technical recoverable reserves were 160 million tonnes. Crude oil production was
191 million tonnes, while consumption stood at 670 million tonnes.
4.71. The government policy on oil is defined in the 13 th Five-Year Plan for Energy Development
(2016-20). The Plan aims to increase crude oil reserves and the recovery efficiency of traditional oil
fields, as well as speed up the development of shale oil and extend the corresponding pipeline
network for crude oil and refined products. The exploration and development of oil is listed among
encouraged industries nationwide.
4.72. To implement the recommendations of the Several Opinions on Deepening Oil and Gas System
Reform, the MNR issued the Opinions on Promoting the Reform of Mineral Resources Management
(Trial) on 31 December 2019. Among the several reform steps promoted by the Opinions, domestic
and foreign enterprises that are registered in China, and have a minimum net asset of
CNY 300 million, are entitled to obtain mining rights of oil and gas. The Opinions state that the
validity period of a prospecting right may be extended to five years at the time of initial registration,
and each extension shall be five years.48 The regulation also unifies the exploration right and mining
right of oil and gas. Under the Opinions, oil and gas exploration right owners who make a recoverable
discovery should sign the mining right grant contract within five years.
4.73. The Special Administrative Measures on Access of Foreign Investment (National Negative List)
(2019) abolished the requirement that exploration and development of oil and natural gas (except
for those including coal-bed methane, oil shale, oil sands, and shale gas) are limited to Chinese-
foreign equity.
4.74. Enterprises are allowed to determine their own oil prices based on the supply and demand in
the market, on the premise of not exceeding the "ceiling price" decided by the NDRC. The pricing
mechanism allows the NDRC to adjust the guided price when the moving average of prices over
22 consecutive trading days fluctuates more than 4% in the international oil markets. 49 The latest
pricing mechanism was released in 2016.
4.75. The authorities indicate that China has not released any law or regulation on enterprises'
compulsory oil reserve and does not require that oil companies must engage in oil reserve.
4.76. Over the last three years (2018-20), the Kingdom of Saudi Arabia, the Russian Federation,
Iraq, Angola, Brazil, and Oman remained the top oil exporters to China. In 2020, the share of Norway
and the State of Kuwait in China's imports of oil increased substantially, while the share of the
Islamic Republic of Iran remained on a significant decreasing trend (Table 4.17).
4.77. In 2020, China processed 670 million tonnes of crude oil. Foreign investors can participate in
refining projects and are not subject to limitations in terms of legal forms.
47
48
Twenty-five per cent of the block area shall be deducted for each extension to urge mineral right
holders to accelerate exploration.
49
Interim Administration Measures for Oil Prices (Fa Gai Jia Ge No. 1198, 2009).
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Table 4.17 China's key trading partners for oil imports, 2018-20
('000 tonnes)
2018 2019 2020
World 461,907.9 505,890.3 542,385.5
Saudi Arabia, Kingdom of 56,733.9 83,322.3 84,923.0
Russian Federation 71,494.4 77,664.9 83,572.3
Iraq 45,044.5 51,799.0 60,117.5
Brazil 31,622.2 40,156.6 42,189.9
Angola 47,387.6 47,368.5 41,785.1
Oman 32,909.8 33,871.7 37,838.3
Kuwait, State of 12,199.2 15,294.0 31,168.1
United Arab Emirates 23,212.4 22,688.3 27,496.9
United States 12,281.3 6,349.5 19,760.3
Norway 895.1 1,018.2 12,712.8
Malaysia 8,882.7 12,046.6 12,529.0
Colombia 10,768.5 13,121.0 12,383.1
Congo 12,580.5 11,960.5 9,246.0
Qatar 1,347.7 858.3 6,200.4
United Kingdom 7,725.5 12,556.7 5,894.2
Gabon 3,624.9 7,022.4 5,853.5
Ecuador 1,872.4 2,050.4 4,712.6
Ghana 3,356.0 3,595.8 4,112.5
Nigeria 464.7 2,437.3 3,934.3
Iran, Islamic Republic of 29,272.7 14,769.4 3,917.7
Note: Top 20 import partners are sorted by the year 2020.

Source: WTO Secretariat calculations, based on UN Comtrade database.
4.78. Distribution of gasoline/petrol is mostly operated by the China National Petroleum Corporation
(CNPC) and the China Petroleum and Chemical Corporation (SINOPEC). Foreign investors can
participate in the retail distribution sector, as China has lifted restrictions on foreign investment in
the construction and operation of petrol stations. The authorities indicate that a number of
multinational corporations have entered the Chinese petrol station operation market.
4.2.2.4 Gas
4.79. In 2019, China's natural gas production (including shale gas and coal-bed methane) stood at
176.17 billion m3; consumption of natural gas stood at 306 billion m 3.50 The newly discovered
geological reserves of shale gas were 764.42 billion m3, of which the increased proven technical
recoverable reserves were 183.84 billion m3.
4.80. Under China's energy development plan, the use of natural gas is to be expanded, as it is
considered clean energy. In 2019, gas accounted for 8.1% of energy consumption, up from 5.8%
in 2015. In addition to industrial fuel and power generation, gas is mainly used for urban heating
and cooking, transport, and the manufacture of raw chemical materials and chemical products.
4.81. Distribution of natural gas is mostly operated by the CNPC and SINOPEC, while private
companies play a more substantial role in the retail sector. Foreign investors, notably from
Hong Kong, China, are present in both the importing segment and in the urban gas retail distribution
segment. According to the 2020 Negative List for the Access of Foreign Investments, the distribution
of foreign-invested natural gas has been opened to foreign investors and shall be managed following
the principle of consistent domestic and foreign investment.
4.2.2.5 Electricity
4.82. By end-2019, China's installed power generation capacity was 2.01 billion kW (up from
1.9 billion kW at end-2018). Thermal power, hydropower, nuclear power, wind power, and solar
power accounted for 1.19 billion kW, 358 million kW, 49 million kW, 210 million kW, and
200 million kW, respectively. At end-2018, these figures were 1.04 billion kW, 352 million kW,
45 million kW, 180 million kW, and 170 million kW, respectively.

50
- 145 -
4.83. On 19 December 2018, the Standing Committee of the NPC amended the Electricity Law
(adopted in 1995 and came into force on 1 April 1996). It was previously amended in 2009 and
2015. The 2018 amendment aimed to address the approval procedures of power businesses. Under
the amendment, applications for the establishment and a change in a power supply business shall
be submitted to the electric power administrative department, which shall, in accordance with its
duties and administrative authority, issue the electric power business licence after examination and
approval in conjunction with the relevant departments.
4.84. The Administration Measures on Power Grid Enterprises' Full Purchase of Electricity Generated
by Renewable Energy51 provide that on-grid electricity generated by renewable energy power plants
must be purchased by distributors (regional monopolies) within the coverage of their power grids.
Currently, Chinese grid companies include State Grid Corporation, China Southern Power Grid, Inner
and Mongolia Power (Group) Co., Ltd., as well as a number of provincial grid enterprises.
4.85. Chart 4.7 describes electricity production, by source of primary energy, and electricity
consumption, by type of economic activity, in 2018.
4.86. Chart 4.8 describes the installed generation capacities by source for 2019; Table 4.18
describes the investment in generation capacity by source for 2017 and 2019.
4.87. In 2019, China lifted the requirements that the construction and operation of gas pipeline
networks in cities with a population of more than 500,000 must be controlled by Chinese
shareholders. However, for construction and operation of nuclear power plants, the Chinese parties
must be the controlling shareholders (Table 4.19). Private investment, including foreign investment,
is encouraged in the development of the renewable energy sector. In the new 36-Clause on Private
Investment (State Council Circular 2010/13), domestic private capital is "encouraged" to build new
energy sectors such as wind, solar, geothermal, and biomass power. Electricity generation from
wind, solar, or biomass power is also listed in the "encouraged" section of the Catalogue of
Encouraged Industries for Foreign Investment (2020 edition). China also promotes electricity
generation with nuclear energy; as in the case of renewable energy, FDI is encouraged.
Chart 4.7
Chart 4.7 Structure
Structureof
of electricity
electricty production
productionand
andconsumption, 2018
consumption, 2018
Production by source Consumption by economic activity
Construction
Thermal powera Industry 1.2% Transport &
71.1% 68.7% storage 2.2%
Nuclear power Commerceb
4.1% 4.1%
Wind power Residential

5.1% 14.1%
Solar power
2.5%
Other
Hydropower 8.0%
17.2%
Agriculture,
forestry & fishery
1.7%
Total: 7,166 TWh Total: 7,151 TWh
a Thermal power refers to electricity generated by coal, oil, gas, residual heat, waste incineration, and
biomass.
b biomass.
Commerce refers to wholesale and retail trade, and hotels and catering.
b Commerce refers to wholesale and retail trade; hotels and catering.
Source: National Bureau of Statistics, Statistical Yearbook 2020.
Source: National Bureau of Statistics China. Statistical Yearbook 2020.
51
State Electricity Regulatory Commission (SERC), Decree 2007/25.
Chart 4.8 Installed capacity of power generation, 2019

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Chart 4.8 Installed generation capacities by primary energy, 2019

Nuclear power
Hydropower 2.4%
17.8% Wind power
10.4%
Solar power
10.2%
Total
Thermal powera 2,010 GW
59.2%
a Thermal power refers to electricity generated by coal, oil, gas, residual heat, waste incineration,
biomass.
and biomass.
Source: National Bureau of Statistics, China Statistical Yearbook 2020.
Source:4.18
Table NBS.Investment
China Statisticalin
Yearbook
power2020.
generation capacity by source, 2017-19
Type Unit (CNY million) 2017 2018 2019
Hydropower 100 622 700 839
Thermal power 100 858 786 634
Nuclear power 100 454 447 382
Wind power 100 681 646 1,244
Solar power generation 100 285 207 184
Source: China Electricity Council, Statistical Data Collection of Electric Power Industry, 2017-2019.
Table 4.19 Investment regime for electricity, 2017 and 2020

2019 Encouraged Industries/2020
2017 Catalogue
Negative List
Encouraged Construction and operation of ultra-supercritical Same as in 2017
unit power station with the capacity of a single
unit of 600,000 kW or more
Construction and operation of back-pressure Same as in 2017
combined heat and power stations, combined
cooling, heating and power stations, and
combined heat and power stations with capacity
of 300,000 kW or more
Construction and operation of large air cooling Same as in 2017
unit power stations with the capacity of a single
unit of 600,000 kW or more in water-deficient
areas
Construction and operation of integrated Same as in 2017
gasification combined cycle power generation
and other clean coal power generation projects
Construction and operation of power generating Same as in 2017
projects of a single unit of 300,000 kW or more
by using fluidized bed combustion bolters and
coal gangue and coal slime, etc.
Construction and operation of hydropower Same as in 2017
stations for the primary purpose of power
generation
Construction and operation of nuclear power Same as in 2017
stations
Construction and operation of new energy Same as in 2017
power stations (including but not limited to
solar, wind, geothermal, tidal, tidal current,
wave, and biomass)
Construction and operation of power grid Construction and operation of clean
energy microgrid
Seawater utilization (direct utilization of Seawater utilization (direct utilization of
seawater or seawater desalination) seawater or seawater desalination);
brackish water utilization
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2019 Encouraged Industries/2020

2017 Catalogue
Negative List
Construction and operation of water supply Design, construction, and operation of
plants water supply plant
Construction and operation of renewable water Design, construction, and operation of
renewable water
Construction and operation of sewage Design, construction, and operation of
treatment plants sewage treatment plants
Construction and operation of vehicle charging Same as in 2017
stations and battery replacement stations
Construction and operation of hydrogen Same as in 2017
refuelling stations
Restricted Construction and operation of nuclear power Construction and operation of nuclear
stations (with Chinese party as the controlling power stations (with Chinese party as the
shareholder) controlling shareholder)
Construction and operation of power grid (with Not listed
Chinese party as the controlling shareholder)
Construction and operation of pipeline networks Not listed
for gas, heat, and water supply and sewage in
cities with a population of more than 500,000
(with Chinese party as the controlling
shareholder)
Source: MOFCOM and NDRC, Catalogue for the Guidance of Foreign Investment Industries 2017, Catalogue
of Encouraged Industries for Foreign Investment (2020 edition), and Special Administrative
Measures on Access to Foreign Investment (2020 edition); and 2020 National Negative List.
4.88. China's efforts to liberalize power generation and utilization were outlined in Several Opinions
on Further Deepening the Reform of the Electric Power System (Zhong Fa No. 9, 2015), issued in
March 2015.52 The reform liberalizes electricity prices (notably industrial ones), except for
transmission and distribution and for public welfare purposes (i.e. residential, agricultural, and
important utility uses, and other public welfare purposes determined by the Government).
Transmission and distribution tariffs are regulated by the NDRC and the NEA. The authorities indicate
that the NDRC has completed the approval of the transmission and distribution tariffs of the
33 provincial grids during the regulatory period (2020-22), and has for the first time ratified the
transmission prices of five regional power grids. The new tariffs are set to come into force on
1 January 2021. Certain large industrial and commercial consumers are encouraged to buy electricity
from generation companies based on direct electricity purchase agreements at negotiated prices.
4.89. In line with the liberalization steps initiated in 2015, the power retail market is open to
non-state-owned investors under the Management Rules for Entry and Exit of Power Sale Companies
and the Management Rules for Orderly Liberalizing of Power Distribution Businesses issued by the
NDRC and the NEA in October 2016 (Fa Gai Jing Ti No. 2120, 2016).53 The Rules stipulates licensing
requirements for power sales enterprises. As at end-2020, there were about 4,500 electric power
companies registered with the power trading agency of China. Since 2018, there has been no foreign
investment restriction in the construction and operation of power grids. Under the current regime,
the generation, transmission, and distribution of power shall be administered under the principle of
equal treatment to both domestic and foreign investment.
4.90. Various electricity trading agencies have been established across the country, with the
purpose of linking the grids and the retail distribution companies, and trading electricity on a market
basis. They are mainly responsible for the construction, operation, and management of trading
platforms; the organization of market trading; the provision of settlement evidence and relevant
services; the registration of bilateral contracts signed by the power users and generation companies;
52
The orientations of the reform were subsequently elaborated by six Supportive Documents for
Electricity Mechanism Reform issued by the NDRC and the National Energy Administration (Fa Gai Jing Ti
No. 2752, 2015), as well as by numerous implementing regulations and pilot projects, notably: (i) the Notice of
NDRC and NEA on Standardizing the Pilot for Incremental Power Distribution Reform (Fa Gai Jing Ti No. 2480,
2016); (ii) the Reply of NDRC General Office and NEA General Affairs Division on Agreeing with the
Establishment of Incremental Power Distribution Reform Pilot in Ningdong (Fa Gai Ban Jing Ti No. 570, 2017);
and (iii) the Notice of NDRC and NEA on Standardizing the Second Batch of Pilot for Incremental Power
Distribution Reform of 21 November 2017.
53
NDRC and NEA, The Management Rules for Entry and Exit of Power Sale Companies, and the
Management Rules for Orderly Liberalizing of Power Distribution Businesses. Viewed at:
https://www.ndrc.gov.cn/xxgk/zcfb/tz/201610/t20161011_963217.html.
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the registration and management of market actors; and the disclosure and release of market
information.
4.91. The trial of "pilot spot markets", where trading of electricity takes place on a spot basis instead
of by medium- to long-term contracts, began in August 2017 in eight areas (Guangdong, west of
Inner Mongolia, Zhejiang, Shanxi, Shandong, Fujian, Sichuan, and Gansu). All pilot areas carried
out a settlement trial in September. The authorities indicate that further simulations took place
during the review period to verify the integrity of the market clearing and technical support system.
In June 2019, all eight pilot power spot areas started simulated operation. In 2020, all pilot areas
completed a monthly settlement trial. It is planned that in 2021 some areas will carry out longer
settlement trials.
4.3 Manufacturing
4.3.1 Recent developments
4.92. China is the world's largest producer of industrial goods. In 2018, with a total value-added
amounting to some USD 4 trillion, the Chinese manufacturing sector accounted for 28% of global
manufacturing output.54 The sector is an important driver of China's economy, despite its shrinking
contribution to the country's GDP. Its share as a percentage of GDP stood at 27.2% in 2019, down
from 29% in 2015. Additionally, its share in private sector employment was around 15.4% in 2018.55
In 2019, manufactured products accounted for 95.4% of China's exports (up from 93.7% in 2016)
and 66.5% of its imports (up from 64.9% in 2016).
4.93. The authorities consider that China's performance in manufacturing is largely attributed to its
increasing integration in global value chains, driven by factors including trade and investment
liberalization, abundant and productive labour, a large domestic market, high-quality infrastructure,
and innovation. However, the long-term sustainability of the sector may face environmental
challenges and excess capacity. Firms in this sector may consistently face low capacity utilization
rates, as well as incurring losses. Nevertheless, the authorities state that, currently, there is no
excess coal production capacity in China; since 2016, it has closed more than 1 billion tonnes of
outdated coal production capacity, and the proportion of outputs of large-scale coal mines with or
above 1.2 million tonnes per year has exceeded 80%. They also state that the steel, cement,
aluminium, and chemicals sectors have sound profitability levels, and they consider that there is no
excess capacity in these industries.
4.94. A number of policy initiatives remain in force to address the challenges facing manufacturing
activities and further develop the sector. As described in detail in the previous Review, major
initiatives include the Made in China 2025 (or China Manufacturing 2025) initiative (launched in
2015), and the Internet Plus initiative (launched in 2015). According to the authorities, these
initiatives are non-binding guidelines.
4.95. While the current policy initiatives are intended to promote the expansion of higher
value-added and knowledge-based activities through innovation, environmental considerations are
also at the core of China's efforts in the manufacturing sector. They aim to reduce energy and
resources consumed and pollutants emissions released per unit of industrial added value by 2025. 56
On 1 January 2018, China implemented a new environmental tax policy aimed at promoting
environmental protection and reducing pollution. The new tax is set to affect companies in various
economic sectors, mainly in manufacturing. It replaces the pollution discharge fee previously in
place and applies to four pollutant categories when they are discharged directly into the environment
in Chinese territory: atmospheric pollutants, water pollutants, solid waste, and noise. 57 Reductions
54
World Economic Forum, These Are the Top 10 Manufacturing Countries in the World, 25 February
2020. Viewed at: https://www.weforum.org/agenda/2020/02/countries-manufacturing-trade-exports-econo
mics/#:~:text= According%20to%20data%20published%20by,China%20overtook%20it%20in%202010.
55
National Bureau of Statistics, China Statistical Yearbook 2019. Viewed at:
http://www.stats.gov.cn/tjsj/ndsj/2019/indexeh.htm.
56
OECD (2017), Industrial Upgrading for Green Growth in China. Viewed at:
https://www.oecd.org/greengrowth/Industrial_Upgrading_China_June_2017.pdf.
57
Exclusions include discharge of sewage/domestic waste into treatment facilities and solid waste into
storage/disposal facilities where these meet national standards, emissions from agricultural production, and
motor vehicle/vessel/aircraft emissions.
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on environmental tax are provided to companies that pollute less than the standard. Penalties have
been also strengthened.
4.96. The authorities are also cognizant of the issue of excess capacity in manufacturing 58, and
have made efforts to reduce capacity in recent years. As an example, the Supply-Side Structural
Reforms (SSSR), which were announced in 2015, aim to reduce capacity, among other goals. During
the review period, the country's efforts to phase out industries that it considers outdated or heavily
polluting were shown in the Catalogue for Guiding Industry Restructuring, last updated in 2019
(Section 2.4.1).
4.97. In an effort to increase the competitiveness of the economy, manufacturing activities were
further liberalized during the review period. The 2020 Special Administrative Measures on Access to
Foreign Investment (the 2020 National Negative List) lifted the restrictions on the share ratio of
foreign investment in commercial vehicle manufacturing. In addition, they eliminated the
prohibitions on foreign investment in the smelting and processing of radioactive minerals, as well as
the production of nuclear fuel. Furthermore the 2020 Catalogue of Encouraged Industries for Foreign
Investment (Encouraged FDI Catalogue) added a number of manufacturing activities to the list of
encouraged industries, including fifth-generation equipment mobile terminals and their integrated
system, etchers for integrated circuits, chip packaging equipment, cloud computing devices, key
components of industrial robots, new energy vehicles (NEVs), intelligent vehicles, aerospace new
materials, cell therapy drugs, and large-scale cells culture products.
4.98. At the same time, some restrictions and prohibitions are in place vis-à-vis foreign
investments. In the automotive industry, Chinese parties must hold no less than 50% in the
manufacturing of passenger vehicles.59 In addition, a foreign investor may establish no more than
two joint ventures in China to manufacture the same type of vehicles. Within the medicine production
industry, foreign companies are prohibited from investing in the application of steaming, stir-frying,
moxibustion, calcination of Chinese herbal medicines, and other processing techniques, as well as
the production of confidential prescription products of proprietary Chinese medicines. Foreign
investment in the production of satellite television broadcasting ground receiving facilities and key
components is subject to licensing.
4.99. The Ministry of Industry and Information Technology (MIIT) is the main regulator for the
manufacturing sector; it is responsible for developing industrial strategies, making industry plans
and standards, and monitoring the operation of the industry, including licensing for production of
road vehicles and civilian explosives, according to the law. The NDRC is responsible for coordinating
industry development and developing industry upgrade strategies. MOST is also involved in industrial
policies for high-tech manufacturing.
4.3.2 Selected subsectors
4.3.2.1 Automobiles, automotive parts, and components
4.100. In 2018, state-holding enterprises and foreign-invested enterprises (FIEs) accounted for
45.4% and 47.3%, respectively, of operating revenue in the automobile manufacturing sector
(43.7% and 48.0%, respectively, in 2019).
4.101. China is the largest automobile market worldwide, both in terms of demand and supply.
According to the results of the national survey of industries above a certain scale 60, the production
volume of automobiles in 2018 and 2019 was around 27.8 million and 25.7 million, respectively.
4.102. China's automobile industry was hit hard by the COVID‑19 pandemic. The authorities note
that car production and sales fell by nearly 80% in February 2020. However, due to the epidemic
prevention and control measures and recent economic developments, car production and sales have
recovered markedly. In 2020, the decline in annual production and sales narrowed to less than 2%,
and the production and sales of NEVs increased by 7.5% and 10.9%, respectively. According to the
World Economic Forum, car manufacturers in China resorted to innovative marketing solutions to
58
This challenge is also present in sectors beyond manufacturing, such as coal mining.
59
The authorities state that the limit will be cancelled in 2022.
60
The above-mentioned designated scale is a statistical term used in China to refer to industrial
enterprises with annual main business revenue of CNY 20 million or more.
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keep supply chains running. For example, some carmakers focused on consumers who were
shopping online for cars, using tools including virtual reality and live broadcasts to stimulate sales. 61
4.103. In 2020, the production and sales volume of automobiles were 25.22 million and
25.31 million, respectively. According to the National Bureau of Statistics, in 2020, the operating
revenue of the automobile manufacturing sector above the state-designated scale was
CNY 8,155.77 billion, an increase of 3.4% year-on-year, and the profit was CNY 509.36 billion, with
a year-on-year increase of 4.0%. Statistics from the China Association of Automobile Manufacturers
suggest that the number of employees in the 17 key automotive enterprises (groups) stood at
999,951, a year-on-year decrease of 5.6%.
4.104. In April 2020, in an effort to boost automobile consumption, 11 ministries and commissions,
including the NDRC and MOFCOM, jointly issued a series of measures.62 In substance, the regulations
delay the implementation of the National VI emission standards for six months (until January 2021),
for the production of light vehicles (total mass not exceeding 3.5 tonnes). 63 Measures were also
taken, along the same lines, to extend the financial subsidy available for purchasing NEVs to
end-202264, accelerate the elimination of scrapped diesel trucks through preferential tax policies,
and encourage financial institutions to actively develop financial services, such as automobile
consumer credit. Furthermore, the authorities indicate that in order to increase the sales of
second-hand vehicles, from 1 May 2020 to 31 December 2023, VAT rate on the distribution of used
cars shall be reduced to 0.5%. Prior to this reduction, VAT rate was at 2% (which is lower than the
3% rate under the "simplified method").65
4.105. The production of automobiles, including NEVs, is subject to approval by the NDRC and the
MIIT. Measures were taken in November 2018 to reform the regulatory regime on the market
admission (approval) of automobile manufacturers, as well as the admission of auto vehicle
products.66 Specifically, the new reform, inter alia, unifies the rules (requirements) that regulate the
admission of manufacturers and products in the auto industry67, and streamlines the list of matters
subject to MIIT approval, so as to reduce the administrative burden on auto manufacturers.
4.106. In December 2018, the authorities took new measures to further facilitate certain
administrative procedures on investments in the automotive sector.68 According to the new rules,
investment projects in complete vehicles and other related investments shall be managed by local
Development and Reform Departments. The regulations also set strict control on new investments
that aim to increase manufacturing capacity of traditional oil-fuelled cars, in line with the country's
efforts to promote NEVs and the sustainable development of the automotive industry.
4.107. The Automobile Mid- and Long-term Development Plan (launched in 2017) is the main
strategic plan to promote the auto industry. The Plan aims to, inter alia, improve the innovation
system and promote the development of key areas, such as NEVs, smart network cars, and energy-
saving cars. The Plan also emphasizes the importance of strengthening international cooperation.
4.108. In accordance with the vision of the Automobile Mid- and Long-term Development Plan,
specific plans were adopted during the review period. With regard to new generation vehicle
manufacturing, a number of supporting actions were taken during the review period to encourage
production. In February 2020, the NDRC and other 11 departments jointly released the Intelligent
61
World Economic Forum, This Industry Was Crippled by the Coronavirus – Here's How It's Fighting
Back, 25 February 2020. Viewed at: https://www.weforum.org/agenda/2020/02/coronavirus-china-
automotive-industry/.
62
Notice on Measures to Stabilize and Expand Automobile Consumption (Fa Gai Chan Ye No. 684,
2020).
63
The National VI Emission Standards refer to the new emission standards on diesel particulate filters.
64
MOF, Announcement on the Relevant Policies Concerning the Exemption of Vehicle Purchase Tax on
New Energy Vehicles. Viewed at: http://szs.mof.gov.cn/zhengcefabu/202004/t20200417_3500222.htm.
65
Announcement on Value-Added Tax Policy Related to the Distribution of Used Cars (Announcement
No. 17, 2020).
66
Measures for the Administration of Access by Road Motor Vehicle Production Enterprises and Products
(MIIT Decree No. 50).
67
The MIIT divides road vehicles into six categories (i.e. passenger vehicle (PV), commercial vehicle
(CV), special purpose vehicle (SPV), trailer, motorbike, and low-speed automobile) for which emission
requirements and process used to be in place for each category.
68
Provisions on the Management of Investments in the Automotive Industry.
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Vehicle Innovation and Development Strategy to, inter alia, accelerate the transformation and
upgrading of the automotive industry, and promote innovation and development of intelligent
vehicles. Under the Plan, commercial application of highly automated driving vehicles is expected to
take place by 2025.
4.109. In October 2020, the Government outlined a development plan for the NEV industry, aiming
to accelerate technological innovation and infrastructure construction.69 Under the plan, the average
power consumption of new purely electric passenger cars shall be reduced to 12 kWh/100 km and
the proportion of NEVs in the total sales of new vehicles shall be raised to 20% by 2025.
4.110. New rules were adopted in May 2019 to improve the management of the recycling and
dismantling of scrapped motor vehicles.70 The regulations lift the quota restriction on the number of
recycling enterprises allowed in each region; though, without a qualification, no company or
individual may operate such a business. The new rules are set to increase China's recycling and
dismantling capability and promote the healthy development of the scrap industry.
4.3.2.2 Machinery and equipment
4.111. Similar to the whole manufacturing sector, the machinery and equipment industry was hit
hard by the COVID‑19 outbreak. According to data provided by the authorities, from January to
May 2020, the accumulative operating income of the machinery industry was CNY 7.4 trillion, a year-
on-year decrease of 9.03%, while imports stood at USD 112 billion, a year-on-year decrease of
11.02%; exports amounted to USD 167.9 billion, a year-on-year decrease of 7.61%. However,
according to the authorities, since the second quarter of 2020, production in the machinery industry
has steadily improved, and the annual accumulative operating income for 2020 stood at
CNY 23 trillion, a year-on-year increase of 4.2%, while export delivery value amounted nearly
CNY 2 trillion, a year-on-year decrease of 3.1%. Imports of machinery equipment in 2020 amounted
to USD 191.96 billion, a year-on-year increase of 0.8%, while exports stood at USD 440.25 billion,
a year-on-year increase of 5.7%. Exports of medical devices totalled USD 12.91 billion in 2019, a
year-on-year increase of 13.2%; they totalled USD 18.14 billion in 2020, a year-on-year increase of
40.5%. The authorities note that machinery industry policy aims to pursue innovation-driven
development; promote the transformation towards an intelligent, green, and service-oriented
machinery industry; promote the optimization of industrial structures; improve product quality;
improve the utilization rates of resources and energies; and reduce pollutant emissions.
4.112. In 2016, the Government launched the Robotics Industry Development Plan (2016-2020) to
promote robot applications and to attract foreign investment. The plan aims to, inter alia, produce
100,000 industrial robots annually by 2020. The authorities state that these targets have not been
fully met. Under the Plan, special funds from the central budget were set to be earmarked to support
robotics research and development, and financial institutions were encouraged to finance robotic
projects.71
4.113. With respect to recent developments in relation to medical equipment, the authorities took
measures in 2020 to support the stable production of COVID‑19 prevention and control materials.
The State Taxation Administration and the MOF issued the Announcement on Tax Policies Supporting
COVID‑19 Prevention and Control (Announcement No. 8, 2020). The Announcement allows a
one-time deduction from corporate income tax of expenses related to newly purchased equipment
by key producers of COVID prevention and control to expand their production capacity. 72
4.114. Other strategic actions in machinery and equipment industries include: (i) the MIIT's Guiding
Opinions on Accelerating the Development of Environmental Protection Equipment Manufacturing
Industry, which set the goal of reaching a production value of CNY 1 trillion for environmental
equipment manufacturing by 2020; and (ii) the Action Plans for High-End Smart Remanufacturing
69
State Council, Cabinet Boost for New Energy Vehicles, 13 October 2020. Viewed at:
http://english.www.gov.cn/policies/policywatch/202010/13/content_WS5f85068dc6d0f7257693d696.html.
70
State Council, Measures on the Management of the Recycling of Scrapped Motor Vehicles (State
Council Decree No. 715).
71
State Council, China to Triple Industrial Robot Production by 2020, 27 April 2016. Viewed at:
http://english.www.gov.cn/state_council/ministries/2016/04/27/content_281475336534830.htm.
72
State Taxation Administration. Viewed at:
http://www.chinatax.gov.cn/chinatax/n810341/n810755/c5143465/content.html.
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(2018-2020). In addition, the Plan of Intelligent Manufacturing Development (2016-2020), issued

by MIIT and the MOF, was put in place to guide the development of intelligent manufacturing. The
Plan, inter alia, sets the goals of completing the digitalization of traditional manufacturing sectors
by 2020, establishing an intelligent manufacturing support system, and achieving intelligent
transformation of key industries by 2025.
4.3.2.3 Iron and steel
4.115. The value of China's iron and steel exports stood at USD 33.4 billion in 2020, down from
USD 46.9 billion in 2018, while the value of imports increased from USD 22.4 billion to
USD 36.8 billion over the same period. According to the authorities, the same dynamic continued in
2020, in line with China's efforts to tackle overcapacity in the steel industry. Over the first half of
2020 steel exports sharply decreased, and imports substantially increased. From January to May,
China exported 25 million tonnes of steel products, a year-on-year decrease of 14%, and imported
5.46 million tonnes of steel products, a year-on-year increase of 12%, reflecting the country's efforts
to address excess capacity in the industry.
4.116. Efforts by China to eliminate production overcapacity in the steel industry are guided by the
Opinions on Reducing Overcapacity in the Steel Industry to Achieve Development by Solving
Difficulties (Guo Fa No. 6, 2016).73 Among other actions, the Opinions prohibit the building up of
new steel capacity. China also intends to encourage enterprises to eliminate part of their steel
production capacity through, inter alia, proactive capacity elimination, mergers and acquisitions and
restructuring, transformation and conversion of production lines, relocation and reconstruction, and
global cooperation in production capacity. Under the Opinions, China plans to cut additional crude
steel capacity by 150 million tonnes by 2020, to bring capacity closer to consumption.
4.117. The authorities indicate that, by the end of 2019, China had reduced crude steel capacity by
about 170 million tonnes in cumulative terms, which outperformed the goal of the 13th Five-Year
Plan for Economic and Social Development of reducing 150 million tonnes of excess steel capacity
ahead of the 2020 deadline.74 They also note that zombie companies75 have been largely dismantled
in the iron and steel industry. In addition, steel production not conforming to quality standards was
cut by 140 million tonnes in 2017. The authorities state that the capacity of "standard steel" has
been fully banned.
4.118. Going forward with its capacity reduction efforts, in January 2018, China announced a new
policy to forbid steel plants from increasing their capacity. They were also required to remove at
least 1.25 tonnes of outdated capacity for every tonne of new capacity in "environmentally sensitive"
areas of the Beijing-Tianjin-Hebei region, the Yangtze River Delta, and the Pearl River Delta.76 Under
the Notice on Improving Capacity Replacement and Project Filing of Iron and Steel (Fa Gai Dian
No. 19, 2020), as from 24 January 2020, the steel capacity replacement and project filing were
suspended; guidelines for steel project filing were formulated and introduced, and revisions were
made to the measures for steel capacity replacement. The Notice also imposed some
environment-related provisions and prohibited steel smelting capacity extensions.
4.119. According to the OECD, in November 2019, the NDRC, the MIIT, and the National Bureau of
Statistics jointly issued a notice requiring steel companies to conduct a study and submit a report
on the capacity status and production changes in their facilities over the last three years. The aim
73
State Council, Opinions of the State Council on Resolving Excess Capacity in the Iron and Steel
Industry. Viewed at: http://www.gov.cn/zhengce/content/2016-02/04/content_5039353.htm.
74
A 2020 report by the OECD on the world's steelmaking capacity noted a decrease in China's
steelmaking capacity from 1,192.9 million tonnes in 2016 to 1,152.2 in 2019; these figures were not confirmed
by the authorities. According to the study, these calculations are based solely on the sum of all the steelmaking
plants in existence for which information is available to the OECD Secretariat. OECD (2020), Latest
Developments in Steelmaking Capacity. Viewed at: https://www.oecd.org/industry/ind/latest-developments-in-
steelmaking-capacity-2020.pdf.
75
The term "zombie companies" refers to companies that are unable to cover debt servicing costs from
current profits.
76
State Council, China Releases New Steel Capacity Replacement Policy, 9 January 2018. Viewed at:
http://english.www.gov.cn/state_council/ministries/2018/01/09/content_281476006915798.htm.
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of this investigation was to review the changes in capacity and equipment in China's steel sector
since 2016.77
4.3.2.4 Electronic, IT, and integrated circuits
4.120. According to the Statistical Yearbook of China's Electronic Information, the market share of
SOEs in electronic information manufacturing enterprises (above a certain designated scale) stood
at 3.5% in 2018, while private enterprises accounted for 47.3%.
4.121. The integrated circuit (IC) industry is the core of information technologies. As such, the
authorities see it as a strategic industry supporting national economic and social development and
maintaining national security. The Made in China 2025 initiative reiterated China's focus on
next-generation IT, with reference to semiconductors. The authorities indicate that in 2018, the
operating revenue of IC manufacturing enterprises (above a designated scale) was CNY 364.4 billion.
In addition, the statistics of China Semiconductor Industry Association suggest that in 2019 the
revenue of China's IC industry was about USD 108 billion, with 40.51% coming from IC designing,
28.42% from IC manufacturing, and 31.07% from IC packaging and testing.
4.122. China relies heavily on the imports of high-end ICs. Exports of ICs stood at USD 117.1 billion
in 2020 (up from USD 84.7 billion in 2018), while imports amounted USD 350.8 billion (up from
USD 312.7 billion in 2018). Most demand for semiconductors reflects the country's specialization in
the assembly of electronics, as the majority of chips are not actually consumed in China but instead
re-exported to other countries in the form of electronic equipment (e.g. phones, TVs, and tablets).
4.123. The 2014 Guidelines for Promoting the Development of the National Integrated Circuit
Industry set specific targets to develop China's IC and semiconductor industry. It identified the goals
of raising the industry's revenue to over CNY 350 billion by 2015, and achieving an annual rate of
revenue growth of over 20% by 2020. Priority tasks include the establishment of the National
Leading Group for the Development of Integrated Circuit Industry, the initiation of the National
Integrated Circuit Industry Investment Fund, and the promotion of safe and reliable hardware and
software.
4.124. On 24 September 2014, the National IC Industry Investment Fund was established, with
initial funding of USD 23 billion. The authorities state that the Fund's investment management and
decision-making of the Fund are under the market principles, and the Fund is not affiliated with any
government authority. According to a study by the OECD, as at May 2019, shareholding in China's
National IC Investment Fund included: the MOF (36%); China Development Bank Capital (22%);
China National Tobacco, a central SOE (11%); and Beijing E-Town International Investment &
Development, a local SOE (10%).78 The authorities did not confirm these figures.79 A second round
of funding for the IC Fund was completed in 2019, which added USD 29 billion for investments into
upstream, domestic semiconductor companies. According to the authorities, as at October 2019, the
major shareholders included the MOF (11.02%), China Development Bank Capital (10.77%),
Shanghai Guosheng Group (7.35%), China National Tobacco (7.35%), and Beijing E-Town
International Investment & Development (4.89%).
4.125. As described in the Secretariat's report for China's previous Review, certain tax incentives
continue to be granted to companies in the IC industry, mainly through the 2015 revised Circular on
Enterprise Income Tax Policies for Further Encouragement to Development of Integrated Circuit
Industry (MOF and SAT No. 6, 2015), and the 2016 Circular on Enterprise Income Tax Policies for
Software Industry and Integrated Circuit Industry (MOF and SAT No. 49, 2016).80
77
OECD (2020), Latest Developments in Steelmaking Capacity. Viewed at:
https://www.oecd.org/industry/ind/latest-developments-in-steelmaking-capacity-2020.pdf.
78
OECD (2019), Measuring Distortions in International Markets – The Semiconductor Value Chain.
Viewed at: http://www.oecd.org/officialdocuments/publicdisplaydocumentpdf/?cote=TAD/TC(2019)9/
FINAL&docLanguage=En.
79
According to the OECD report, at the provincial level, the National IC Industry Investment Fund is
supplemented by a series of local funds, such as the Beijing IC Industry Equity Investment Fund. The
authorities also indicate that the local funds have no government involvement.
80
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4.126. On 4 August 2020, the State Council released the Policy on Promoting High-quality
Development of Integrated Circuit Industry and Software Industry (Guo Fa No. 8, 2020).81 Under
the Policy, China rolled out a wide range of favourable measures, such as preferential corporate
income tax, favourable financing, support for R&D, preferential import duties for certain products,
and simplified customs formalities. The authorities indicate that these measures are designed for
domestic and foreign-invested companies on the same terms, as specified by the law. The Policy
also seeks to strictly implement an intellectual property protection system for ICs and software and
increase the penalties for violations of IPRs. On international cooperation, the policy aims to,
inter alia, create an environment for international companies to invest China; encourage
international companies to build R&D centres in China; and promote the "Go Global" initiative of the
IC industry and software industry. The authorities state that the incentives measures under this
Policy are set to replace the existing preferential tax treatment, after a transition period.
4.127. The National Informatization Development Strategy, which was issued in July 2016, seeks
to guide the development of national informatization in the next 10 years. Action plans for IT and
its subsectors are presented in Table 4.20.
Table 4.20 Action plans for IT and its subsectors, 2016-20

Plans Goals (by 2020) Date of issue
Information Industry Revenue of the information industry will reach 16 January 2017
Development Guide CNY 26.2 trillion (up 8.9% from 2015); general
trade exports of electronic information products
will account for 30% of the industry exports (up
4.5% from 2015)
Plan for the Development of the ICT revenue will reach CNY 3.5 trillion (up 15.5% 17 January 2017
Information and Communication from 2015)
Industry (2016-2020)
Plan for the Development of the Revenue of software and IT will exceed 17 January 2017
Software and Information CNY 8 trillion, with an annual growth rate of
Technology Services (2016- 13%, accounting for 30% of the IT industry;
2020) exports of software products will exceed
USD 68 billion
Plan for the Development of the Revenue of large data-related products and 17 January 2017
Large Data Industry (2016- services will exceed CNY 1 trillion, with an annual
2020) growth rate of 30%
Three-Year Action Plan for the By 2019, the cloud computing industry will reach 30 March 2017
Development of Cloud CNY 430 billion
Computing (2017-2019)
Three-Year Action Plan for the E-commerce purchases will amount to 25 September 2017
Development of Industrial CNY 9 trillion and e-commerce sales to
Electronic Commerce CNY 11 trillion
Information Industry Revenue of the information industry will reach 16 January 2017
Development Guide CNY 26.2 trillion (up 8.9% from 2015); general
trade exports of electronic information products
will account for 30% of the industry's exports
(up 4.5% from 2015)
4.3.2.5 Shipbuilding
4.128. The Made in China 2025 initiative considers shipbuilding as one of its 10 priority sectors. The
Plan has the overarching strategic objective to make China strong in high-end shipbuilding.
Furthermore, in the context of the 13th Five-Year Plan for Economic and Social Development, the
MIIT unveiled in December 2016 the Shipbuilding Industry Deepening Structural Adjustment,
Accelerating Transformation and Upgrading Action Plan (2016-20), outlining the reform and
transformation upgrade needed for the shipbuilding industry.
4.129. In addition, the Plan aims to improve technological innovation, streamline capacity,
incorporate intelligent manufacturing, improve overall quality and branding, promote military-
commercial shipbuilding collaboration, and extend the global reach in terms of investments and
partnerships. It also urges shipbuilders to comply with environmental good practices and promote
81
State Council, Policy on Promoting High-quality Development of Integrated Circuit Industry and
Software Industry. Viewed at: http://www.gov.cn/zhengce/content/2020-08/04/content_5532370.htm.
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green shipping and energy efficiency. China's policy to promote a green shipbuilding industry was
previously signalled in 2009, as the country proposed to accelerate the scrap-and-build of old fleets
and eliminate single-hulled oil tankers, aiming to increase the safety of ships and decrease the
environmental burden from shipping by replacing old fleets with new greener vessels.
4.130. The 13th Five-Year Plan of China Ship Accessory and Equipment Industry (2016-20) also
pursued the objective of raising the proportion of domestic equipment to reach 80%, 60%, and
40%, respectively, in three ship models, high-tech ships, and ocean engineering equipment by
end-2020. According to the authorities, the Plan and its objectives serve only as guidelines.
4.131. In January 2017, the MIIT published a statement encouraging financial institutions to
support the domestic shipbuilding industry. According to an OECD study, the China Banking
Regulatory Commission (CBRC) encouraged financial institutions to support the domestic
shipbuilding industry and exports of domestically built ships.82 The authorities indicate that over the
years, they have provided support to the development of the real economy, including shipbuilding.
As such, they note that in recent years, with the continuous improvement of China's shipbuilding
technology and quality, as well as the enhancement of China's business environment, including
financing conditions, demand for ships in China has increased, which has played a positive role in
supporting Chinese shipbuilding enterprises to resist the adverse impact of long-term market
downturn and maintain the healthy and stable development of the industry.
4.132. China is the world's leading shipbuilder. In recent years, the level of ship design and
shipbuilding in China has improved rapidly. China is building large container ships of above
20,000 TEU in batch. Construction of large cruise ships has also begun, but the product structure
still needs to be optimized. Low value-added and low-tech ship types, such as bulk carriers, still
account for a large proportion (52% of the total delivery in 2020 in terms of compensated gross
tonnage).
4.133. In 2019, a plan to merge the country's two largest state-owned shipbuilders – the China
State Shipbuilding Corp. (CSSC) and the China Shipbuilding Industry Co. (CSIC) – was announced.83
The authorities state that as at March 2021, the joint reorganization of the CSSC and the CSIC had
not yet been completed.
4.4 Services
4.4.1 Financial services
4.4.1.1 Overview
4.134. China's policy on financial services seeks to prevent and control financial risks, serve the
real economy, and further promote liberalization.84 The authorities indicate that some current policy
measures are geared towards addressing the rebound of non-performing bank assets, regulating
shadow banking, and combatting financial corruption and crime. Specific efforts include actions to
further improve the monetary policy transmission channel, improve the capital market, support small
and medium-sized banks to replenish their capital and optimize their governance, improve the
corporate governance of financial institutions, and regulate the qualifications and behaviour of
shareholders. In the foreign exchange market, the authorities aim to promote market-based
development of the foreign exchange market.
82
OECD, Science, Technology and Industry Policy Papers, August 2019, No. 75.
83
Both the CSSC and the CSIC are managed by the State-owned Assets Supervision and Administration
Commission (SASAC) on behalf of the Government. The shipyards of the CSIC are located in northeast and
northern China. Its subsidiaries include Dalian Shipbuilding Industry, Bohai Shipbuilding Heavy Industry,
Qingdao Beihai Shipping Heavy Industry, and Shanhaiguan New Shipbuilding Industry. CSSC shipyards are
mainly located in eastern and southern China, and its subsidiaries include Shanghai Waigaoqiao Shipbuilding,
Jiangnan Shipyard (Group) Co., Ltd., Hudong-Zhonghua Shipbuilding (Group) Co., Ltd., and the rebranded
CSSC Offshore & Marine Engineering Company (COMEC).
84
The description will mainly focus on the regulatory developments that have occurred during the
review period. See WT/TPR/S/375/Rev.1, 13 July 2018, paras. 4.143-4.172; WT/TPR/S/342/Rev.1, 12 October
2016, paras. 4.44-4.84; WT/TPR/S/300/Rev.1, 7 October 2014, paras. 4.48-4.84; WT/TPR/S/264/Rev.1, 20
July 2012, paras. 96-164; and WT/TPR/S/230/Rev.1, 5 July 2010, paras. 47-82.
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4.135. The sector accounted for 7.9% of GDP in 2019 and 2018; it employed 8.2 million people
in 2019, up from 6.9 million in 2018. Its structure is still unbalanced, with a significant predominance
of banks over other types of financial institutions. The stock market is relatively small. Market
capitalization of listed domestic companies stood at CNY 8.5 trillion in 2019, representing roughly
59.3% of GDP.85 By contrast, according to the World Bank, the ratio of total bank credit to GDP
stood at 164.6% in 2019. Commercial banks' dominance of the sector is evident from their
participation in the system's total assets: over 82% of assets and liabilities of banking institutions,
up from some 78% for both indicators in 2018. The authorities indicated that in 2020, the market
capitalization of listed domestic companies stood at CNY 79.72 trillion, representing 78.5% of GDP.
In 2018, 2019, and 2020, equity financing86 of non-financial sectors stood at CNY 861.5 billion,
CNY 918.9 billion, and CNY 1.26 trillion, respectively; non-financial companies issued
CNY 1.65 trillion, CNY 2.58 trillion, and CNY 3.45 trillion in corporate bonds (including corporate
goods, convertible bonds, and exchangeable bonds), respectively, in those same years through the
exchange bond market. The exchange bond market issued local government bonds totalling
CNY 2.56 trillion, CNY 2.83 trillion, and CNY 2.42 trillion, respectively, in 2018, 2019, and 2020.
4.136. State-owned banks are among the major players in China's financial sector. Large banks in
the system (e.g. the Big Six state-owned commercial banks and the three policy banks 87) and most
other financial institutions (e.g. credit cooperatives, non-bank financial companies, and insurance
companies) are either directly state-owned or owned by other SOEs. In a report to the NPC, the
State Council indicated that total assets of state-owned financial institutions at end-2017 was
CNY 241 trillion, which represented 88% of the total.88
4.137. On 24 January 2019, the number of China's official big state-owned banks, the most
important banks in the domestic system, reached six, following the inclusion of the Postal Savings
Bank of China by the authorities, alongside Industrial and Commercial Bank of China, Agricultural
Bank of China, Bank of China, China Construction Bank, and Bank of Communications. 89 The
authorities state that, in recent years, China has encouraged joint-stock commercial banks to
optimize corporate governance structure, improve governance and execution efficiency, and
accelerate high-quality development and transformation. In June 2019, the CBIRC approved the
initial public offering (IPO) of the Postal Savings Bank of China in A-shares.
4.138. Assets of banks continued to grow during the review period. As at the end of the first half of
2020, the total CNY and foreign currency assets of China's banking institutions reached
CNY 309.4 trillion, up 9.7% year-on-year. Profit growth of commercial banks was generally stable
during the review period. However, in the first half of 2020, profits of commercial banks decreased
year-on-year. Commercial banks accumulated a net profit of CNY 1.0 trillion, down by 9.4% year-
on-year. The average rate of net return on equity was 10.35%. The average rate of net return on
total assets (ROA) of commercial banks was 0.83%. Compared with the end of the first quarter of
2020, it decreased by 0.15 percentage points. The authorities note that risk resilience remained
strong. The core Tier 1 capital adequacy ratio (CAR) of commercial banks (excluding branches of
foreign banks) was 10.47%, down by 0.41 percentage points compared with the end of last quarter
2019; Tier 1 CAR was 11.61%, down by 0.34 percentage points, and CAR was 14.21%, down by
0.31 percentage points compared with the end of the last quarter of 2019.90
4.139. Regarding non-performing loans (NPLs), at the end of 2020 Q2, the outstanding balance of
NPLs of commercial banks was CNY 2.74 trillion, up by CNY 124.3 billion compared with last quarter.
The NPL ratio of commercial banks was 1.94%, an increase of 0.03 percentage points compared
with the previous quarter, which seems to reflect the economic impacts of the COVID‑19 pandemic.
85
World Bank, Market Capitalization of Listed Domestic Companies (Current US$) in China. Viewed at:
https://data.worldbank.org/indicator/CM.MKT.LCAP.CD?locations=CN.
86
Including that in the Shanghai and Shenzhen Stock Exchanges and National Equities Exchange.
87
The three policy banks are China Development Bank, Export-Import Bank of China, and Agricultural
Development Bank of China.
88
Zhang, C. (2019), How Much Do State-Owned Enterprises Contribute to China's GDP and
Employment?, World Bank document. Viewed at: http://documents1.worldbank.org/curated/en/449701565248
091726/pdf/How-Much-Do-State-Owned-Enterprises-Contribute-to-China-s-GDP-and-Employment.pdf.
89
Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China, and China
Construction Bank of China are designated as global systemically important banks by the Financial Stability
Board.
90
CBIRC, Supervisory Statistics of the Banking and Insurance Sectors – 2020 Q2, 8 October 2020.
Viewed at: http://www.cbirc.gov.cn/en/view/pages/ItemDetail.html?docId=921929&itemId=983.
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At the same time, the balance of loan loss provisions of commercial banks reached CNY 5.0 trillion,
an increase of CNY 206.0 billion from the previous quarter. The provision coverage ratio was 182.4%
in the first half of 2020, down by 0.80 percentage points compared with the end of last quarter
2019. The authorities have introduced a phased deferment of loan repayments scheme, in which
banks have been allowed to grant deferment of loan repayments to micro, small, and medium-sized
enterprises (MSMEs) and other eligible firms upon application. In this case, banks could refrain from
downgrading enterprises' loan risk categories, while upholding the approach of substantive risk
assessment. The authorities note that in the first half of 2020, COVID‑19 had a sizeable impact on
China's economy, and new NPLs in the banking sector rose. In this regard, the CBIRC urged banks
to do a more accurate classification of credit assets, adopt various means to make up for capital,
increase the withdrawal of provisions in advance, continue to increase the disposal of NPLs, and
strictly control the increment of new NPLs. They indicate that as at first quarter 2021 the risk of
NPLs has generally eased.
4.140. Over the period leading up to the COVID‑19 pandemic, the Government had been exploring
the resolution framework of financial institutions, and in accordance with laws and regulations, it
intervened in three relatively weak banks. In 2019, developments in China's banking industry were
marked by the takeover of Baoshang Bank and the recapitalization of the Bank of Jinzhou and
Hengfeng Bank. In November 2020, Beijing No. 1 Intermediate People's Court ruled for the
bankruptcy liquidation of Baoshang Bank.
4.141. In the insurance sector, assets of companies increased during the review period, amounting
to CNY 22.0 trillion in the first half of 2020. Compared with the beginning of the year, assets of
property and casualty insurance companies registered CNY 2.4 trillion, up 5.3%; assets of life
insurance companies reached CNY 18.6 trillion, up 9.6%; assets of reinsurance companies recorded
CNY 513.3 billion, up 20.5%; and assets of insurance asset management companies were
CNY 64.4 billion, up 0.5%.
4.4.1.2 Reform of the financial supervision framework
4.142. During the review period, the authorities carried out a significant reshuffle of China's financial
supervision system, in response to the changing realities of the country's financial environment. The
recent liberalization efforts by China and the context of financial innovation have been marked by
the prevalence of new types of challenges and the emergence of a more diverse typology of market
participants, mainly shadow banking. In 2017, the IMF and the World Bank considered that
coordination and detailed exchanges of information between regulators were lacking; they pointed
out the need for China to reform its financial supervision structure.91 The authorities consider that
the establishment of the CBIRC in 2018 significantly strengthened the overall coordination and
penetration supervision of banking and insurance. The recent reforms, including strict enforcement,
have led to a decrease in shadow banking activities. The authorities state that in 2017 shadow
banking dropped by about CNY 20 trillion from its historical peak. This helped to maintain the
stability of the financial system.
4.143. The new structure follows an integrated type of supervisory model. The Financial Stability
and Development Committee (FSDC), established in November 2017, is a financial regulatory body
under the auspices of the State Council and headed by a Vice Premier, which is higher ranked than
the ministry-level heads of the other financial regulators. The FSDC is tasked with, inter alia,
implementing the decisions and plans of the State Council regarding the financial sector; deliberating
major reform and development programmes for the financial sector; coordinating financial reform,
development and regulation, issues concerning monetary policy and financial regulation, and major
issues concerning financial regulation; analysing international and domestic financial situations,
addressing international financial risks, and conducting policy research on systemic risk prevention
and treatment to maintain financial stability; and guiding local financial reform, development, and
supervision of the duty performance of local financial regulatory authorities and governments. During
the review period, a new supervisory arrangement was adopted, combining the oversight structure
of banking and insurance to form one single regulator, the CBIRC. The CBIRC was established in
April 2018, as a result of a merger of the CBRC and China Insurance Regulatory Commission (CIRC).
91
IMF (2017), People's Republic of China: Financial Sector Assessment Program – Detailed Assessment
of Observance of Basel Core Principles for Effective Banking Supervision. Viewed at: https://www.imf.org/en/
Publications/CR/Issues/2017/12/26/Peoples-Republic-of-China-Financial-Sector-Assessment-Program-Detailed-
Assessment-of-45516.
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Its mandate is to, inter alia, regulate and supervise banking and insurance institutions, maintain fair
competition in the banking and insurance sectors, and protect the legitimate rights and interests of
stakeholders, including depositors and insurance policyholders.92 It also collects and publishes
statistics on industry, approves the establishment or expansion of banks and insurance companies,
and resolves potential liquidity, solvency, or other problems that might occur in individual
companies. The China Securities Regulatory Commission (CSRC) has a similar mandate in the
securities and futures market that includes, inter alia, the responsibilities of policy formulation and
implementation, including monitoring of compliance.93
4.144. As part of the reform of financial supervision, some legislative and rulemaking
responsibilities originally vested in the CBRC, the CIRC, and the CSRC within their respective
segments were transferred to the PBOC. Moreover, in addition to its central bank responsibilities of,
inter alia, formulating and implementing monetary and exchange rate policies; regulating interbank
markets, foreign exchange markets, the payment and settlement system, and the credit information
system; and building a macro-prudential monitoring system, and conducting regular risk
assessments, the PBOC also leads the effort in preventing systemic financial risk and promoting the
stability of the financial system. It is responsible for establishing the mechanism for the assessment
and identification of systemically important financial institutions, and leading the drafting of basic
rules, monitoring, and analysis, as well as supervising such financial institutions.
4.4.1.3 Recent regulatory developments
4.4.1.3.1 Overview
4.145. China continued to reform its financial sector during the review period. While a number of
licensing and prudential regulations were adopted or amended, several measures were taken to
liberalize financial activities and to further promote foreign participation in the banking, insurance,
pension fund management, and securities industries. As regards the opening of the financial market,
in July 2019, the FSDC announced a package of 11 reform measures covering: (i) credit rating by
foreign-invested companies; (ii) foreign participation in asset management; (iii) steps to encourage
foreign financial institutions to invest in wealth management subsidiaries of Chinese commercial
banks; (iv) foreign participation in pension fund management; (v) foreign participation in currency
brokerage; (vi) lifting the foreign ownership cap on life insurance companies; (vii) lifting the
restrictions on foreign ownership in insurance asset management companies; (viii) relaxing the entry
restrictions on foreign-invested insurance companies; (ix) lifting foreign ownership limits on
securities companies, futures companies, and fund management companies; (x) allowing foreign-
invested financial institutions access to Type-A underwriting licences in the interbank bond market;
and (xi) allowing foreign institutional access to inter-bank bond markets.
4.4.1.3.2 Regulatory developments in banking
4.4.1.3.2.1 Developments in licensing of foreign banks
4.146. The 2018 National Negative List lifts the cap on foreign ownership in Chinese commercial
banks, which was previously set at 20% for an individual foreign investor and 25% for a group of
investors. Accordingly, on 17 August 2018, the CBIRC published the Decision on Abolishing and
Revising Some Rules, which revises the Implementation Measures for the Administrative Licensing
Items Concerning Chinese-Funded Commercial Banks.
4.147. Furthermore, on 15 October 2019, the State Council amended the Regulations on
Administration of Foreign-Funded Banks (State Council Order No. 720), followed in December 2019
by its implementing rules published by the CBIRC. The amendment abolishes the requirements that
obliged foreign shareholders to have total assets of no less than USD 10 billion to establish wholly
foreign-owned banks or a joint venture with Chinese banks, or USD 20 billion to establish branches
in China. It also allows foreign investors to establish and operate both branches and wholly owned
or joint ventures simultaneously in China, and operate agency collection and payment business. In
addition, the amended regulation removed the requirement that "the Chinese sole or key
shareholder of a joint venture bank shall be a financial institution". While the new regulation lowers
92
CBIRC, About the CBIRC. Viewed at: https://www.cbirc.gov.cn/en/view/pages/ItemList.html?itemPId
=974&itemId=975&itemUrl=About/Mandates.html&itemTitle=Mandates&itemPTitle=About%20the%20CBIRC.
93
CSRC, About CSRC. Viewed at: http://www.csrc.gov.cn/pub/csrc_en/about/.
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the minimum amount of the fixed-term CNY deposit that branches of foreign banks in China can
accept from Chinese individuals (from no less than CNY 1 million to no less than CNY 0.5 million per
deposit), it also removes the approval requirement applicable to foreign-invested banks engaging in
CNY-related businesses.
4.148. The authorities indicate that on 27 April 2018 a Notice was issued by the CBRC94, allowing
the operating capital of foreign banks to be calculated in a "consolidated manner". Under the new
framework, if the operating capital of an established branch meets the minimum required capital,
the foreign bank may authorize the established branch to allocate its excess operating capital to an
additional branch in China.95
4.4.1.3.2.2 Developments in banking prudential regulations and measures to tackle other

systemic risks
4.149. Measures were taken during the review period to further improve China's prudential
regulation framework, in accordance with the Core Principles of Effective Banking Supervision under
Basel III (Revisions) and based on the actual situation of the banking industry in China.
4.150. On 24 April 2018, the authorities adopted the Measures for the Administration of the Large
Exposures of Commercial Banks, effective on 1 July 2018, in line with Basel III supervisory
framework for measuring and controlling large exposures. Under the Measures, the total exposure
of a commercial bank to an interbank counterparty or a group of connected interbank counterparties
shall not exceed 25% of the bank's net value of Tier 1 capital. The total exposure of a global
systemically important bank to another global systemically important bank shall not exceed 15% of
the bank's net Tier 1 capital.
4.151. On 25 May 2018, the Measures on Liquidity Risk Management of Commercial Banks were
adopted, with an effective date of implementation of 1 July 2018. The Measures require commercial
banks to increase the diversification of and to further stabilize their financing sources. They introduce
three new indicators for liquidity risk supervision in response to Basel III reforms96:
• the net stable funding ratio (NSFR), which measures banks' long-term stable funding to
support their business development, applies to lenders with assets of no less than CNY 200
billion;
• the adequacy ratio of the high-quality liquid assets (HQLA) ratio, which evaluates whether
banks have enough HQLA to cover short-term liquidity gaps when under stress, applies to
lenders with assets below CNY 200 billion; and
• the liquidity matching ratio, which applies to all lenders, measures the maturity matching
of bank assets and liabilities.
4.152. In accordance with the Liquidity Risk Management Measures, a commercial bank with an
asset size of CNY 200 billion and above shall continuously meet the minimum supervisory standards
for the liquidity coverage ratio (LCR) (at 100%), NSFR (at 100%), liquidity ratio (at 25%), and
liquidity matching ratio (at 100%). A commercial bank with an asset size of less than CNY 200 billion
shall continuously meet the minimum supervisory standards for adequacy ratio of HQLA (at 100%),
liquidity ratio (at 25%), and liquidity matching ratio (at 100%). Commercial banks shall fully
implement the supervisory requirements for the liquidity matching ratio from 1 January 2020.
4.153. On 30 April 2019, the CBIRC launched a consultation on the draft Interim Measures for the
Classification of Financial Asset Risks of Commercial Banks, following the release of new benchmarks
by the Basel Committee on Banking Supervision. The draft measures extend the risk classification
from loans to all financial assets that bear credit risk. The draft Measures, once adopted, would
94
Notice of the General Office of the CBRC on Issues Concerning the Amendment and Implementation
of Measures for the Administrative Licensing of Foreign-Funded Banks (CBIRC Notice No. 45, 2018).
95
State Council Information Office, Notice of the CIRC on Further Liberalizing Market Access for Foreign
Banks. Viewed at:
http://www.scio.gov.cn/32344/32345/39620/41925/xgzc41931/Document/1666285/1666285.htm.
96
These indicators are in addition to two indicators that were already in place: liquidity coverage ratio
(LCR) and liquidity ratio.
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replace the 2007 Guidelines for Risk-Based Loan Classification, which classifies commercial loans
into five tiers: normal, special mentioned, substandard, doubtful, and loss. According to the
authorities, the draft Measures extend the risk classification from loans to all financial assets that
bear credit risk, emphasize the concept of debtor-centred classification, clarify the number of
overdue days as an objective indicator of risk classification, and refine the risk classification
requirements for restructured assets.
4.154. Several other measures were taken by the authorities to better contain financial risks. In
January 2018, the CBRC released the Measures for the Administration of Entrusted Loans by
Commercial Banks to regulate entrusted loans and risks thereof.97 The Measures set clear guidelines
on the sources of funds, loan purposes, and risk management, as well as strict supervisory rules on
entrusted loans in commercial banks. Under the Measures, the CBRC forbids the use of entrusted
loans for, inter alia, bonds, futures, and financial derivatives investment. Over the same period, the
CIRC revised rules to tighten regulation over the use of insurance funds, in order to better serve the
real economy.
4.155. In April 2018, China's financial regulators jointly issued the Guiding Opinions on Regulating
the Asset Management Business of Financial Institutions, and a supplementary notice was issued on
20 July 2018 to clarify operational details.98 The new rules set, inter alia, strict standards for
investment in non-standard assets, standards of asset management product leverage, and strict
controls on implicit guarantees.
4.156. In November 2018, the PBOC, the CBIRC, and the CSRC issued the Guidelines on Improving
Regulation of Systemically Important Financial Institutions, which clarify the overall framework for
the identification, regulation, and resolution of domestic systemically important financial institutions.
In December 2020, the PBOC and the CBIRC issued the Measures for the Evaluation of Systemically
Important Banks, which specify the scope, methodology, and procedure for evaluating domestic
systematically important banks.
4.157. Other measures were also taken in relation to equity management by commercial banks. On
5 January 2018, the Interim Measures for the Equity Management of Commercial Banks were
adopted by the CBRC. The Measures standardize the behaviour of shareholders of commercial banks.
It also strengthens the information disclosure and reporting requirements imposed on shareholders
that have a significant impact on the operation and management of commercial banks.
4.4.1.3.2.3 Other measures in banking
Foreign participation in bond rating
4.158. The FSDC announced in July 2019 that it would allow foreign-invested entities to provide
credit ratings on all types of bonds in the Chinese interbank bond market and exchange-traded bond
market. The move was initiated through the release on 1 July 2017 of PBOC Circular No. 7/2017,
which opened the interbank bond market to foreign credit rating agencies. The authorities indicate
that S&P Global and Fitch Ratings have established wholly foreign-owned subsidiaries in China.
4.159. Prior to the 2019 Announcement, S&P Global Ratings was the only foreign entity that was
allowed to participate in giving ratings to all kinds of bonds on the China interbank bond market,
including financial institution bonds, debt financing instruments for non-financial enterprises,
structured products, and foreign bonds. On 11 July 2019, S&P Global (China) Ratings released its
first rating report for a domestic issuer in China, rating ICBC Financial Leasing Co., Ltd. "AAA" with
a "stable" outlook. On 14 May 2020, the US firm Fitch Ratings was allowed, via its wholly owned
subsidiary, to conduct certain bond rating business in the interbank bond market. Moody's, another
foreign-owned rating agency, operates in the Chinese market through equity participation. At
present, Moody's holds 30% of the equity in China Chengxin International Credit Rating (CCXI),
97
Entrusted loans refer to loans provided by a corporate lender to a corporate borrower through a
commercial bank that acts as a trustee of the lender. Entrusted loans are considered to be shadow banking in
China.
98
Notice on Further Clarifying Relevant Matters in the Guiding Opinions on Regulating the Asset
Management Business of Financial Institutions (detailed rules).
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which is qualified to provide rating services for all bond products in the interbank and exchange
markets.
Participation of foreign financial institutions in the establishment and investment of the

wealth management subsidiaries of commercial banks
4.160. The FSDC announced that China will encourage foreign financial institutions to participate in
the establishment of, and make investments in, the wealth management subsidiaries of Chinese
commercial banks. Furthermore, joint ventures between foreign asset management agencies and
Chinese banks or insurance companies to establish an asset management company controlled by
the foreign party would be permitted. On 24 September 2020, the CBIRC approved the
establishment of Huihua Wealth Management Co., Ltd., a joint venture co-invested by France's
Amundi Asset Management (55%) and Bank of China Wealth Management Co., Ltd. (45%). In
addition, on 11 August 2020, the CBIRC approved a joint wealth management venture among
Blackrock Financial Management Inc., CCB Wealth Management Co., Ltd., and Fullerton Management
Pte Ltd.
4.161. On 3 January 2020, the CBIRC published the Guiding Opinions on Promoting the
High-Quality Development of the Banking and Insurance Industries, which encourage foreign-funded
institutions to participate in various aspects of the wealth management business. While the Guiding
Opinions further encourage business collaboration in financing (including trade finance, finance
granted to SMEs, and commodity finance), they also emphasize collaboration in the wealth
management business.
Currency brokerage by foreign companies
4.162. According to the FSDC's announcement, China will support foreign entities to establish
currency brokerage firms using their own capital or to take an equity stake in a Chinese broker. On
3 September 2020, the CBIRC approved the establishment of Japan's Ueda Yagi Money Broking
(China) Co., Ltd., China's first wholly foreign-invested currency brokerage.
Reform of the interest rate setting mechanism
4.163. On 17 August 2019, the PBOC released an announcement to improve the formation
mechanism of the loan prime rate (LPR), to further reflect market dynamics. 99 Under the reforms,
the new LPR will be linked to rates set during open market operations, namely the PBOC's
medium-term lending facility (MLF), which is determined by broader financial system demand for
central bank liquidity. Since August 2019, the new LPR is announced at 9:30 a.m. on the 20th of
every month, in lieu of publishing it on daily basis. The rate had up until the reform been set using
quotations from 10 contributing banks. The number of quotation banks was expanded from the
top 10 nationwide banks by loan volume to 18 quotation banks, including 10 nationwide banks,
2 city commercial banks, 2 rural commercial banks, 2 foreign-invested banks, and 2 private banks,
to further reflect the representativeness of quotation banks and encourage small- and medium-sized
banks to use LPR.
4.4.1.3.3 Regulatory developments in insurance
4.4.1.3.3.1 Developments in licensing requirements
4.164. Since 2018, the Central Government has launched several measures to open up the
insurance industry, including abolishing the requirement of having a representative office in China
for at least two years and 30-year operation period to establish foreign-invested insurance
institutions in China, allowing foreign insurance groups to invest in insurance institutions, and
opening-up measures in the field of insurance intermediaries. On 15 October 2019, the State Council
announced its decision to modify certain provisions in the Administrative Regulations on Foreign-
99
PBOC, China Monetary Policy Report Quarter Four, 2019, 19 February 2020. Viewed at:
http://www.pbc.gov.cn/en/3688229/3688353/3688356/3830461/3985458/2020030717393760199.pdf.
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invested Insurance Companies100; it was followed in December 2019 by implementing rules

published by the CBIRC.
4.165. Foreign ownership limits were also lifted on life insurers and insurance asset management
companies. In 2018, the PBOC announced that the foreign ownership cap on life insurance
companies would be raised to 100% by 2021. Subsequently, in July 2019, the FSDC announced that
China will accelerate this transition timeline by allowing Chinese life insurance companies to be fully
foreign-owned in 2020. On 9 December 2019, the CBIRC released the Notice Concerning Clarification
of the Timeframe for the Cancellation of Foreign Ownership Restrictions on Joint Venture Life
Insurance Companies. The Notice states that all restrictions on foreign ownership of joint-venture
insurance companies that engage in life insurance operations will be officially lifted starting
1 January 2020, giving foreign investors the opportunity for full ownership. In addition, in line with
FSDC's announcement, the CBIRC is revising the Interim Administrative Regulations on Insurance
Asset Management Companies, which lift the 25% foreign ownership cap on insurance asset
management companies.
4.4.1.3.3.2 Developments in prudential regulations
4.166. China's current solvency regime, the China Risk Oriented Solvency System (C-ROSS), was
first brought into operation in January 2016. Under C-ROSS, three indicators need to be reported by
insurers to the regulator in their solvency reports: (i) the core solvency ratio (the ratio of core capital
to minimum capital); (ii) the overall solvency ratio (the ratio of core capital plus supplementary
capital to minimum capital); and (iii) the integrated risk rating (IRR), which ranges from A (highest
rating) to D (lowest) based on both quantitative capital requirements and an evaluation of
unquantifiable capitalized risks.
4.167. In September 2017, the CIRC launched a public consultation on C-ROSS Phase II, to take
into account the evolving nature of risks in the insurance industry. In January 2021, the CBIRC
revised and issued the Regulations on the Solvency Management of Insurance Companies, which
specify solvency standards as follows: core solvency ratio to be not less than 50%; comprehensive
solvency ratio to be not less than 100%; and IRR, which measures the overall solvency risk of
insurance companies (including capitalized and uncapitalized risks), shall not be lower than Class B.
A company will be considered to meet solvency standards only when all three indicators are satisfied.
According to the authorities, after two rounds of quantitative testing and a number of expert
discussions by the insurance industry, a draft containing all rules under C-ROSS Phase II has been
completed. The authorities asked to receive the opinions from the industry by end-January 2021.
4.4.1.3.4 Recent developments in securities activities
4.4.1.3.4.1 Foreign participation
4.168. In March 2021, the authorities stated that the legislative work on the Futures Law was
ongoing. The Futures Law is set to be the next overarching legislation for China's futures industry.
4.169. Efforts have been made in recent years to develop and vitalize China's securities market,
including expanding the range of products available to foreign investors, enlarging foreign investors'
access to the Chinese market, and enhancing the legal regime governing the sector.
4.170. On 28 June 2018, the 2018 edition of the Special Administrative Measures for the Market
Entry of Foreign Investment (Negative List) provided that foreign shareholding restrictions in
securities companies, futures companies, fund management companies, and life insurance
companies would be eased to allow investment up to a maximum stake of 51%, and the measures
approved the lifting of all such restrictions in 2021. However, the shareholding restrictions for foreign
securities companies, fund management companies, futures companies, and life insurance
companies would be officially lifted in 2020, a year earlier than previously scheduled, which means
that full foreign ownership is therefore allowed. The authorities note that caps on foreign ownership
of fund management companies and securities companies have been abolished nationwide since
100
State Council, Amendments to Regulations in Finance Sector, 15 October 2019. Viewed at:
http://english.www.gov.cn/policies/latestreleases/201910/15/content_WS5da57b97c6d0bcf8c4c1524e.html.
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1 January 2020 and 1 December 2020, respectively. In addition, caps on foreign ownership of
futures companies were lifted from 1 January 2020.
4.171. China also extended market access opportunities for holders of Qualified Foreign Institutional
Investors (QFII) status and Renminbi Qualified Foreign Institutional Investors (RQFII) status.
Initially, these statuses were created to allow foreign institutional investors to have access to a range
of Chinese financial products (entire A-share market, bond markets, and other asset classes). In
September 2020, the CSRC, the PBOC, and State Administration of Foreign Exchange (SAFE)
released the Measures for the Administration of Domestic Securities and Futures Investment by QFII
and RQFII, which took effect on 1 November 2020. The measures consolidated the QFII and RQFII
schemes into one and further streamlined application procedures. As a result, foreign institutions
can make a one-time application for the new QFII status, which allows them to invest in China's
securities and futures market in either CNY or a tradable foreign currency. The new rules also
expanded QFIIs' scope of investment to include, inter alia, financial futures and commodity
futures.101
4.172. On 7 May 2020, the PBOC and SAFE issued the Regulations on Fund Administration for
Domestic Securities and Futures Investments by Foreign Institutional Investors (PBOC and SAFE
Announcement No. 2, 2020) to end the quota system for both QFII and RQFII schemes. Under the
defunct quota system, institutional investors seeking to participate in the QFII and RQFII schemes
were required to apply for an individual quota that sets limits on how much they can invest in the
capital market. The reform steps also aimed to, inter alia, allow the QFII/RQFII to independently
choose the currency and time of inward remittance and perform integrated management of domestic
and foreign currencies, and cancel the requirements that a Chinese certified public accountant must
issue special audit reports on tax-related filing of investment income. The authorities note that the
recent reforms have further promoted foreign participation, as at February 2021, a total of 576 QFII
institutions had invested in China's capital market.
4.173. Regarding foreign participation in China's bond market, the authorities continued to
gradually open the bond market to foreign market participants. Pursuant to the FSDC announcement
in July 2019, the authorities note that China now allows foreign-invested entities to become Type-A
lead underwriters in the interbank bond market, which allows them to act as lead underwriters of all
types of bonds.
4.4.1.3.4.2 Measures to improve governance and prevent risks
4.174. On 26 October 2018, the 13th National People's Congress adopted a decision to revise the
Company Law. The revision seeks to improve the current share repurchase regime, mainly by
broadening the share repurchase scenarios, simplifying the decision-making procedures for share
repurchase, extending the period in which a company holds the shares that it had repurchased,
increasing the upper limit of the number of shares of a company held by the company itself,
establishing and improving the treasury stock system of joint-stock companies, and supplementing
the normative requirements of share repurchase of listed companies. Before the revision, companies
were banned from buying back their publicly traded shares except under four circumstances. 102 The
new regime further loosens the restrictions by allowing companies to convert repurchased shares
into corporate bonds issued by listed companies, or to buy back shares to defend their corporate
value and shareholders' interests.
4.175. An amendment to the Securities Law was adopted on 28 December 2019 and entered into
force on 1 March 2020.103 Major changes in the amended Securities Law include implementing a
registration-based IPO regime (which replaces the current approval regulatory framework),
enhancing disclosure requirements and investor protection rules, and strengthening regulatory
enforcement and risk prevention and control. The authorities indicate that in accordance with the
101
CSRC, CSRC, PBC and SAFE Release the Measures for the Administration of Domestic Securities and
Futures Investment by Qualified Foreign Institutional Investors and RMB Qualified Foreign Institutional
Investors, 25 September 2020. Viewed at:
http://www.csrc.gov.cn/pub/csrc_en/newsfacts/release/202009/t20200925_383652.html.
102
The four circumstances were capital reduction, merger with other companies, awarding the shares to
employees, and at the request of dissident shareholders.
103
State Council, New Securities Law Takes Effect, 1 March 2020. Viewed at:
http://english.www.gov.cn/policies/latestreleases/202003/01/content_WS5e5b6168c6d0c201c2cbd4dc.html.
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Securities Law, the administrative measures for the issuance and trading of asset-backed securities
and asset management products shall be formulated by the State Council in accordance with the
principles of the Law.
4.176. The authorities have also taken several measures with a view to further strengthening the
supervision over securities companies, regulating certain activities of securities companies, and
preventing risks faced by securities companies. In this respect, in 2018, the CSRC, inter alia, issued
the Guidelines for the Internal Control of Investment Banking Business of Securities Companies and
revised the Administrative Measures on Sponsorship for Securities Issuance and Listing. In addition,
the CSRC issued the Regulations on the Administration of the Equity of Securities Companies, the
Regulations on Issues Concerning the Implementation of the Regulations on the Administration of
the Equity of Securities Companies, and the Administrative Measures for the Private Asset
Management Business of Securities and Futures Operating Institutions. In January 2020, the CSRC
revised the Regulations on the Calculation Standards for Risk Control Indicators of Securities
Companies.
4.177. In July 2020, the CSRC and the CBIRC jointly revised and issued the Administrative Measures
for Securities Investment Fund Custody Business. It allows foreign bank branches in China to apply
for qualification as a securities investment fund custody business and their financial indicators such
as net assets can be calculated based on the overseas head office. The Measures also specify the
responsibilities that shall be undertaken by overseas head offices and strengthen supporting risk
management and control arrangements.104
4.178. Several measures were adopted to further modernize the futures market. On
7 September 2018, the Announcement on Further Strengthening the Collection of Trading Terminal
Information from Futures Operators Clients (CSRC Announcement No. 27, 2018) was adopted. It
requires futures companies to ensure, inter alia, that the trading orders placed by its clients through
trading terminal software directly reach their information system.
4.179. In June 2019, the CSRC issued the Amended Measures for the Supervision and
Administration of Futures Companies, setting out stricter qualification requirements for major
shareholders of futures companies, especially the controlling shareholders and the largest
shareholders, than those in the 2014 version of the Measures. The Amended Measures also set
disciplines on, inter alia, the obligations of the shareholders, notably when it comes to the
management of futures companies, and the management of domestic branches, subsidiaries, and
overseas operating institutions of futures companies.105
4.180. The authorities indicate that in February 2019 the CSRC issued the amended Regulation on
the Classification and Supervision of Futures Companies.106 On 15 January 2021, the CSRC issued a
Decision on Amending and Abolishing Some Rules on Securities and Futures (CSRC Order No. 179),
which amended the Administrative Measures for the Qualifications of Directors, Supervisors and
Senior Managers of Futures Companies and the Measures for the Administration of Futures
Exchanges.
4.4.1.3.4.3 Foreign activities of Chinese companies
4.181. Regarding foreign activities of Chinese securities companies, in September 2018, the CSRC
issued the Administrative Measures for the Overseas Establishment, Acquisition, and Shareholding
of Financial Institutions of Securities Companies and Securities Investment Fund Management
Companies to further clarify the conditions for Chinese companies going abroad and to strengthen
the parent company's control over its overseas subsidiaries.
104
CSRC, CSRC and CBIRC Jointly Promulgated the Administrative Measures on Custodian Business for
Securities Investment Funds, 11 July 2020. Viewed at:
http://www.csrc.gov.cn/pub/csrc_en/laws/rfdm/DepartmentRules/202007/t20200711_379940.html.
105
CSRC, CSRC Order No. 155, 2019, Measures for the Supervision and Administration of Futures
Companies. Viewed at: http://www.csrc.gov.cn/zjhpublic/zjh/201906/t20190614_357276.htm.
106
CSRC, CSRC Notice No. 5, 2019, Decision on Amending the Regulation on the Classification and
Supervision of Futures Companies. Viewed at:
http://www.csrc.gov.cn/pub/zjhpublic/zjh/201902/t20190222_351228.htm.
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4.4.1.3.5 Developments in pension fund management
4.182. The FSDC announced that China will permit foreign financial institutions to set up or invest
in Chinese private pension fund management companies. However, China's pension fund
management sector is still operating under a pilot programme. According to the authorities, China
continues to adopt the model of "one-on-one approval for eligible companies". They indicate that
the CBIRC has not received formal applications from foreign financial institutions to set up or invest
in private pension fund management companies in China.
4.183. The only foreign presence in the industry was made effective on 27 March 2019, as the
CBIRC approved Heng An Standard Retirement Insurance Co., Ltd., a joint venture between the
UK insurance company Standard Life Aberdeen PLC and Tianjin TEDA International to establish the
first foreign-invested pension insurance company in China. Currently, there are eight established
Chinese pension insurance companies.
4.184. China's private pension segment has considerable growth potential. The authorities are
considering measures to promote individual pillar-three pensions, including formulating new laws
and regulations, and launching preferential tax policies.
4.4.1.3.6 Measures to ease cross-border transactions and promote CNY internalization
4.185. Measures were taken during the review period to promote the internationalization of the
CNY – among them, the recent reforms of the QFII/RQFII status (as described in
Section 4.4.1.3.4.1) to further facilitate qualified overseas investors to invest in China's capital
market. In 2019, the PBOC reformed the procedures for foreign Central Banks to have better access
to China's interbank market.
4.186. In addition, the Notice on Further Improving Cross-border CNY Business Policies to Promote
Trade and Investment Facilitation (Yin Fa No. 3, 2018), adopted on 5 January 2018, aims to promote
cross-border CNY business in relation to trade and investment. The Notice provides that companies
may settle with CNY for all cross-border transactions that can be settled in foreign currencies in
accordance with the law. It also states that domestic enterprises may transfer CNY funds raised
abroad by issuing bonds and stocks back to the domestic market for use as needed.
4.187. On 23 October 2019, SAFE issued the Circular on Further Promoting the Facilitation of Cross-
border Trade and Investment (Hui Fa No. 28, 2019). The regulation consists of measures to simplify
the foreign exchange control requirements under both current account transactions
(e.g. import/export of goods and services) and capital account cross-border transactions (e.g. equity
investment and debt financing), and relax the longstanding domestic equity investment restriction
imposed on FIEs. Prior to this reform, only FIEs with the explicit wording of "investment" in their
business scope (such as foreign-invested holding companies and foreign-invested venture
capital/private equity investment enterprises) were allowed to use their capital funds to make further
onshore equity investments. Now, with the implementation of the regulation, normal FIEs (without
an investment business scope) are also allowed to utilize and convert their capital received from
foreign investors to make equity investment provided that: (i) the restrictions of the applicable
Negative List are complied with, and (ii) the investment is genuine and legitimate.
4.188. Regarding the necessary infrastructure for CNY internationalization, on 2 May 2018, the
CNY Cross-border Interbank Payment System (Phase II) was established. According to the
authorities, it improved the settlement mode, extended the system's external service hours,
lengthened the list of direct participants, and further improved the application system design.
4.4.1.3.7 Developments in the fintech industry
4.189. The authorities encourage financial institutions to adopt new information technologies, as a
way to improve the accessibility of financial services and reduce risk through the application of big
data and artificial intelligence. In 2019, the PBOC issued the Fintech Development Plan, which lays
out the basic principles, development goals, and supportive measures from 2019-21. The PBOC
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conducted a pilot programme in 10 different places.107 In recent years, the surge of fintech has
opened new possibilities for expanding access to credit for small borrowers, including small and
medium-sized enterprises (SMEs). Big Tech companies, such as Alibaba and Tencent, have extended
loans to millions of small borrowers.108 The leading virtual banks, MYbank (affiliated with Alibaba),
WeBank (affiliated with Tencent), and XW Bank (affiliated with tech giant Xiaomi), provide loans to
millions of small firms annually, more than 80% of which have no credit history. 109 The Central
Bank's digital currency (e-CNY), which is currently being tested, is also expected to expand the
coverage of payment services to unbanked households and small firms. This could improve their
access to finance and further promote financial inclusion.
4.190. The 13th Five-Year Plan for the Development of Information Technology in China's Financial
Sector also seeks to promote, inter alia, the innovative development of inclusive finance, financial
infrastructure development, comprehensive financial statistics, and financial IT. The Plan identifies
the following priorities: (i) attaining international advanced standards with regards to financial
information infrastructure; (ii) harnessing IT to drive financial innovation; (iii) comprehensively
deepening financial standardization; (iv) improving the security of all financial networks; and
(v) significantly improving governance capabilities of financial IT.110
4.191. Baidu, Alibaba, and Tencent are responsible for most of the high-profile innovations that
have occurred in China's finance industry. Millions of people use Tencent's WeChat Pay and Alibaba's
Alipay daily to make third-party mobile payments. The fintech products currently offered include
mainly online payment services, Internet banking, Internet loans, crowdfunding, Internet wealth
management, Internet securities, and Internet insurance. Tech companies are required to obtain
the corresponding financial licences to conduct financial services business.
4.192. There is no single comprehensive regulation that governs fintech activities. Various
administrative measures on financial services apply to fintech business operators. Additionally, China
has not set up a single supervisory authority for the regulation of the fintech industry. As indicated
in Table 4.21, the relevant businesses of the fintech industry are subject to the supervision of the
traditional regulatory authorities, depending on the characteristics of the services provided. The
authorities indicated that in the fintech industry, financial innovation must be carried out on the
premise of prudential supervision; supervision must be strictly implemented. All financial activities
must be licensed and fully regulated in accordance with the law to avoid regulatory arbitrage.
According to the authorities, all types of entities, domestic or foreign, are treated equally.
Table 4.21 Overview of the regulatory regime for fintech

Business Regulator Specific legislation
Online payment People's Bank of China Administrative Measures on Payment
Services of Non-financial Institutions;
Management Measures for Bank Card
Acquiring Business; Administrative
Measures on Online Payment Business of
Non-bank Payment Institutions; Barcode
Payment Service Specification (Trial)
Insurance sales on the China Banking and Insurance Measures on Internet Insurance Business
Internet Regulatory Commission
Online trust business and China Banking and Insurance ..
consumer financing Regulatory Commission
Blockchain information Cybersecurity Administration of Administrative Rules on Block Chain
service China Information Services
.. Not available.
107
The projects include the Industrial and Commercial Bank of China's supply chain financing project;
the Bank of Agriculture's microloan product; a payment token project jointly developed by Citic Bank, China
UnionPay, Baidu's fintech arm Du Xiaoman Financial, and the online travel service platform Ctrip.com; Citic
Bank's application programming interface solutions; Bank of Ningbo's fast loan product; and China UnionPay,
Xiaomi and JD's joint project using cell phones as point-of-sale devices.
108
Frost et al. (2019), BigTech and the Changing Structure of Financial Intermediation. Viewed at:
https://www.bis.org/publ/work779.pdf.
109
IMF (2020), Fintech Credit Risk Assessment for SMEs: Evidence from China, IMF working paper
WP/20/193. Viewed at: https://www.imf.org/en/Publications/WP/Issues/2020/09/25/Fintech-Credit-Risk-
Assessment-for-SMEs-Evidence-from-China-49742.
110
PBOC. Viewed at: http://www.pbc.gov.cn/goutongjiaoliu/113456/113469/3333848/index.html.
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4.193. On 10 November 2020, the State Administration for Market Regulation (SAMR) issued a
consultation draft of the Anti-Monopoly Guidelines on the Sector of Platform Economies, aiming to
prevent monopolistic behaviour by Internet platforms to ensure fair competition and strengthen
anti-monopoly law enforcement. All companies engaged in Internet platform business must be
subject to anti-monopoly supervision. The draft expressly refers to the Anti-Monopoly Law, and set
rules to discipline the online market, in compliance with the provisions already stated under the
Anti-Monopoly Law.
4.194. Since 4 September 2017, initial coin offerings (ICOs), i.e. fundraising in which virtual
currencies (such as Bitcoin) are raised by way of the sale and circulation of digital tokens, are strictly
prohibited in China, pursuant to the Announcement on Preventing Risks relating to Fundraising
through Token Offerings. Consequently, financial institutions and non-bank payment institutions are
prohibited from providing products or services for token fundraising activities, including account
opening, registration, trading, clearing, settlement, and other services.
4.195. On 21 March 2018, the PBOC circulated Announcement No. 7, 2018, which allows qualified
foreign institutions to provide electronic payment services in respect of both domestic transactions
and cross-border transactions. To provide third-party electronic payment services in China, qualified
foreign investors must establish a foreign-invested payment institution and obtain a payment
business operating licence in accordance with the 2010 Administrative Measures on Payment
Services of Non-financial Institutions. In addition, they must store, process, and analyse in Chinese
territory all personal information and financial data collected and generated in China. Where
international transfers of such information are necessary to process cross-border transactions, the
transfer must comply with applicable laws and regulations.
4.196. As a consequence of the reform, on 31 December 2020, the US fintech company PayPal
completed a stake acquisition deal that makes it the first foreign company to offer digital payment
services in China. PayPal acquired a 30% stake in Gopay, a Chinese provider of electronic payment
services, more than a year after its purchase of 70% of Gopay, making it the sole owner.
4.4.2 Telecommunications
4.4.2.1 Overview
4.197. China is the world's largest telecommunications market in terms of mobile, fixed-telephone,
fixed-broadband, and mobile broadband subscriptions.111 In 2020, information, communication, and
computer services accounted for 16.5% of total services exports (14.3% in 2019) and 8.7% of total
services imports (5.3% in 2019).
4.198. According to the authorities, China's telecommunications policy aims at guiding and
facilitating a sound and high-quality development of the information and communication industry,
including guiding technological transformation and upgrades, optimizing the allocation of resources
and productive factors, improving the accessibility and affordability of information and
communication services, maintaining fair market competition environment, safeguarding the
legitimate interests of market entities and users, and ensuring network security.
4.199. China's telecommunications market has experienced noticeable development in recent

years, in particular with regard to optical broadband, and 4G and 5G networks. As at
September 2020, the proportion of optical fibre users reached 93%, and the proportion of 4G users
reached 80%. China was ranked 80th of 176 economies in the 2017 International Telecommunication
Union (ITU) Information and Communications Technology Development Index, moving up
three places from the previous year.112
4.200. The main economic characteristics of the telecommunications sector and their recent
evolution are described in Box 4.2. Table 4.22 provides average telecom prices in 2019 in China,
computed by the ITU as a percentage of the gross national income (GNI) per capita. The authorities
indicate that China's telecommunications charges are determined by the market and have been set
by telecom companies since 2014. They also note that since 2018 the out-bundle charges for local
111
ITU (2018), Measuring the Information Society. Viewed at: https://www.itu.int/en/ITU-D/Statistics/
Documents/publications/misr2018/MISR-2018-Vol-2-E.pdf.
112
ITU, ICT Development Index 2017. Viewed at: https://www.itu.int/net4/ITU-D/idi/2017/index.html.
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mobile calls have been in the range of CNY 0.10-CNY 0.15/minute, and the charges for international
long-distance calls were CNY 0.49-CNY 2.99/minute, while the charges for local and international
calls made by fixed lines have been about CNY 0.10/minute and CNY 0.39-CNY 6.88/minute,
respectively.
Box 4.2 Selected indicators of the telecommunications sector, 2020
Total telephone subscribers (per 100 inhabitants): 1.776 billion (126.9)

Mobile phone subscribers (% total telephone subscribers): 1.594 billion (89.8)
Internet users (per 100 inhabitants): 989 million as at end-March 2020 (70.4)
Broadband Internet subscribers: 484 million
Main actors
Number of companies providing value-added telecoms services: about 85,000 nationwide by end-June 2020.
Names and market shares of the leading companies for fixed telecoms services (2020): China Telecom
(61.9%), China Unicom (26.0%), and China Mobile (12.1%).
Name and market shares of the leading companies for mobile telephones services (2020): China Mobile
(58.8%), China Telecom (22.0%), and China Unicom (19.2%).
Name and market share of the broadband Internet services (2020): China Telecom (38.7%), China Mobile
(43.5%), and China Unicom (17.8%).
Foreign ownership participation in telecom companies (2019): In the basic telecoms sector, the proportions of
overseas public shares of China Telecom, China Mobile, and China Unicom were 17.15%, 27.28%, and 20.1%,
respectively.
By end-2020, a total of 395 foreign-invested enterprises had entered China's telecoms market, mainly engaged
in information services and e-commerce-related businesses.
State ownership (2019): In the field of basic telecoms services, the proportions of state-owned shares of
China Telecom, China Mobile, China Unicom, and China Broadcasting Network were 82.85%, 72.72%,
52.10%, and 100.00%, respectively.
Table 4.22 Telecoms prices as a percentage of GNI per capita, 2019

China Asia and Pacific World
Mobile voice prices (% GNI per capita) 0.4 2.5 4.3
Mobile data prices (% GNI per capita) 1.0 2.7 4.3
Fixed-broadband prices (% GNI per capita) 0.6 6.4 10.3
Source: ICT, Price Trends 2019. Viewed at: https://www.itu.int/en/mediacentre/Documents/Documents/ITU-

Measuring_Digital_Development_ICT_Price_Trends_2019.pdf.
4.201. According to the ITU, under the universal service policy, which has remained unchanged
since the previous Review, enterprises invested more than USD 6.2 billion between 2015 and 2017
to build optical fibre in 130,000 administrative villages, covering 95% of the nation's administrative
villages.113 The authorities did not confirm these figures.
4.4.2.2 Regulatory framework
4.202. The regulatory regime for telecoms services in China has been described in detail in previous
Reviews114 and has remained largely unchanged. The principal statute governing telecoms services
remains the 2000 Telecoms Regulations (last amended in 2016). It is supplemented by a large body
of implementing regulations covering a wide range of matters, including licensing, fee collection,
interconnectivity, and foreign participation. For example, the Classified Catalogue of
Telecommunications Services 2015 lists the classifications of basic telecoms service and value-added
telecoms service. These classifications affect the licensing and administration of a particular telecoms
service. Telecoms licences are granted for a limited scope of operation, i.e. the holder of a telecoms
licence is only permitted to carry out the activities specified in the licence.
4.203. The MIIT is the main regulator of the telecommunications and information service market.
It is in charge of the licensing and administration of telecoms services and access tariffs and charges.
113
ITU (2018), Measuring the Information Society Report 2018, Vol. 2. Viewed at:
https://www.itu.int/en/ITU-D/Statistics/Documents/publications/misr2018/MISR-2018-Vol-2-E.pdf.
114
Notably in WTO documents WT/TPR/S/375/Rev.1, 13 July 2018, paras. 4.119-4.142;
WT/TPR/S/342/Rev.1, 12 October 2016, paras. 4.29-4.43; WT/TPR/S/300/Rev.1, 7 October 2014,
paras. 4.37-4.47; WT/TPR/S/264/Rev.1, 20 July 2012, paras. 165-204; and WT/TPR/S/230/Rev.1, 5 July
2010, paras. 83-98.
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It is also responsible for formulating national telecoms regulations, standards, and policies. The
telecoms administration bureaus of provinces, autonomous regions, and municipalities (the Local
Communications Bureaus) under the MIIT are in charge of administrating telecoms services within
their jurisdictions, as well as the initial review of applications to operate nationwide.
4.204. The regulations on foreign investment in telecommunications services in China are stipulated
in, inter alia, the Special Administrative Measures on Access to Foreign Investment (National
Negative List) and the Pilot Free Trade Zone Special Administrative Measures on Access to Foreign
Investment (PFTZ Negative List). Telecommunications companies are subject to the provision of
telecommunications services pursuant to the market opening commitments made at China's
accession to the WTO. These specify that the foreign share ratio for value-added telecommunications
services (except for e-commerce, domestic multi-party communications, storage-forwarding, and
call centres) shall not exceed 50%; for basic telecommunications, the controlling stake shall be held
by the Chinese national. Within the PFTZs, there is no restriction on the foreign share ratio for
investment in information services (application store only) and Internet access service. For
investment in domestic virtual private network (VPN) services, the foreign share ratio shall not
exceed 50%.
4.205. Pursuant to the Mainland China and Hong Kong, China/Macao, China Closer Economic
Partnership Arrangement, Internet data centre (IDC) services are open to service providers from
Hong Kong, China and Macao, China, and the share ratio of Hong Kong, China or Macao, China
service providers shall not exceed 50%.
4.206. Since 2018, notable developments in the telecommunications sector have included the
launch by China of its first 5G licences, a new law on e-commerce, regulations on cybersecurity, the
launch of a number portability programme, measures to promote facility sharing, and a series of
measures to further modernize the telecoms sector.
4.4.2.2.1 Developments in 5G
4.207. On 6 June 2019, the MIIT issued the Basic Telecommunication Business Operation License
to three state-owned carriers (China Telecom, China Mobile, and China Unicom) and a state-owned
broadcasting company (China Broadcasting Network) to approve their operation of "fifth generation
digital cellular mobile communication services". As a consequence, the MIIT revised the
Telecommunication Services Classification Catalogue (2015) to accommodate the new item. The
2019 revised Catalogue adds "A12-4 Fifth generation digital cellular mobile communication services"
to "A12 Cellular mobile communication services" under Category A "Basic telecommunication
services". The new item refers to voice, data, multimedia, and other services provided through
fifth-generation (5G) digital cellular mobile communication networks. According to the authorities,
by end-June 2020, more than 400,000 5G base stations had been built.
4.208. In March 2020, the MIIT issued the Notice on Promoting the Accelerated Development of 5G.
It provides guidance for the industry to fully promote 5G network construction, application
popularization, technological development, and security assurance.
4.209. In November 2019, the MIIT issued the Plan for Advancing the 512 Program on 5G Plus
Industrial Internet, a policy document to facilitate the integrated development of 5G and industrial
Internet. It aims to promote the use of 5G technologies to upgrade five public service platforms
by 2022.
4.4.2.2.2 Facility sharing
4.210. On facility sharing, the MIIT continues to require basic telecommunications enterprises to
carry out infrastructure construction in accordance with the requirements of sharing basic
telecommunications facilities or co-construction. In addition, Internet access service providers in
China can provide Internet access services to users by leasing the network resources from basic
telecommunications companies and wired access facilities service providers. In June 2020, China
issued the Implementation Opinions on Supporting the Accelerated Development of 5G Networks
Through the Co-construction and Sharing of Telecommunication Infrastructure. According to the
authorities, as at end-June 2020, the sharing rate of newly built towers in China stood at 90%, which
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is equivalent to sharing the construction of 780,000 towers and saving a total of CNY 140 billion. As
at end-2020, China's telecom operators had opened more than 330,000 shared 5G base stations.
4.4.2.2.3 Number portability
4.211. In November 2019, in order to further improve the service quality of the telecommunications
industry, China officially rolled out a mobile number portability programme, which allows mobile
users to keep their phone numbers when switching to a new mobile provider. According to the
authorities, as at end-2020, 19.18 million subscribers had taken advantage of number portability,
accounting for 1.48% of the total number of mobile subscribers. As a first step in this programme,
the MIIT had carried out a number portability trial in Tianjin and Hainan Provinces in November 2010
and expanded it to five provinces in 2017. As at end-June 2017, number portability had been
employed by more than 790,000 subscribers in five provinces.115
4.4.2.2.4 Spectrum management
4.212. There were also new developments in the framework of spectrum management. In 2019,
the MIIT promulgated provisions on the management of the use of the frequencies of enhanced
Machine-Type Communication (eMTC) systems, specifying the usage frequency of eMTC systems,
the management requirements of base station terminals, and other content. The Ministry also issued
Announcement No. 52, 2019, which defines the catalogue, radio frequency specifications, and
management requirements of micro-power short-range radio transmitting equipment, with a view
to further standardizing the management of such equipment.
4.4.2.2.5 Cloud computing
4.213. The authorities state that since the previous Review, no substantial progress has been made
with regard to cloud-enabled services regulations. The Notice on Standardizing Cloud Service Market
and Facilitating the Sound Development of the Industry, which was adopted in 2017, has not yet
been implemented. However, the authorities note that the Notice sets a clear path and institutional
guarantees for foreign investors to participate in China's market for cloud-enabled services. While
cloud services are not open to foreign investment116, the authorities allow the joint provision of cloud
services through contractual partnerships between Chinese and foreign enterprises, where the
Chinese enterprise applies for a cloud services licence to conduct a partnership with a
foreign-invested enterprise.
4.4.2.2.6 Cybersecurity
4.214. The Cybersecurity Law, which entered into force on 1 June 2017, remains in force; it aims
"to ensure network security, to safeguard cyberspace sovereignty, national security and the societal
public interest, to protect the lawful rights and interests of citizens, legal persons and other
organizations, and to promote the healthy development of economic and social informatization".
Article 37 of the Law requires "critical information infrastructure" operators (CIIOs) to store within
the mainland of China all personal information and "important data" gathered or produced within
the mainland of China.117 The Law further stipulates conditions regarding a security assessment of
locally stored data. During the review period, in order to implement the Law, several regulations,
administrative measures, and technical specifications were adopted or published for public comment.
According to the authorities, regulations concerning CIIOs are being drafted. On 28 May 2019, the
Cyberspace Administration of China (CAC) released, for public comment, draft measures to clarify
the definition of "important data". In addition, the Draft Measures on Security Assessment of Cross-
Border Transfer of Personal Information were released on 13 June 2019. With respect to cross-
border transfer of scientific data, on 17 March 2018, the Measures for the Administration of Scientific
115
WTO document WT/TPR/S/375/Rev.1, 13 July 2018.
116
In China's Classification Catalogue of Telecommunications Services (2015 Version), cloud services
are a form of Internet data centre (IDC) services for which China did not make a commitment when it acceded
to the WTO.
117
Article 31 states that operators in the following sectors are liable to be designated as CIIOs: public
communication and information services, power, traffic, water resources, finance, public service, e-government
and other critical information infrastructure that if destroyed, suffer a loss of function, or experience a data
leak might seriously endanger national security, national welfare, the people's livelihood, or the public interest.
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Data took effect. The Measures include basic rules for managing scientific data in China and would,
inter alia, regulate cross-border transfers of this type of data.
4.215. Regarding network security, Article 21 of the Cybersecurity Law stipulates that China shall
implement a tiered system of network security protection, in which network operators are required
to comply with a Multi-Level Protection Scheme (MLPS). Network operators shall, according to the
requirements of the tiered system, fulfil security protection obligations. The tiered system is a basic
system in the field of network security determined by law. Network operators shall, in accordance
with the significance of their networks in such factors as national security, economic construction
and social life, and the severity of the harm to national security, social order, public interest, and
the legitimate rights and interests of citizens, legal persons, and other organizations, determine the
level of security protection according to the degree of harm to the factors. There are five levels of
network security protection, escalating from Level 1 to Level 5. A network at Level 2 or above shall
be filed with a public security authority at or above the prefectural level. In order to implement the
tiered system, China issued a series of technical standards, and improved the standard system with
technological innovation and development. In line with the MLPS's implementation, the SAMR issued
a series of national standards on 13 May 2019, to provide detailed technical requirements for
enhancing the MLPS.118 These new national standards, together with the Regulation on the
Cybersecurity Multi-level Protection Scheme (which came into force on 1 December 2020),
constitute a substantial base for what is referred to as MLPS 2.0, as they impose heightened
regulatory requirements compared with MLPS 1.0. Public security organs have strengthened their
supervision, inspection, and guidance on the implementation of the tiered system to ensure the
security of network operation. Any network operator who fails to perform the security protection
obligations as prescribed by Article 21 shall be punished in accordance with Article 59 of the
Cybersecurity Law.
4.216. The Regulation on Internet Security Supervision and Inspection by Public Security Organs
(promulgated on 15 September 2018 and came into effect on 1 November 2018) is another
regulation along the lines of Internet protection in China.119 It regulates the authorities of Public
Security Bureaus (PBSs) in inspecting Internet service providers, including Internet information
providers, Internet cafes, and data centres. Under the Regulation, PBSs must comply with legal
authorities and procedural requirements when entering business sites, reviewing and copying
relevant information, and checking technical measures in place to safeguard network and
information security.
4.217. The Encryption Law was also enacted on 26 October 2019 and came into effect on
1 January 2020.120 It encourages enterprises to voluntarily apply to qualified testing and certification
agencies for the testing and certification of their commercial encryption products. However, testing
and certification might be mandatory for certain commercial encryption products and services that
may affect "national security, national welfare and people's livelihood, and society's interest" and
shall be included in the Catalogue of Critical Network Equipment and Network Security-specific
Products.121
4.218. In China's ongoing efforts to regulate its cyber domain, on 17 January 2017, the MIIT issued
the Circular on Cleaning up and Regulating the Internet Access Service Market, which is legislation
that prohibited the use of VPNs as at 31 March 2018. However, it would appear that companies in
China can still apply to the Government to offer VPNs for commercial purposes.
4.219. There were also new developments regarding the protection of personal information. On
6 March 2020, the SAMR and the Standardization Administration of China (SAC) jointly published
the Information Security Technology – Personal Information (PI) Security Specification
(GB/T 35273-2020) to replace the 2017 version (GB/T 35273-2017). The Specification took effect
on 1 October 2020. The Specification is a national standard (not mandatory, in principle), as well as
118
These standards include: Information Security Technology – Baseline for Classified Protection of
Cybersecurity (GB/T 22239-2019); Information Security Technology – Technical Requirements of Security
Design for Classified Protection of Cybersecurity (GB/T 25070-2019); and Information Security Technology –
Evaluation Requirements for Classified Protection of Cybersecurity (GB/T 28448-2019).
119
State Council. Viewed at: http://www.gov.cn/gongbao/content/2018/content_5343745.htm.
120
NPC. Viewed at:
http://www.npc.gov.cn/npc/c30834/201910/6f7be7dd5ae5459a8de8baf36296bc74.shtml.
121
CAC, Critical Network Equipment and Special Network Security Product Catalog (First Batch). Viewed
at: http://www.cac.gov.cn/2017-06/09/c_1121113591.htm.
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a recommended guideline that reinforces the Cybersecurity Law. 122 The authorities rely on it as a
benchmark to determine whether business operators follow the country's data protection rules. The
2020 Specification seeks to ensure that individuals or entities that provide their PI (subjects) have
a certain degree of autonomy. It also regulates the behaviour of those who collect PI for providing
a product or service (controllers). On some issues, such as the collection of biometric data or when
sharing and transferring PI, the Specification states that controllers must obtain explicit consent,
i.e. an authorized statement on either paper or an electronic format affirming the collector has the
right to process the PI of the subject. Collectors are also required to inform subjects on their intended
purposes, method of collection, scope, and storage time. Regarding cross-border transfer, Article 9.8
of the Specification states that PI collected and generated in China can be transferred overseas, but
the controller must comply with all relevant national regulations and standards. On the specific
legislation concerning PI protection, on 21 October 2020, China published for public comment the
first draft of the Personal Information Protection Law123, the country's first comprehensive law
regulating, inter alia, the processing of PI.124
4.220. China also implemented the provision of the Cybersecurity Law concerning national security
review requirements for CIIOs purchasing certain network products and services. This was made
through the Measures on Cybersecurity Review, and was jointly adopted on 27 April 2020 (effective
1 June 2020) by the CAC and 11 other government agencies.125 The Measures seek to implement
Article 35 of the Cybersecurity Law, which established a cybersecurity review requirement on
network products and services procured by CIIOs. Purchases of network products or services with a
potential effect on national security are subject to the cybersecurity review system outlined under
the Measures. Such network product and services include core network devices, high-performance
computers and servers, mass storage devices, large databases and application software, network
security devices, cloud computing services, and other network products and services that have a
significant impact on the security of the critical information infrastructure.
4.221. The Measures establish an interagency cybersecurity review body, which consists of
members from 12 government agencies – the CAC, the NDRC, the MIIT, the Ministry of Public
Security, the Ministry of National Security, MOFCOM, the Ministry of Finance, the PBOC, the SAMR,
the National Radio and Television Administration, the National Administration of State Secrets
Protection, and the State Cryptography Administration – and is led by the CAC. The Office of
Cybersecurity Review is established in the CAC.
4.222. Under the Measures, CIIOs shall conduct an assessment of potential national security risk
exposure prior to the procurement of network products or services. If the self-assessment identifies
a national security risk, the CIIO shall report the case to the Office of Cybersecurity Review for a
cybersecurity review. However, if a member of the interagency cybersecurity review body believes
the network products or services used by the CIIO affect or may affect national security, the Office
of Cybersecurity Review shall report the case to the CAC and initiate a cybersecurity review without
an application from a CIIO.
4.4.2.2.7 E-commerce
4.223. On 31 August 2018, the Standing Committee of the NPC passed the E-commerce Law, which
came into force on 1 January 2019. The Law applies to all business activities of selling goods and/or
providing services through information networks such as the Internet, with the exception of financial
products and services or services that provide news, audio, and video programmes; publications; or
cultural products. It contains provisions on, inter alia: (i) the definitions of e-commerce operators,
e-contracts, and e-payments; (ii) guarantees for e-commerce transactions; (iii) data protection and
promotion of consumer protection; (iv) fair competition and mechanisms for dispute resolution;
(v) cross-border commerce; and (vi) the provision of substantial civil and criminal penalties.
122
Dai, K. and Deng, J. (2019), "A 15-Step Guide to Data Protection, Privacy and Cybersecurity in
China", Swiss Chinese Law Review Journal, Issue 2. Viewed at: https://www.sclalawreview.org/a-15-step-
guide-to-data-protection-privacy-and-cybersecurity-in-china/.
123
China Law Insight, Personal Information Protection Law (Draft): A New Data Regime, 11 November
2020. Viewed at: https://www.chinalawinsight.com/2020/11/articles/compliance /personal-information-
protection-law-draft-a-new-data-regime/.
124
NPC. Viewed at: http://www.npc.gov.cn/flcaw/more.html.
125
CAC. Viewed at: http://www.cac.gov.cn/2020-04/27/c_1589535450769077.htm.
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4.224. According to Article 2 of the E-commerce Law, e-commerce refers to business activities that
sell goods or provide services via information networks like the Internet. Article 9 further defines
e-commerce operators to be natural persons, legal persons, and unincorporated organizations that
engage in the business activities of selling merchandise or providing services on the Internet or other
information networks. As such, the E-commerce Law mainly applies to the following three types of
operators: (i) platform operators, i.e. any legal persons or unincorporated organizations that provide
a space for digital business, transaction matching, information release, and other services to
facilitate parties in an e-commerce transaction; (ii) operators on platforms, i.e. third-party
merchants that sell goods or provide services on e-commerce platforms; and (iii) online sellers,
i.e. other e-commerce players doing business through their own websites or through other online
channels, such as social media applications.
4.225. By law, all e-commerce operators, except individuals who sell their own agricultural products
or handcrafts or who carry out sporadic and small transactions, are required to obtain a business
licence. E-commerce operators must fulfil their taxation obligations and could enjoy preferential tax
treatments according to relevant laws and regulations.
4.226. Regarding intellectual property (IP) protection, the E-commerce Law holds liable both
counterfeiters and e-commerce operators that fail to take appropriate measures to prevent sellers
in violation of intellectual property rights (IPRs). It also provides that IP holders can notify a platform
owner of an alleged infringement, and the platform owner has the obligation to prevent the trade of
the infringed good pending investigation. Platform operators that fail to fulfil their responsibilities in
terms of IP protection within a specified time period are punishable by a fine ranging from
CNY 50,000 to CNY 2 million.
4.227. Article 17 of the E-commerce Law further fosters consumer protection by requiring
e-commerce operators to disclose truthful, accurate, and timely information concerning commodities
or services and to avoid engaging in misleading and deceptive practices.
4.228. Article 22 of the E-commerce Law spells out fair competition obligations for all e-commerce
operators, with special emphasis on those with dominant market positions. Operators with
advantages in the market due to technology or number of users are prohibited from abusing their
position to exclude or restrict competition.
4.229. On consumers' privacy protection, pursuant to Articles 23 and 24 of the Law, e-commerce
operators must abide by existing Chinese laws and regulations in respect of protection of personal
data when collecting and using users' personal data. The Law further requires e-commerce operators
to expressly specify to users the procedures for inquiring about, correcting, and deregistering their
accounts. Operators are required to deal with personal data in a timely manner if users request to
see, correct, or delete their data. Further efforts are also ongoing in connection with personal data
protection, as China unveiled its draft of the Personal Data Protection Law for public consultation on
21 October 2020. Once adopted, the Law will, inter alia, clarify state agencies' role in protecting
individuals' data and implement consent-based rules for processing information.
4.230. Regarding foreign business, the E-commerce Law provides that China shall encourage
cross-border e-commerce (CBEC) development. In practice, the authorities have been promoting
CBEC (activities of purchasing or selling products via online shopping across national borders). On
27 April 2020, the State Council issued the Approval of the Establishment of Integrated Pilot Areas
for Cross-border E-commerce in 46 Cities and Areas (Guo Han No. 47, 2020). This brought the total
number of CBEC pilot zones to 105. In December 2019, the authorities extended the List of Goods
under Cross-border E-commerce Retail Importation to allow more foreign goods to be delivered to
Chinese consumers through the CBEC retail importation programme.126
4.231. Oversees enterprises involved as vendors in CBEC must be registered with the General
Administration of Customs (GACC). In practice, they must entrust a Chinese company as "domestic
agent" to handle the registration procedures. The domestic agent must be a legal entity registered
with the SAMR.127 They must also designate a Chinese agent, which will be held directly accountable
by the authorities for consumer complaints, product recall, and other product quality or safety
MOFCO. Viewed at: http://cws.mofcom.gov.cn/article/swcjzc/202001/20200102929369.shtml.

126
Announcement on Matters Concerning the Supervision of Retail Imports and Exports in Cross-Border
127
E-commerce (GACC Announcement No. 194, 2018).

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obligations. Domestic enterprises shall undergo registration formalities with Customs in their
location, in accordance with the provisions on the administration of the registration of customs
declaration entities.128
4.232. CBEC pilot areas have promoted the development of innovative systems such as import
e-commerce platforms, export e-commerce platforms, third-party payment platforms, and logistics
companies.
4.233. The E-commerce Law provides that e-commerce disputes can be settled by: (i) negotiating;
(ii) requesting mediation by consumer organizations, industry associations, or other legally
established mediating organizations; (iii) filing complaints with relevant authorities; (iv) filing for
arbitration; or (v) instituting legal proceedings. Additional measures to bolster e-commerce include
the establishment of Internet courts. Internet courts in Beijing and Guangzhou were formally
established in September 2018, following the opening of China's first Internet court in Hangzhou
in 2017 (Section 2.1). Internet courts were established to hear matters relating to e-commerce and
online transactions. In general, the entire litigation process is conducted online. Internet courts may
decide to complete part of the litigation process offline, upon application by the litigants or due to
the needs of trying cases. In September 2018, the Supreme People's Court also issued the Provisions
on Several Issues Concerning the Trial of Cases by Internet Courts, to regulate the litigation activities
of Internet courts.
4.4.3 Transport
4.234. The share of transport, storage, and communication in GDP decreased from 4.4% in 2018
to 4.1% in 2020 (Table 1.2). Transportation is one of China's major traded services; during the
review period, China maintained a slight deficit in transportation services trade. In 2018, there were
1.8 million people employed in the railway transportation sector, 3.6 million in road transport,
0.4 million in water transport, 0.6 million in air transport, and 0.03 million in pipeline transport.
Around 0.3 million people were employed in the associated industries of intermodal transport and
forwarding agencies, and 0.4 million people in loading, unloading, and storage.129
4.235. In value terms, shipping is the main mode of transport for imports and exports of
merchandise goods (Table 4.23). Data were not available on the volume of merchandise trade
transported through the different modes.
Table 4.23 Value of merchandise goods imported to and exported from China through
different transport modes, 2018-20
(USD million)
2018 2019 2020
Maritime transport
- Imports 1,191,383.7 1,172,461.0 1,033,210.4
- Exports 1,655,367.9 1,660,002.5 1,502,594.3
Air transport
- Imports 502,385.0 488,220.0 450,972.1
- Exports 402,449.4 405,995.6 410,163.5
Railway transport
- Imports 20,284.2 20,284.7 22,989.2
- Exports 29,618.1 34,887.5 49,049.1
Road transport
- Imports 364,768.3 338,584.4 314,322.7
- Exports 376,464.6 366,397.6 327,853.0
4.236. The Ministry of Transport (MOT) remains responsible for road, water, and air transport, as
well as administration of rail transport.
128
Announcement on Launching the Pilot Program of Supervision over Business-to-Business Export in
Cross-Border E-commerce (GACC Announcement No. 75, 2020).
129
http://www.stats.gov.cn/tjsj/ndsj/2019/indexeh.htm.
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4.4.3.1 Maritime transport
4.237. China is the world's third ship owning country in terms of cargo-carrying capacity, accounting
for 6,896 ships in 2020 with a total dead weight tonne (DWT) capacity of 128,892,849. More than
4,500 of these ships operated under the national flag (43.56% of total in DWT terms), while
2,300 Chinese-owned ships operated under a foreign flag (56.44% of total in DWT terms). 130 In
order to encourage qualified Chinese-funded international "Flag of Convenience" ships to return to
China, ships that were declared for import and were registered between September 2016 and
September 2019 were exempt from customs duties and import VAT. 131 A total of 80 vessels were
approved for duty-free import, of which 39 vessels went through registration procedures in China.
4.238. China's main shipping law is the Maritime Law, which became effective in 1993. 132 There
were no amendments to the Law during the review period. China's commitments related to maritime
transport under the General Agreement on Trade in Services (GATS) are described in detail in a
previous Review.133
4.239. China's major state-owned shipping companies include China COSCO Shipping Corporation
Limited (COSCO Shipping) and China Merchants Group. COSCO Shipping is the world's biggest
shipping company, with a fleet of 1,371 vessels with a combined capacity of 109.33 million DWT.
Reportedly, it has the world's biggest container fleet, as well as dry bulk vessels, tankers, and
general and specialized cargo vessels.134 The shipping activities of the conglomerate China
Merchants Group are undertaken through its subsidiaries China Merchants Energy Shipping Co. Ltd.
(which specializes in energy and bulk cargo transportation), Xunlong Shipping, and
Hong Kong, China Ming Wah Shipping Co. Ltd. Reportedly, China Merchants Group is the world's
fourth-largest energy transportation enterprise.
4.240. There have been no changes to China's maritime cabotage policies during the review period;
domestic water transport companies are required to have Chinese parties as the controlling
shareholders (Table A2.3). The Maritime Law stipulates that maritime transport and towage services
between ports in China must be undertaken by ships flying the Chinese flag, except as otherwise
provided for by laws or administrative regulations. The Regulations on the Administration of
Domestic Water Transport stipulate that operators of water transport may not operate domestic
water transport business with foreign ships. However, with the permission of the competent
department of transport under the State Council, operators of water transport may temporarily
operate a transport business with foreign ships subject to time and voyage limitations. Between
January 2018 and February 2020, eight foreign ships were so authorized.
4.241. In 2019, the State Council issued the Decision on Revising Certain Administrative Rules and
Regulations (State Council Decree No. 709), and revised the Regulations on International Maritime
Transportation, which lifted the restrictions on foreign investment in international shipping and
international shipping agency services in China.135 Previously, international maritime companies
were limited to Chinese-foreign equity/cooperative joint venture operations.136 The authorities
confirm that there are no requirements for government cargo to be transported on domestically
flagged ships.
130
UNCTAD (2020), Review of Maritime Transport 2020. Viewed at:
https://unctad.org/system/files/official-document/rmt2020_en.pdf.
131
Notice of the State Taxation Administration of the Ministry of Finance and the General Administration
of Customs on the List of the Fourth Batch of Chinese-funded "Flags of Convenience" Vessels Enjoying Import
Tax Preferential Policies. Viewed at:
http://www.chinatax.gov.cn/chinatax/n810341/n810825/c101434/c29917165/content.html.
132
Maritime Law of the People's Republic of China. Viewed at:
http://www.lawinfochina.com/display.aspx?lib=law&id=191.
133
134
COSCO Shipping, Group Profile. Viewed at: http://en.coscoshipping.com/col/col6918/index.html.
135
Regulations on International Maritime Transportation, as revised in 2019. Viewed at:
http://www.gov.cn/zhengce/content/2019-03/18/content_5374723.htm.
136
Catalogue of Industries for the Guidance of Foreign Investment (2017 Revision), referenced in WTO
document WT/TPR/S/375/Rev.1, 14 September 2018.
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4.242. In 2018, the Ship Tonnage Tax Law was enacted, at the same time the Provisional
Regulations of the Ship Tonnage Tax were repealed.137 Ships entering domestic ports from ports
outside China are subject to a ship tonnage tax. The Law sets preferential rates for Chinese taxable
ships and taxable ships whose country of registry has signed treaties or agreements that mutually
grant MFN treatment clauses of ship taxes and fees. For other taxable ships, the ordinary tax rate
applies. The tax is levied in accordance with the net tonnage of the ship and the duration of the
tonnage tax licence. The tonnage tax payable is calculated by multiplying the net tonnage of the
ship by the applicable tax rate (Table 4.24). Various exemptions apply, including fishing and breeding
fishing boats. The passage of the Law does not change the tax framework and burden, but it does
raise the status of the previous administrative regulation to NPC law (as required by the
2015 amendment to the Law on Legislation).138
Table 4.24 Ship tonnage tax rates, 2020

Ordinary tax rate according to Preferential tax rate according
licence period to licence period
1-year 90-day 30-day 1-year 90-day 30-day
licence licence licence licence licence licence
No more than 2,000 net tonnes 12.6 4.2 2.1 9.0 3.0 1.5
2,000-10,000 net tonnes 24.0 8.0 4.0 17.4 5.8 2.9
10,000-50,000 net tonnes 27.6 9.2 4.6 19.8 6.6 3.3
Over 50,000 net tonnes 31.8 10.6 5.3 22.8 7.6 3.8
Source: FAO, Vessel Tonnage Tax Law of the People's Republic of China. Viewed at:
4.243. According to the authorities, during the COVID‑19 pandemic, the MOT established an
International Logistics Guarantee Coordination Mechanism, and set up international logistics work
shifts for 24-hour entity operations and offered various guarantee measures for maritime
transportation enterprises, including temporarily exempting port construction charges of imported
or exported goods (Section 3.1.4), reducing cargo dues and port facility security charges, extending
vessel certificates, offering online seaman training and licence renewal, formulating pandemic
prevention guides, and assisting shipping companies in changes of shifts by seamen.
4.244. By end-2019, China had 408 ports. According to United Nations Conference on Trade and
Development (UNCTAD), in 2019, four of China's ports were in the top five global container ports
(in order of throughput: Shanghai, Ningbo-Zhoushan, Shenzhen, and Guangzhou).139 The authorities
state that no state-owned ports are operated by third parties (including foreign companies) under
concession agreements. There are no restrictions on the share ratios of FDI in investment in Chinese
ports. Information was not available as to whether there is any foreign investment in Chinese ports
in practice. Various SOEs provide port services.
4.245. The Port Law is the main law governing the construction and operation of ports. In 2018,
China revised the Law to allow port tally businesses to operate without having to obtain a permit.140
4.246. According to the Catalogue of Central Determined Prices and the Regulation on Port Charges,
port operating service charges are divided into market-regulated price, government-guided price,
and government pricing. Among them, the government-guided and government-priced port charges
137
FAO, Vessel Tonnage Tax Law of the People's Republic of China. Viewed at:
138
Library of Congress, China: Tobacco Leaf Tax and Vessel Tonnage Tax Laws Passed, 19 January
2018. Viewed at: https://www.loc.gov/law/foreign-news/article/china-tobacco-leaf-tax-and-vessel-tonnage-
tax-laws-passed.
139
UNCTAD (2020), Review of Maritime Transport 2020. Viewed at:
https://unctad.org/system/files/official-document/rmt2020_en.pdf.
140
FAO, Law of the People's Republic of China on Ports (Port Law). Viewed at: https://www.ecolex.org/
details/ legislation/law-of-the-peoples-republic-of-china-on-ports-2015-lex-faoc155111/?q=china&type=legis
lation&xdate_min=&xdate_max=. The Port Law was amended in 2018 in accordance with the Decision of the
Standing Committee of the National People's Congress to Amend Four Laws Including the Electric Power Law
(Order No. 23 of the President). Viewed at: http://www.npc.gov.cn/zgrdw/npc/xinwen/2019-01/07/content
2070259.htm. Port tally business is the provision of services, such as tallying and the checking of the apparent
condition of cargo for the consignor, in the cargo handover process.
- 177 -
are decided by the MOT and the NDRC. Market-set port charges, such as port handling lump sum
charges, may be set by port operators themselves.
4.247. With respect to completion of major port infrastructural works in recent years, the authorities
indicate that in December 2017 Phase IV of the Automated Container Terminal of Yangshan Port in
Shanghai was completed and put into operation; reportedly, this terminal is the world's largest single
fully automated terminal. In 2019, Phase II of the Yangtze River Nanjing Section Deepwater Channel
Project was officially put into use. As notified to the WTO, China offers preferential tax policies for
Chinese-foreign equity joint ventures engaged in port and dock construction, as well as for public
infrastructure projects that are particularly supported by the State.141
4.4.3.2 Air transport
4.248. The Civil Aviation Administration of China (CAAC) remains the main regulator of the air
transport industry. The strategy for the sector is contained in the 13 th Five-Year Plan for the
Development of China's Civil Aviation.142 Additionally, the Program of Building National Strength in
Civil Aviation in the New Era was issued on 10 December 2018; it outlines strategic plans, 8 major
tasks, and 33 key measures for the future development of civil aviation.143 In December 2018, minor
amendments were made to the Civil Aviation Law.144 During the review period, regulations on foreign
civil aircraft flight management, civil airport management, and civil aircraft nationality registration
were slightly revised.
4.249. Air connectivity has continued to increase; the number of international routes grew from
739 in 2016 to 953 in 2019, and the number of domestic routes increased from 3,055 to 4,568 over
the same period.145
4.250. As at end-2020, 67 airlines were established in China; 50 were state owned, 9 have foreign
equity participation, and 8 are listed as stock companies. The CAAC has approved 14 private or
private-holding airlines. Information was not available as to whether it is required for persons or
goods to be transported on nationally registered airlines. Restrictions on foreign investment in civil
aviation remain unchanged.
4.251. International scheduled passenger and freight transportation are regulated by bilateral air
services agreements. Since January 2018, China has signed new air service agreements with Congo
(January 2018), Côte d'Ivoire (June 2018), Rwanda (July 2018), Dominica (November 2018), the
European Union (May 2019), the Bahamas (September 2019), and Member States of the Association
of South East Asian Nations (ASEAN) (Protocol III, November 2019). Cabotage remains reserved to
domestic airlines.146 The passenger fares of the domestic civil air routes are subject to prices guided
by the Government (except for competitive areas). Airlines are permitted to raise the fare by no
more than 25% of a benchmark fare. The rationale for maintaining price control is that competition
has not yet developed in some areas of the passenger transportation industry in domestic civil air
routes.
4.252. As a consequence of the COVID‑19 outbreak, international passenger flights from China
dropped dramatically from February 2020, as compared with February 2019, and have remained at
a low level (Chart 4.9). The domestic passenger transport segment also declined significantly in
February 2020, as compared with February 2019, but recovered by end-2020 (Chart 4.10).
141
142
CAAC, 13th Five-Year Plan for the Development of China's Civil Aviation. Viewed at:
http://www.caac.gov.cn/XXGK/XXGK/FZGH/201704/t20170405_43502.html.
143
CAAC, Program of Building National Strength in Civil Aviation in the New Era. Viewed at:
http://www.caac.gov.cn/XXGK/XXGK/ZCFB/201812/t20181212_193452.html.
144
CAAC, Civil Aviation Law (as revised in 2018). Viewed at:
http://www.caac.gov.cn/XXGK/XXGK/FLFG/201510/t20151029_2777.html. The amendments were as follows:
civil airports other than those open to the public shall be put on record; the "quarantine" in Article 103 was
deleted; and the drone authorization clause was included in the Law.
145
http://www.stats.gov.cn/tjsj/ndsj/2019/indexeh.htm; and updated information provided by the authorities.
146
- 178 -
Chart 4.[CHN] International passenger flights, January to December, 2019 and 2020
Chart 4.9 International passenger flights, January to December, 2019 and 2020
60,000
+10.8%
50,000
40,000
2019
30,000 2020
-57.7%
20,000 2020 over 2019:
-73.5%
-81.1% -80.3% -79.7%

10,000 -83.7% -83.5% -82.9%
-85.7% -83.4% -85.0% -85.2%
Source: ICAO. Viewed at: https://data.icao.int/coVID-19/operational.htm

Source: ICAO, Operational Impact on Air Transport. Viewed at: https://data.icao.int/coVID-
19/operational.htm.
Chart 4.[CHN]
Chart Domestic passenger
4.10 Domestic passengerflights, January January
flights, to December,
to2019 and 2020 2019 and 2020
December,
400,000 +4.5%
-3.1% +2.6% +2.3

-8.4% -3.4%
350,000
-17.9%
300,000
-25.4%
250,000
2019
200,000 2020
-48.3%
-53.5%
-56.4%
150,000
2020 over 2019:
-72.2%
-22.9%
100,000
50,000
Source: ICAO.
Source: ICAO, Viewed at: https://data.icao.int/coVID-19/operational.htm
Operational Impact on Air Transport. Viewed at: https://data.icao.int/coVID-
19/operational.htm.
4.253. In order to respond to the COVID‑19 outbreak and mitigate its impact on the development
of the aviation industry, the CAAC has taken the following measures: (i) the Guidelines for
Preventing Spread of Coronavirus Disease 2019 (COVID‑19) Airlines and Airports were issued and
updated seven times; (ii) the pandemic prevention and control measures for civil aviation operations
were adjusted and refined according to the needs of epidemic prevention and control; prevention
measures on both human beings and goods were strengthened; and prevention and control
requirements for cargo flights and cargo operations were enhanced; (iii) management measures for
international operation crews were formulated to ensure the smooth flow of international passengers
and cargo; (iv) supportive policies were introduced in early 2020 and have been implemented
(Table 4.25); (v) the management of cargo routes and flights was optimized; (vi) a "green channel"
for the approval of international cargo flights was opened and is available 24 hours a day and 7 days
a week, so as to support the resumption of airlines; this has reportedly greatly reduced approval
times and simplified approval procedures; and (vii) airlines were supposed to use surplus passenger
- 179 -
plans to carry cargo and implement "passenger-to-cargo" flights under the premise of ensuring
safety.
Table 4.25 CAAC policies supporting active response to the COVID‑19 outbreak
Areas Policies
Proactive financial • Implement favourable policies, including exemption from payment by airlines into
and economic civil aviation development fund for landing. Ensure preferential measures for the
policies civil aviation industry are effectively implemented.
• Implement policies of financial support from the Central Government treasury during
the COVID‑19 outbreak to international scheduled passenger flights and major
transport flight missions deployed by the Joint Prevention and Control Mechanism of
the State Council.
• Add incentive support for epidemic containment missions carried out by general
aviation enterprises by fully leveraging on existing subsidy policies.
Fee reductions and • Airport authorities to exempt airlines from charges associated with the operation of
burden alleviation air transport services and ground handling for major transport flight missions
deployed by the Joint Prevention and Control Mechanism of the State Council. Air
traffic control entities to exempt airlines from approach command charges and route
navigation service charges.
• Reduced charges for airports and air navigation services on domestic and foreign
airlines and airlines from Hong Kong, China; Macao, China; and Chinese Taipei
regions. Reduced benchmark for landing charges at Category I and II airports by
10%; reduced benchmark of difference between purchase and sales of jet fuel for
domestic flights of domestic airlines by 8% (effective from 23 January 2020).
• Information service providers and subordinate public entities and companies of the
CAAC are encouraged to reduce current charges as appropriate.
Infrastructure • Airport authorities, relevant operation support entities, and civil aviation medicine
investment research institutions may apply for subsidies from civil aviation development fund
expansion for urgent procurements or R&D of dedicated fixed facilities and equipment for
epidemic containment purposes.
• Support for orderly start and resumption of major construction projects in a
scientific manner. Online channels available for project applications to facilitate
acceleration of pre-project formalities and coordinate solutions for priorities and
difficult problems with project start and resumption. Major and emergency
construction projects encouraged to use available trade centres to accelerate bidding
process. Major infrastructure projects of hub airport building, poverty alleviation,
and Blue Sky Protection Campaign to be started/resumed as a matter of priority.
Aim is to complete an annual fixed asset investment of CNY 100 billion.
• Implement current civil aviation development fund-related policies to better support
airlines in improving safety capabilities. Expand investments in airlines' projects of
safety, security, flight operation quality oversight, and application of satellite
navigation and other new technologies. Support safety upgrade modifications of
airlines' airborne equipment, and arrange full subsidy from civil aviation
development fund for B737NG aircraft data frame expansion projects.
• Support planning and construction of strategic infrastructure projects of air traffic
control, IT, fuel supply, and others related to national, industrial, and public
interests by increasing government funding.
Air transport • Increase policy flexibility for introducing aircraft transport capacity. Encourage and
development guide airlines to optimize current capacity and streamline capacity introduction
facilitation procedures.
• Improve approval administration of routes and flights to enable airlines to make
dynamic adjustments to flight plans, international route structure, and traffic rights
entitlement and capacity in line with market demands, by streamlining routes, flight
approval procedures, and slot coordination procedures, and shorten time for
approval on start or resumption of international route operation.
• Extend flight schedule for the 2019 winter season until 2 May 2020, suspending
evaluation of airlines regarding flight schedule execution rate, slot resource
utilization rate, and flight regularity rate. Actively develop slot policies for flight
rescheduling, taking into consideration needs of airlines to resume operation,
exempting domestic flights from evaluation of slot execution rate for the 2020
summer season, and allowing orderly circulation of slots in domestic, international,
and regional slot pools in light of changes in market demands for the 2020 summer
season.
• Actively support and assist airlines with their special operation requirements during
the COVID‑19 outbreak and traffic right and slot issues encountered in resumption
of international route operation, and maintain close communication and coordination
with relevant national civil aviation authorities regarding these issues.
- 180 -
Areas Policies
Administrative • Adjust working methods of administrative approval by enabling online processing
service and off-site processing channels. Optimize approval procedures and introduce
optimization informing and committing mechanism to improve approval efficiency.
• Transform regulation method, improve oversight performance, reduce on-site
supervision, and make full use of new regulation modes, such as off-site
supervision.
Source: CAAC International Cooperation and Service Centre, Notice of CAAC on Policies Supporting Active
Response to COVID-19 Outbreak, 29 April 2020. Viewed at:
http://www.icscc.org.cn/en/content/details_98_1939.html.
4.254. By end-2019, China had 238 certified transportation airports, of which 59 were international.
The Special Administrative Measures for Access of Foreign Investment (National Negative List)
(2020) stipulate that the construction and operation of civil airports must be relatively controlled by
Chinese parties and that foreign parties are prohibited from participating in the construction and
operation of airport towers (Table A2.3); foreign parties may participate in the construction and
operation of airports in accordance with this provision. There have been no changes to the rules on
computer reservation services, repair and maintenance services, and ground-handling services
during the review period.147 China's GATS commitments in air transport were described in a previous
Review.148
4.255. The authorities indicate that major airport infrastructure projects undertaken during the
review period included the new project of Beijing Daxing International Airport and the Phase III
Expansion Project of Shanghai Pudong International Airport.
147
China's rules on computer reservation systems are described in WTO document
WT/TPR/S/300/Rev.1, 7 October 2014. Its rules on repair and maintenance services and ground-handling
services are described in WTO document WT/TPR/S/264/Rev.1, 20 July 2012.
148
- 181 -
5 APPENDIX TABLES
Table A1.1 Bilateral debt stocks to China – public and publicly guaranteed (PPG),
2014-19
Country 2014 2015 2016 2017 2018 2019
Angola 9,283.6 8,789.3 17,623.7 18,592.7 17,493.2 15,724.7
Argentina 657.4 1,702.7 1,800.4 2,803.6 3,133.6 3,237.9
Bangladesh 888.2 919.4 974.5 1,357.0 3,099.1 3,599.6
Belarus 3,198.4 3,681.7 4,026.6 4,371.0 4,742.4 4,975.9
Bolivia, Plurinational State of 550.4 518.8 571.5 713.6 891.7 1,044.9
Brazil 7,705.4 6,211.9 4,720.2 11,224.8 10,328.1 5,042.9
Cambodia 2,374.8 2,683.4 2,797.7 3,137.6 3,424.9 3,608.6
Cameroon 1,904.3 2,139.5 2,385.8 3,076.0 3,154.9 3,626.6
Congo, Democratic Rep. of the 2,051.2 1,948.9 1,902.5 1,837.4 2,040.9 3,751.9
Côte d'Ivoire 569.6 796.4 1,203.6 1,697.4 1,969.3 2,546.6
Djibouti 178.7 518.0 887.5 1,160.5 1,186.5 1,195.5
Ecuador 5,184.0 5,484.3 8,213.4 7,548.9 6,823.6 6,057.4
Egypt 330.4 322.0 1,924.2 2,328.6 4,192.3 4,117.7
Ethiopia 5,465.1 7,271.2 8,243.8 8,734.1 8,655.9 8,351.6
Gabon 808.5 882.8 1,054.0 1,103.8 1,187.9 1,221.7
Ghana 2,369.7 2,469.1 2,332.3 2,101.0 1,893.6 1,824.0
Indonesia 964.9 969.7 1,026.0 1,317.1 1,614.7 1,764.8
Kazakhstan .. .. 257.6 906.2 1,245.0 1,180.6
Kenya 2,229.6 3,140.5 4,345.3 5,844.6 6,902.3 7,493.4
Kyrgyz Republic 1,115.9 1,303.0 1,521.3 1,708.1 1,719.4 1,778.5
Lao People's Democratic Rep. 2,635.6 3,048.7 3,379.5 3,739.1 4,431.5 5,252.0
Maldives 157.3 149.9 306.6 395.4 927.9 1,165.8
Mongolia 571.6 598.4 736.8 814.4 978.9 1,054.7
Mozambique 1,473.5 1,558.4 1,645.6 1,962.0 2,011.7 1,910.1
Myanmar 4,434.2 4,520.4 4,188.3 4,187.0 3,682.2 3,341.7
Nigeria 1,293.1 1,444.7 1,642.0 1,931.0 2,485.1 3,175.1
Pakistan 5,138.9 5,988.7 7,637.0 10,996.2 18,131.7 21,620.0
Senegal 360.0 503.8 902.2 1,142.9 1,315.0 1,225.4
Serbia 542.7 740.3 796.9 924.7 1,046.7 1,241.2
South Africa .. .. .. 1,500.0 1,900.0 2,298.8
Sri Lanka 4,294.7 4,520.8 4,678.4 5,070.1 6,060.9 6,371.6
Sudan 1,677.2 1,579.5 1,487.7 1,421.1 1,330.2 1,246.2
Tajikistan 901.5 1,045.6 1,152.8 1,187.4 1,169.1 1,122.7
Turkey 515.9 524.3 511.1 868.5 1,625.9 1,933.3
Uganda 399.4 762.5 1,098.8 1,545.5 1,945.7 2,149.2
Uzbekistan 1,094.0 1,273.9 1,768.4 1,813.8 1,824.2 1,958.1
Viet Nam 2,284.0 2,071.4 2,046.1 2,112.9 2,037.5 1,787.9
Zambia 1,294.6 1,638.1 2,061.0 2,496.8 2,827.5 3,420.2
Zimbabwe 816.5 1,003.2 1,141.2 1,254.9 1,470.2 1,565.5
Total of countries above 77,714.7 84,725.1 104,992.4 126,927.6 142,901.0 145,984.4
Total debt stocks to China 85,876.5 93,816.3 114,814.7 137,495.6 153,671.1 157,111.9
.. Not available.
Source: World Bank, International Debt Statistics database.
- 182 -
Table A1.2 Merchandise exports by HS section and major HS chapter/subheading,

2015-20
HS section/chapter/subheading 2015 2016 2017 2018 2019 2020
Total exports (USD billion) 2,273.5 2,097.6 2,263.4 2,494.2 2,499.0 2,590.6
(% of total exports)
Exports under processing trade 35.1 34.1 33.5 32.0 29.4 27.1
01 Live animals and products 0.8 0.8 0.8 0.7 0.7 0.6
02 Vegetable products 1.0 1.2 1.1 1.0 1.1 1.1
03 Fats and oils 0.03 0.03 0.04 0.04 0.05 0.1
04 Prepared food, beverages and tobacco 1.2 1.4 1.3 1.3 1.3 1.2
05 Mineral products 1.4 1.4 1.7 2.1 2.1 1.4
27 Mineral fuels and oils 1.2 1.3 1.6 1.9 1.9 1.2
2710 Petroleum oils and oils from 0.8 0.9 1.1 1.4 1.5 1.0
bituminous minerals, not crude …
06 Chemicals and products thereof 4.7 4.7 5.1 5.5 5.2 5.3
29 Organic chemicals 1.9 2.0 2.2 2.4 2.3 2.2
07 Plastics and rubber 3.8 3.9 4.0 4.1 4.3 4.6
39 Plastics and articles thereof 2.9 3.0 3.1 3.2 3.4 3.7
08 Raw hides and skins; leather, furskins and articles 1.5 1.5 1.5 1.4 1.4 1.0
thereof
09 Wood, cork, straw 0.7 0.7 0.7 0.7 0.6 0.6
10 Pulp of wood; paper and paperboard 1.0 1.0 1.0 0.9 1.0 0.9
11 Textiles and textile articles 12.0 12.1 11.4 10.7 10.4 10.8
61 Clothing, knitted or crocheted 3.7 3.5 3.2 2.9 2.9 2.4
62 Clothing, not knitted or crocheted 3.5 3.4 3.2 2.9 2.7 2.4
63 Other made up textile articles; worn 1.2 1.2 1.2 1.1 1.1 2.9
articles; rags
12 Footwear, headgear, etc. 3.0 2.8 2.7 2.5 2.5 2.0
64 Footwear, gaiters and the like 2.4 2.3 2.1 1.9 1.9 1.5
13 Articles of stone, plaster, cement 2.4 2.1 2.0 2.1 2.2 2.2
14 Precious stones and metals 1.4 1.0 0.8 0.8 0.8 0.7
15 Base metals and articles thereof 7.8 7.4 7.3 7.5 7.3 6.8
73 Articles of iron and steel 2.7 2.5 2.5 2.6 2.8 2.7
16 Machinery, electrical equipment 42.2 42.8 43.4 43.9 43.5 44.4
84 Machinery and mechanical appliances, parts 16.0 16.4 16.9 17.2 16.7 17.0
thereof
8471 Automatic data processing machines 6.0 6.0 6.3 6.2 5.9 6.6
and units thereof …
8473 Parts … suitable for use with machines 1.3 1.2 1.5 1.8 1.3 1.2
of heading no. 8469 to 8472
85 Electrical machineries and parts thereof 26.1 26.4 26.4 26.6 26.8 27.4
8517 Telephone sets, including telephones 9.4 9.6 9.7 9.6 9.0 8.6
for cellular networks …
8528 Monitors and projectors … 1.2 1.3 1.4 1.3 1.2 1.2
8542 Electronic integrated circuits 3.1 2.9 3.0 3.4 4.1 4.5
17 Transport equipment 4.7 4.4 4.6 4.7 4.5 4.3
87 Vehicles, parts thereof 2.8 2.9 3.0 3.0 3.0 2.9
8708 Parts and accessories of motor 1.2 1.3 1.4 1.4 1.3 1.3
vehicles of HS 8701 to 8705
18 Precision equipment 3.6 3.5 3.4 3.1 3.2 3.3
90 Optical, photographic, measuring, medical 3.2 3.2 3.1 2.9 2.9 3.1
instruments …
19 Arms and ammunition 0.0 0.0 0.0 0.0 0.0 0.0
20 Miscellaneous manufactured articles 6.9 7.0 7.0 6.8 7.2 7.7
94 Furniture, lighting, signs, prefabricated 4.3 4.2 3.9 3.9 4.0 4.2
buildings
95 Toys, games, sports requisites 1.9 2.1 2.4 2.3 2.5 2.8
21 Works of art, etc. 0.02 0.01 0.01 0.01 0.03 0.03
Other 0.0 0.2 0.2 0.2 0.7 1.0
Source: WTO Secretariat calculations, based on UN Comtrade database and information from the General
Administration of Customs.
- 183 -
Table A1.3 Merchandise imports by HS section and major HS chapter/subheading,

2015-20
HS section/chapter/subheading 2015 2016 2017 2018 2019 2020
Total imports (USD billion) 1,679.6 1,587.9 1,843.8 2,135.0 2,069.0 2,055.6
(% of total imports)
Import under processing trade 26.6 25.0 23.4 22.0 20.1 19.6
01 Live animals and products 1.0 1.4 1.3 1.4 2.0 2.5
02 Vegetable products 3.6 3.4 3.3 2.9 3.0 3.5
12 Oil seeds and oleaginous fruit; misc. grains, 2.4 2.4 2.4 2.0 1.9 2.2
seeds and fruit
1201 Soya bean, whether or not broken 2.1 2.1 2.1 1.8 1.7 1.9
03 Fats and oils 0.5 0.4 0.4 0.4 0.5 0.5
04 Prepared food, beverages and tobacco 1.2 1.2 1.2 1.2 1.3 1.4
05 Mineral products 17.7 17.4 20.7 23.0 24.9 22.1
26 Ores, slag and ash 5.6 5.9 6.9 6.4 7.9 8.8
2601 Iron ores and concentrates 3.4 3.7 4.1 3.5 4.8 5.8
27 Mineral fuels and oils 11.8 11.1 13.5 16.3 16.6 13.0
2709 Petroleum oils and oils obtained from 8.0 7.3 8.9 11.2 11.5 8.6
bituminous minerals; crude
2711 Petroleum gases and other gaseous 1.5 1.4 1.8 2.3 2.5 2.0
hydrocarbons
06 Chemicals and products thereof 6.7 6.9 7.2 7.3 7.5 7.3
29 Organic chemicals 2.8 2.8 3.0 3.2 2.8 2.2
30 Pharmaceuticals 1.1 1.3 1.4 1.3 1.6 1.7
07 Plastics and rubber 4.7 4.7 4.8 4.3 4.2 4.2
39 Plastics and articles thereof 3.9 3.8 3.7 3.5 3.4 3.5
08 Raw hides and skins; leather, furskins and articles 0.7 0.6 0.5 0.4 0.4 0.4
thereof
09 Wood, cork, straw 1.1 1.2 1.3 1.2 1.1 1.0
10 Pulp of wood; paper and paperboard 1.4 1.4 1.5 1.5 1.3 1.3
11 Textiles and textile articles 1.9 1.8 1.7 1.6 1.5 1.4
12 Footwear, headgear, etc. 0.2 0.2 0.2 0.2 0.3 0.3
13 Articles of stone, plaster, cement 0.5 0.6 0.5 0.5 0.5 0.5
14 Precious stones and metals, pearls 5.8 5.0 3.5 2.9 2.9 1.5
7108 Gold, unwrought or in semi-manuf. forms, 4.7 4.0 2.8 2.1 2.1 0.6
or in powder form
15 Base metals and articles thereof 5.2 5.0 5.2 5.0 4.6 5.7
72 Iron and steel 1.1 1.1 1.2 1.0 1.1 1.8
74 Copper and articles thereof 2.3 2.1 2.2 2.2 2.0 2.4
16 Machinery, electrical equipment 34.9 35.3 34.0 33.9 33.1 36.0
84 Machinery and mechanical appliances, parts 9.4 9.3 9.2 9.5 9.2 9.3
thereof
85 Electrical machineries and parts thereof 25.5 26.0 24.8 24.4 23.9 26.7
8517 Telephone sets, including telephones for 2.9 2.9 2.6 2.3 2.0 2.1
cellular networks …
8542 Electronic integrated circuits 13.7 14.3 14.2 14.6 14.7 17.1
17 Transport equipment 5.8 6.1 5.8 5.4 4.7 4.2
87 Vehicles, parts thereof 4.1 4.5 4.3 3.8 3.6 3.6
8703 Motor vehicles for the transport of persons 2.6 2.8 2.7 2.3 2.3 2.2
18 Precision instruments 6.2 6.1 5.5 5.0 5.0 5.1
90 Optical, photographic, measuring, medical 5.9 5.8 5.3 4.8 4.8 4.8
instruments …
19 Arms and ammunition 0.0 0.0 0.0 0.0 0.0 0.0
20 Miscellaneous manufactured articles 0.4 0.5 0.5 0.4 0.4 0.3
21 Works of art, collectors' pieces and antiques 0.02 0.01 0.00 0.01 0.04 0.03
Other 0.4 0.8 0.8 1.4 0.7 0.5
- 184 -
Table A1.4 China's merchandise exports by destination, 2015-20

2015 2016 2017 2018 2019 2020
Total exports (USD billion) 2,273.5 2,097.6 2,263.4 2,494.2 2,499.0 2,590.6
(% of total)
Americas 25.1 25.1 26.2 26.6 24.3 24.9
United States 18.0 18.4 19.0 19.2 16.8 17.5
Other America 7.1 6.7 7.1 7.4 7.5 7.4
Mexico 1.5 1.5 1.6 1.8 1.9 1.7
Canada 1.3 1.3 1.4 1.4 1.5 1.6
Brazil 1.2 1.0 1.3 1.4 1.4 1.3
Europe 17.0 17.5 17.8 17.8 18.6 19.4
EU-27 13.1 13.5 13.9 14.2 14.7 15.1
Germany 3.0 3.1 3.1 3.1 3.2 3.4
Netherlands 2.6 2.7 3.0 2.9 3.0 3.0
Italy 1.2 1.3 1.3 1.3 1.3 1.3
EFTA 0.3 0.3 0.3 0.3 0.3 0.3
Other Europe 3.6 3.7 3.6 3.3 3.6 4.0
United Kingdom 2.6 2.7 2.5 2.3 2.5 2.8
CISa 2.4 2.7 2.9 3.0 3.2 2.9
Russian Federation 1.5 1.8 1.9 1.9 2.0 2.0
Africa 4.7 4.3 4.1 4.1 4.4 4.3
Middle East 4.9 4.6 4.4 3.9 4.3 4.2
United Arab Emirates 1.6 1.4 1.3 1.2 1.3 1.2
Asia 45.9 45.6 44.6 44.5 45.2 44.2
Japan 6.0 6.2 6.1 5.9 5.7 5.5
Other Asia 39.9 39.5 38.5 38.6 39.4 38.6
Hong Kong, China 14.5 13.7 12.3 12.1 11.2 10.5
Viet Nam 2.9 2.9 3.2 3.4 3.9 4.4
India 2.6 2.8 3.0 3.1 3.0 2.6
Chinese Taipei 2.0 1.9 1.9 2.0 2.2 2.3
Singapore 2.3 2.1 2.0 2.0 2.2 2.2
Malaysia 1.9 1.8 1.8 1.8 2.1 2.2
Australia 1.8 1.8 1.8 1.9 1.9 2.1
Indonesia 1.5 1.5 1.5 1.7 1.8 1.6
Thailand 1.7 1.8 1.7 1.7 1.8 2.0
Philippines 1.2 1.4 1.4 1.4 1.6 1.6
Other 0.0 0.1 0.0 0.0 0.0 0.0
Memorandum:
APEC 63.7 63.8 63.5 64.0 62.3 62.7
ASEAN 12.2 12.2 12.3 12.9 14.4 14.8
EU-28 15.7 16.2 16.5 16.5 17.2 17.9
- 185 -
Table A1.5 China's merchandise imports by origin, 2015-20

2015 2016 2017 2018 2019 2020
Total imports (USD billion) 1,679.6 1,587.9 1,843.8 2,135.0 2,069.0 2,055.6
(% of total)
Americas 16.5 16.1 16.4 16.0 15.2 15.7
United States 8.9 8.5 8.4 7.3 6.0 6.6
Other America 7.7 7.6 8.0 8.7 9.3 9.1
Brazil 2.6 2.9 3.2 3.6 3.8 4.1
Chile 1.1 1.2 1.1 1.3 1.3 1.4
Canada 1.6 1.2 1.1 1.3 1.4 1.1
Europe 15.6 16.2 15.6 15.1 15.1 15.4
EU-27 11.3 11.9 12.1 11.7 12.2 12.6
Germany 5.2 5.4 5.3 5.0 5.1 5.1
France 1.5 1.4 1.5 1.5 1.6 1.4
Italy 1.0 1.1 1.1 1.0 1.0 1.1
EFTA 2.7 2.7 2.0 2.0 1.5 1.2
Other Europe 1.5 1.5 1.6 1.4 1.4 1.6
United Kingdom 1.1 1.2 1.2 1.1 1.2 1.0
CISa 3.0 2.9 3.1 3.7 4.2 3.7
Russian Federation 2.0 2.0 2.2 2.8 2.9 2.8
Africa 4.1 3.5 4.1 4.6 4.6 3.5
South Africa 1.8 1.4 1.3 1.3 1.3 1.0
Middle East 6.0 5.4 6.0 7.2 7.5 6.0
Saudi Arabia, Kingdom of 1.8 1.5 1.7 2.1 2.6 1.9
Asia 46.1 47.8 47.6 46.4 47.0 49.4
Japan 8.5 9.2 9.0 8.4 8.3 8.5
Other Asia 37.6 38.6 38.6 37.9 38.8 40.9
Chinese Taipei 8.5 8.7 8.5 8.3 8.4 9.8
Australia 4.4 4.5 5.2 4.9 5.8 5.6
Viet Nam 1.8 2.3 2.7 3.0 3.1 3.8
Malaysia 3.2 3.1 3.0 3.0 3.5 3.6
Thailand 2.2 2.4 2.3 2.1 2.2 2.3
Indonesia 1.2 1.3 1.5 1.6 1.6 1.8
Singapore 1.6 1.6 1.9 1.6 1.7 1.5
India 0.8 0.7 0.9 0.9 0.9 1.0
Philippines 1.1 1.1 1.0 1.0 1.0 0.9
Other 8.6 8.2 7.2 6.9 6.3 6.2
Free Zone Chinab 8.5 8.1 7.2 6.9 6.2 6.1
Memorandum:
APEC 67.3 63.6 67.1 65.4 64.3 66.9
ASEAN 11.6 12.4 12.8 12.6 13.6 14.6
EU-28 12.4 13.1 13.3 12.8 13.4 13.5
b Includes goods that have been exported from China and thereafter re-imported into China.
- 186 -
Table A2.1 Main notifications under WTO Agreements, 1 January 2018-13 April 2021
WTO Agreement Description Latest document symbol and date
Agreement on Agriculture
Articles 10 & 18.2 – ES:1 Export subsidies G/AG/N/CHN/53, 7 December 2020
Articles 10 & 18.2 – ES:2 Export subsidies – total exports G/AG/N/CHN/54, 7 December 2020
Article 18.2 – MA:2 Tariff quotas – imports G/AG/N/CHN/55, 7 December 2020
Article 18.2 – DS:1 Domestic support G/AG/N/CHN/47, 14 December 2018
Article 18.3 – DS:2 New or modified domestic support G/AG/N/CHN/49, 14 December 2018
Agreement on the Application of Sanitary and Phytosanitary Measures
Article 7, Annex B Regulations:
54 in 2018 G/SPS/N/CHN/1062-1115
33 in 2019 G/SPS/N/CHN/1116-1148
45 in 2020 G/SPS/N/CHN/1149-1193
24 in 2021 G/SPS/N/CHN/1194-1217
Agreement on Import Licensing Procedures
Article 7.3 Replies to the questionnaire G/LIC/N/3/CHN/18, 30 January 2020
Agreement on Preshipment Inspection
Article 5 – first time Laws and regulations G/PSI/N/1/Rev.4, 16 October 2019
Agreement on Rules of Origin
Article 5, paragraph 4 of China-Georgia FTA G/RO/N/171, 24 May 2018
Annex II – ad hoc
China-Macao, China CEPA G/RO/N/187, 20 September 2019
China-Chile FTA G/RO/N/191, 20 January 2020
China-Mauritius FTA G/RO/N/212, 4 February 2021
Agreement on Safeguards
Articles 12.5 & 8.2 Proposed suspension of G/L/1218; G/SG/N/12/CHN/1, 3 April 2018
concessions and other obligations G/L/1220; G/SG/N/12/CHN/2, 5 April 2018
G/L/1221; G/SG/N/12/CHN/3, 5 April 2018
Agreement on Subsidies and Countervailing Measures
Article 25.1 & GATT 1994 Subsidies G/SCM/N/343/CHN, 19 July 2019
Article XVI:1
Article 25.11 – ad hoc Countervailing measures G/SCM/N/346, 20 March 2019
G/SCM/N/360/Rev.1, 5 May 2020
G/SCM/N/375, 11 March 2021
Article 25.11 – semi-annual Countervailing duty actions:
1 January-30 June 2018 G/SCM/N/334/CHN, 22 October 2018
1 July-31 December 2018 G/SCM/N/342/CHN, 9 April 2019
1 July-31 December 2019 G/SCM/N/356/CHN, 13 March 2020
1 July-31 December 2020 G/SCM/N/371/CHN, 26 February 2021
Agreement on Technical Barriers to Trade
Article 2.10 Technical regulations – urgent G/TBT/N/CHN/1577, 31 March 2021
Article 2.9 Technical regulations:
49 in 2018 G/TBT/N/CHN/1247-1252, 1258, 1262-1270,
1272-1273, 1276-1299, 1303-1309
84 in 2019 G/TBT/N/CHN/1312, 1314-1330, 1332-1341,
1344-1399
107 in 2020 G/TBT/N/CHN/1402-1413, 1415-1425, 1429,
1435-1452, 1455-1458, 1461-1514, 1516-
1521, 1523
58 in 2021 G/TBT/N/CHN/1528-1538, 1540-1576, 1578-
1587
Articles 2.9 & 5.6 Technical regulations and
conformity assessment
procedures (proposed):
6 in 2018 G/TBT/N/CHN/1254, 1259, 1300-1302, 1310
2 in 2019 G/TBT/N/CHN/1313, G/TBT/N/CHN/1342
1 in 2020 G/TBT/N/CHN/1434
Article 5.6 Conformity assessment
procedures (proposed):
10 in 2018 G/TBT/CHN/1246, 1253, 1255-1257, 1260-
1261, 1272, 1274-1275
2 in 2019 G/TBT/CHN/1311, 1331
18 in 2020 G/TBT/CHN/1414, 1426-1428, 1430-1433,
1453, 1454, 1459, 1460, 1515, 1522, 1524-
1527
1 in 2021 G/TBT/CHN/1539
Article 5.7 Conformity assessment G/TBT/CHN/1400, 1401
procedures (urgent)
- 187 -
WTO Agreement Description Latest document symbol and date

Agreement on Trade-Related Aspects of Intellectual Property Rights
Article 63.2 Replacement or consolidation of IP/N/1/CHN/10; IP/N/1/CHN/U/1, 30 January
the Anti-Unfair Competition Law 2020
Replacement or consolidation of IP/N/1/CHN/11; IP/N/1/CHN/T/5, 30 January
the Trademark Law 2020
Agreement on Trade Facilitation
Articles 1.4, 10.4.3, 10.6.2, Contact information G/TFA/N/CHN/4, 10 January 2020;
12.2.2 G/TFA/N/CHN/2/Rev.3, 30 April 2020
Articles 22.1 & 22.2 Technical assistance, information G/TFA/N/CHN/3, 18 October 2019
and contact points
Agreement on Trade-Related Aspects of Intellectual Property Rights
Article 63.2 Replacement or consolidation of IP/N/1/CHN/10; IP/N/1/CHN/U/1, 30 January
the Anti-Unfair Competition Law 2020
Replacement or consolidation of IP/N/1/CHN/11; IP/N/1/CHN/T/5, 30 January
the Trademark Law 2020
Decision on Notification Procedures for Quantitative Restrictions
G/L/59/Rev.1 – biennial – Market access – quantitative G/MA/QR/N/CHN/5/Rev.1, 15 February 2019
complete notification restrictions
GATT 1994
Article XVII:4(a) & paragraph 1 State trading G/STR/N/16/CHN; G/STR/N/17/CHN, 27 July
of the interpretation of 2018
Article XVII
Article XXIV:7(a) of the China-Mauritius FTA WT/REG442/N/1-S/C/N/1037, 7 January
GATT 1994 & Article V:7(a) 2021
of the GATS
Article XXIV:7(a) of the GATT China-Georgia FTA WT/REG391/N/1-S/C/N/900, 5 April 2018
1994 & Article V:7(a) of the
GATS
Agreement on Implementation of Article VI of the GATT 1994
Article 16.4 – ad hoc Anti-dumping actions G/ADP/N/311, 26 March 2018;
G/ADP/N/320, 29 November 2018;
G/ADP/N/325, 1 April 2019;
G/ADP/N/334, 15 November 2019;
G/ADP/N/339/Rev.1, 5 May 2020
G/ADP/N/353, 10 March 2021
Article 16.4 – semi-annual Anti-dumping actions G/ADP/N/294/CHN, 15 March 2017;
G/ADP/N/308/CHN, 18 April 2018;
G/ADP/N/314/CHN, 23 October 2018;
G/ADP/N/322/CHN, 12 April 2019;
G/ADP/N/328/CHN, 23 October 2019;
G/ADP/N/335/CHN, 21 April 2020
G/ADP/N/350/CHN, 9 March 2021
Agreement on Implementation of Article VII of the GATT 1994
Article 22.2 Customs valuation G/VAL/N/1/CHN6, 12 April 2018
Source: WTO Secretariat.

- 188 -
Table A2.2 WTO dispute settlement cases involving China, 1 January 2018-13 April 2021
Request for WTO
Respondent/ Status (as at
Subject consultation document
complainant 13 April 2021)
received series
China as respondent
Anti-dumping and countervailing duty China/ 16/12/2020 In consultations WT/DS598
measures on barley Australia
Measures concerning the importation of China/ 09/09/2019 In consultations WT/DS589
canola seed from Canada Canada
Certain measures concerning imports of China/ 16/10/2018 In consultations WT/DS568
sugar Brazil
Additional duties on certain products from China/ 16/07/2018 Panel composed WT/DS558
the United States United States
Certain measures of transfer of China/ 20/06/2018 In consultations WT/DS549
technology European Union
Certain measures concerning the China/ 23/03/2018 Panel composed WT/DS542
protection of intellectual property rights II United States
Subsidies to producers of primary China/ 12/01/2017 In consultations WT/DS519
aluminium United States
Tariff rate quotas for certain agricultural China/ 15/12/2016 Report(s) adopted with WT/DS517
products United States recommendation to
bring measures into
conformity
Domestic support for agricultural China/ 13/09/2016 Authorization to WT/DS511
producers United States retaliate requested
(including 22.6
arbitration)
Anti-dumping measures on imports of China/ 15/10/2014 Implementation WT/DS483
cellulose pulp from Canada Canada notified by respondent
Anti-dumping and countervailing duty China/ 20/09/2011 Compliance WT/DS427
measures on broiler products from the United States proceedings completed
United States with finding(s) of non-
compliance
China as complainant
Tariff measures on certain goods from United States/ 02/09/2019 In consultations WT/DS587
China – III China
Tariff measures on certain goods from United States/ 23/08/2018 In consultations WT/DS565
China – II China
Certain measures related to renewable United States/ 14/08/2018 In consultations WT/DS563
energy China
Safeguard measure on imports of United States/ 14/08/2018 Panel composed WT/DS562
crystalline silicon photovoltaic products China Delayed
Certain measures on steel and aluminium United States/ 05/04/2018 Panel composed WT/DS544
products China
Tariff measures on certain goods from United States/ 04/04/2018 Panel report under WT/DS543
China China appeal
Measures related to price comparison European Union/ 12/12/2016 Authority for panel WT/DS516
methodologies China lapsed
Measures affecting tariff concessions on European Union/ 08/04/2015 Settled or terminated/ WT/DS492
certain poultry meat products China Mutually agreed
solution
Certain methodologies and their United States/ 03/12/2013 Authorization to WT/DS471
application to anti-dumping proceedings China retaliate requested
involving China
Countervailing duty measures on certain United States/ 25/05/2012 Authorization to WT/DS437
products from China China retaliate requested
Source: WTO Secretariat.

- 189 -
Table A2.3 Industries in which FDI was/is restricted, 2019 and 2020
2019 2020
Agricultural, forestry, livestock, and fishery industries
Selection and seed production of new varieties of wheat and Selection of new wheat varieties and seed
corn: the Chinese parties as the controlling shareholders. production: the Chinese parties holding no
less than 34%; and selection of new corn
varieties and seed production: controlled by
the Chinese parties.
Manufacturing industries
Printing of publications: the Chinese parties as the controlling Same as in 2019
shareholders.
Except for special vehicles and new energy vehicles, the Manufacturing of complete automobiles,
Chinese parties in vehicle manufacturing shall hold no less excluding special purpose vehicles, new
than 50% of the shares; a foreign investor may establish two energy vehicles, and commercial vehicles:
or fewer equity joint ventures in China to manufacture the the Chinese parties holding no less than
same type of vehicle products. 50% of the shares; a foreign investor may
establish two or fewer equity joint ventures
in China to manufacture the same type of
complete automobile products.
Industries of production and supply of electricity, heat, gas, and water
Construction and operation of nuclear power plants: the Same as in 2019
Chinese parties as the controlling shareholders.
Construction and operation of urban water supply and Not listed
drainage network for cities with a population of more than
500,000: the Chinese parties as the controlling shareholders.
Transportation, warehousing, and postal services industries
Domestic water transport companies: the Chinese parties as Same as in 2019
the controlling shareholders.
Public air transport companies: the Chinese parties as the Same as in 2019
controlling shareholders, the investment ratio of a foreign
investor and its affiliates shall not exceed 25%, and the legal
representative shall be a Chinese citizen.
General aviation enterprises: the legal representative shall be Same as in 2019
a Chinese citizen. General aviation enterprises for the
agricultural, forestry, and fishery industries: limited to equity
joint ventures. Other general aviation enterprises: the
Construction and operation of civil airports: the Chinese Construction and operation of civil airports:
parties as the controlling shareholders. the Chinese parties as the controlling
shareholders, and foreign parties may not
participate in the construction and
operation of the airport tower.
Information transmission, software, and IT service industries
Telecommunications companies: limited to China's WTO Same as in 2019
commitment to open telecommunications services, value-
added telecommunications business of no more than 50% of
the foreign share ratio (except e-commerce, domestic multi-
party communications, storage and forwarding categories,
and call centres). Basic telecommunications services: the
Finance industries
Securities companies: foreign investment shall not exceed Not listed
51%. Securities investment fund management companies:
foreign investment shall not exceed 51%. (Elimination of the
foreign-equity ratio limit will occur in 2021.)
Futures companies: foreign investment shall not exceed 51%. Not listed
(Elimination of the foreign-equity ratio limit will occur in
2021.)
Life insurance companies: foreign investment shall not Not listed
exceed 51%. (Elimination of the foreign-equity ratio limit will
occur in 2021.)
Leasing and commercial services industries
Market surveys: limited to equity or cooperative joint Market surveys: limited to equity joint
ventures; radio and television ratings surveys therein: the ventures; radio and television ratings
Chinese parties as the controlling shareholders. surveys therein: the Chinese parties as the
controlling shareholders.
- 190 -
2019 2020
Education
Pre-school education, ordinary high school, and higher Same as in 2019
education institutions: subject to Sino-foreign cooperative
education, and led by the Chinese parties (the principal or
principal administrative officer shall be a Chinese national,
and the Chinese parties shall comprise not less than half of
the council, board, or joint administrative committee).
Health and social work
Medical institutions: limited to joint ventures and cooperation. Medical institutions: limited to equity joint
ventures.
Source: NDRC and MOFCOM, The Special Administrative Measures on Access to Foreign Investment
(2019 and 2020 editions), 2019 and 2020 National Negative Lists; and information provided by
the authorities.
- 191 -
Table A2.4 Industries in which FDI was/is prohibited, 2019 and 2020
2019 2020
Agricultural, forestry, livestock, and fishery industries
Development, breeding, cultivation, and production Development, breeding, cultivation, and production
of the precious and fine varieties that are rare and of related reproductive materials (including good
special in China, or the production of the relevant genes of cultivation, husbandry, and aquaculture) of
reproductive materials thereof (including high- China's rare and unique varieties.
quality genes in the industries of crop production,
livestock, and aquaculture).
Selection and breeding of transgenic varieties of Breeding genetically modified varieties of crop
agricultural crops, livestock, and breeding poultry seeds, livestock, and poultry breeds and aquatic
and aquatic fry, or the production of their transgenic breeds, as well as manufacturing of genetically
seeds (sprouts). modified seeds (seedlings) thereof.
Fishing of aquatic products in sea area under Same as in 2019
Chinese jurisdiction and within Chinese territorial
waters.
Mining industries
Rare earths, radioactive minerals, tungsten Same as in 2019
exploration, mining, and mineral processing.
Manufacturing industries
Smelting, processing, and production of nuclear fuel Not listed
in radioactive minerals.
Application of steaming, stir-frying, moxibustion, or Same as in 2019
calcination of Chinese herbal medicines and other
processing techniques, as well as the production of
confidential prescription products of proprietary
Chinese medicines.
Satellite TV broadcast ground receiving facilities and Same as in 2019
key parts production.
Wholesale and retail industries
Wholesale and retail of tobacco leaves, cigarettes, Same as in 2019
re-dried tobacco leaves, and other tobacco products.
Transportation, storage and warehousing, and postal services industries
Air traffic control. Not listed
Postal companies, and domestic express delivery Same as in 2019
mail business.
Information transmission, software, and information technology services
Internet news information services, online publishing Same as in 2019
services, Internet audio-visual programme services,
Internet cultural operations (except music), and
Internet public distribution of information services
(except content already opened in China's WTO
accession commitments).
Leasing and commercial services industries
Chinese legal matters (except provision of Same as in 2019
information on impact on Chinese legal
environment), and no foreign investor appointed as
a partner of a domestic law firm.
Social surveys. Social surveys.
Scientific research and technological services industries
Human stem cell, gene diagnosis, and therapeutic Same as in 2019
technology development and application.
Humanities and social science research institutions. Same as in 2019
Geodetic surveying, marine surveying and mapping, Geodetic surveying, marine surveying and mapping,
aerial photography for surveying and mapping, aerial photography for surveying and mapping,
ground motion surveying, and surveying and ground motion surveying, and surveying and
mapping of administrative boundaries. Preparation mapping of administrative boundaries. Preparation
of topographic maps, world administrative area of topographic maps, world administrative area
maps, national administrative area maps, maps of maps, national administrative area maps, maps of
administrative areas at or below the provincial level, administrative areas at or below the provincial level,
national teaching maps, local teaching maps, true national teaching maps, local teaching maps, true
three-dimensional maps and electronic navigation three-dimensional maps and electronic navigation
maps; and regional geological mapping, mineral maps; and regional geological mapping, mineral
geology, geophysics, geochemistry, hydrogeology, geology, geophysics, geochemistry, hydrogeology,
environmental geology, geological disasters, remote environmental geology, geological disasters, remote
sensing geology, and other surveys. sensing geology and other surveys. (The mining
right holders are not subject to the Special
Administrative Measures when carrying out work
within the scope of their mining rights.)
- 192 -
2019 2020
Education
Compulsory education institutions and religious Same as in 2019
education institutions.
Cultural, sports, and entertainment industries
News organizations (including but not limited to Same as in 2019
news agencies).
Editing, publishing, and production of books, Same as in 2019
newspapers, periodicals, audio-visual products, and
electronic publications.
Radio stations, TV stations, radio and TV channels Same as in 2019
(frequencies), radio and TV transmission network
(transmitter stations, relay stations, radio and TV
satellites, satellite uplink stations, satellite receiving
stations, microwave stations, surveillance stations,
and cable radio and TV transmission networks, etc.).
Business of video broadcasting by order of radio and
TV, and installation services of ground receiving
facilities for satellite TV broadcasting.
Companies producing and operating radio and TV Same as in 2019
programmes (including introduction of business).
Film production companies, distribution companies, Same as in 2019
cinema companies, and film importation business.
Auction companies for heritage auction, heritage Same as in 2019
stores, and state-owned heritage museums.
Performing arts groups. Same as in 2019
Source: NDRC and MOFCOM, The Special Administrative Measures on Access to Foreign Investment
(2019 and 2020 editions), 2019 and 2020 National Negative Lists; and information provided by
the authorities.
- 193 -
Table A3.1 MFN applied tariff summary, 2021

Range (%) Duty
Number Average Standard
MFN free
of lines (%) Bound deviation
applied (%)
Total 8,580 7.1 0-65 0-65 6.1 12.6
HS 01-24 1,418 11.2 0-65 0-65 10.1 9.4
HS 25-97 7,162 6.3 0-50 0-50 4.6 13.2
By WTO category
WTO agricultural products 1,175 12.7 0-65 0-65 11.0 8.9
Animals and products thereof 170 11.4 0-25 0-25 7.9 18.2
Dairy products 21 11.2 2-20 6-20 4.1 0.0
Fruit, vegetables, and plants 390 10.7 0-30 0-30 6.6 6.2
Coffee and tea 33 13.0 2-30 8-32 4.7 0.0
Cereals and preparations 129 19.7 0-65 0-65 20.4 7.8
Oils seeds, fats, oil and their products 108 10.1 0-30 0-30 7.4 20.4
Sugars and confectionery 21 30.6 5-50 8-50 16.2 0.0
Beverages, spirits and tobacco 66 14.9 0-65 0-65 15.8 1.5
Cotton 5 22.0 10-40 10-40 14.7 0.0
Other agricultural products, n.e.s. 232 11.9 0-38 0-38 7.9 6.9
WTO non-agricultural products 7,405 6.2 0-50 0-50 4.3 13.2
Fish and fishery products 352 6.8 0-15 0-23 2.9 8.2
Minerals and metals 1,260 6.1 0-50 0-50 4.3 8.5
Chemicals and photographic supplies 1,431 5.7 0-47 0-47 3.9 9.2
Wood, pulp, paper and furniture 421 2.1 0-12 0-20 2.5 41.3
Textiles 851 6.9 2-38 2-38 2.4 0.0
Clothing 299 6.7 5-12 14-25 1.4 0.0
Leather, rubber, footwear and travel goods 226 10.1 0-25 0-25 4.8 0.4
Non-electric machinery 1,042 6.2 0-25 0-35 3.6 16.4
Electric machinery 468 5.1 0-20 0-35 4.4 37.0
Transport equipment 424 10.6 0-45 0-45 7.2 0.2
Non-agricultural products, n.e.s. 611 5.7 0-20 0-35 4.8 30.4
Petroleum 20 4.8 0-9 0-9 3.0 15.0
By ISIC sector
ISIC 1 – Agriculture, hunting and fishing 670 9.7 0-65 0-65 9.7 22.1
ISIC 2 – Mining 123 1.7 0-6 0-8 1.7 41.5
ISIC 3 – Manufacturing 7,786 7.0 0-65 0-65 5.7 11.3
Manufacturing excluding food processing 6,956 6.4 0-50 0-50 4.5 12.3
ISIC 4 – Electrical energy 1 0.0 0 0 0.0 100.0
By stage of processing
First stage of processing 1,190 8.4 0-65 0-65 9.2 20.6
Semi-processed products 2,627 6.3 0-65 0-65 5.4 5.4
Fully processed products 4,763 7.3 0-65 0-65 5.5 14.5
By HS section
01 Live animals and products 533 9.3 0-25 0-25 6.1 12.4
02 Vegetable products 514 13.7 0-65 0-65 12.5 10.9
03 Fats and oils 56 12.6 2-30 5-30 5.9 0.0
04 Prepared food, beverages and tobacco 315 9.9 0-65 0-65 11.1 3.5
05 Mineral products 201 2.9 0-9 0-12 2.5 27.9
06 Chemicals and products thereof 1,354 5.8 0-50 0-50 4.8 9.7
07 Plastics, rubber, and articles thereof 280 8.9 0-25 0-25 4.2 0.4
08 Raw hides and skins, leather, and its products 106 9.7 3-20 5-23 4.3 0.0
09 Wood and articles of wood 235 1.6 0-12 0-20 2.4 42.6
10 Pulp of wood, paper and paperboard 161 3.8 0-7.5 0-7.5 2.3 21.7
11 Textiles and textile articles 1,147 7.1 1-40 3-40 3.4 0.0
12 Footwear, headgear, etc. 73 8.1 4-14 10-25 2.3 0.0
13 Articles of stone, plaster, cement 205 10.4 0-20 0-28 3.5 0.5
14 Precious stones and metals, pearls 90 5.0 0-21 0-35 5.8 38.9
15 Base metals and articles thereof 773 5.8 0-9 0-30 2.3 2.5
16 Machinery, electrical equipment, etc. 1,545 5.7 0-25 0-35 4.0 24.9
17 Transport equipment 439 10.4 0-45 0-45 7.2 0.7
18 Precision equipment 336 5.5 0-20 0-30 5.2 34.2
19 Arms and ammunition 21 13.0 13-13 13-15 0.0 0.0
20 Miscellaneous manufactured articles 186 5.2 0-20 0-25 4.4 34.4
21 Works of art, etc. 10 3.1 0-6 0-14 2.6 20.0
AVEs for non-ad valorem rates provided by the authorities.
Interim duty rates are used for the calculations when fully applied at the 8-digit level.
Table A3.2 Active central subsidy programmes notified in 2019
Sector (number Budget
Programme number and name Duration
of programmes) (CNY million)
Agriculture (7) 33 Projects of agricultural, forestry, animal and fishery 2000-present ..
35 Imported products for the purpose of replacing the planting of poppies 2000-present ..
36a Imports of seeds (seedlings) 2016-2020 ..
50 Fund for water resources development 1983-present 2017: 30,787.72
2018: 20,684.76
52a Fund for agricultural resources and ecological protection 2011-present 2017: 22,036; 2018: 24,536
53 Subsidy for a new round of returning cultivated land to forests and grassland 2014-present 2017: 9,197; 2018: 12,789
65a Agricultural production (excluding large-scale farming) 2008-present ..
Technology (5) 5a High or new technology enterprises 2008-present ..
6 Additional calculation and deduction of R&D expenses 2017-2020 ..
7 Enterprises transferring technology 2008-present ..
10a Service enterprises with advanced technology 2016-present ..
41 Integrated circuit industry 2008-present ..
Fishery (5) 74 Enterprises engaged in projects of agricultural, forestry, animal and fishery 2008-present ..
75 Fishery stocks enhancement and fish fries releasing 2009-present Since 2017, statistical
breakdown for this
programme is not available.
The estimated size of the
funds is CNY 398.5 million.
76 Subsidy for the prevention of aquatic animal diseases 2017-present 2017: 44; 2018: 60
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78 Improved aquatic breed 2014-present 2017: 100; 2018: 100
79 Reform in tax and fee on refined oil (for fisheries) 2015-present In varying amounts
Energy (5) 12a Projects for environmental protection, water and energy conservation 2008-present ..
54a Fund for energy conservation and emission reduction 2015-present 2017: 34,066; 2018: 33,230
61 Special fund for development of renewable energies 2016-2020 2017: 5,400; 2018: 6,887.44
62a Subsidy fund for surcharge of electricity price of renewable energies 2012-present 2017: 75,000; 2018: 83,900
64a Shale gas 2018-March 2021 ..
Disability support 27a Enterprises that employ disabled people 2016-present ..
(5) 28a Enterprises employing disabled people 2007-present ..
29a Imported products exclusively used by disabled people 1997-present ..
30 Products for the disabled people 1994-present ..
31a Enterprises producing goods exclusively used by the disabled people 2004-2020 ..
Chemical & 13a Building materials products produced with integrated utilization of resources 2008-present ..
material (5) 14a Integrated utilization of resources 2015-present ..
15a New-type wall materials 2015-present ..
16 Petroleum products produced with comprehensive utilization of resources 1) and 2) 2009-present; ..
3) 2013-2023
40 Refined oil 2011-present ..
Sector (number Budget
Programme number and name Duration
of programmes) (CNY million)
Infrastructure (4) 1 Chinese-foreign joint ventures engaged in port and dock construction Five years of tax exemption and ..
five years of reduction by half
2 Enterprises with foreign investment established in Special Economic Zones Five years of tax exemption and ..
(excluding Shanghai Pudong area) five years of reduction by half
3 Enterprises with foreign investment established in Pudong area of Shanghai Five years of tax exemption and ..
five years of reduction by half.
11a Public infrastructure projects 2008-present ..
Waste 67 Sites of centralized treatment of urban and rural sewage and centralized 2018-present ..
management (3) treatment of domestic garbage
68 Comprehensive utilization of solid wastes 2018-present ..
69 Enterprises that are below pollutant discharge standards prescribed by the 2018-present ..
state and local governments
Financing (3) 45 Accelerating depreciation of fixed assets 1)-4) 2014-present; ..
5)-6) 2015-present;
7) 2018-December 2020
63a Reward and subsidy for fee reduction of the financing guarantee provided for 2018-2020 2018: 3,000
small and micro enterprises
71 Financing 2018-December 2020 ..
Environment (3) 22a Clean Development Mechanism 2007-present ..
55a Fund for air pollution prevention and control 2016-present 2017: 16,000; 2018: 20,000
70 Enterprises involving the reduction of excessive capacities and structural Tax exemption of up to two years ..
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adjustment
Automobile and 20 Urban public transportation enterprises that purchase buses and trolleybuses 2012-December 2020 ..
transportation (3) 46 Vehicle purchase tax for trailers 2018-June 2021 ..
66 Specific mobile sources of pollution 2018-present ..
SME (2) 23 Small and micro enterprises 2008-present ..
26 Governmental funds 2016-present ..
Poverty reduction 47 Fund for poverty alleviation 1980-present 2017: 86,095; 2018: 106,095
(2) 73 Poverty alleviation migration 2018-December 2020 ..
Pharmaceutical 32 Anti-HIV-AIDS medicine 1) 2016-December 2020; ..
(2) 2) 2016-2018
72 Anti-cancer drugs 2018-present ..
Economic 4 The Western Regions 1) 2001-2020; ..
development (2) 2) two years of tax exemption and
three years of reduction by half;
3) 2001-present.
57a Fund for development of international economic relations and trade 2014-present 2017: 11,976; 2018: 11,378
Oil & gas (1) 39 Urban land use of oil and gas production enterprises 2015-present ..
Mining (1) 37a Filling mining and mining resources in exhaustion stage 2016-present ..
FDI (1) 38a Import of equipment 1998-present ..
.. Not available.
a Programme eligibility tied to specific information that is not provided in the notification.
Table A3.3 Summary of IPR legislation, as at late-January 2021
Notification to
Form Main legislation Coverage Period of protection the TRIPS
Council
Copyrights and Copyright Law Works of literature, art and sciences, which are expressible in For natural persons, works are protected for life IP/N/1/CHN/C/1,
related rights (last amended in some form and created in writing; orally; musically, plus 50 years. 8 July 2002
2020) theatrically, quyi, choreographic and/or acrobatically; fine For legal persons, cinematographic and
arts and architecture; photography; audio-visual works and photographic works are protected for 50 years.
works created by a process analogous to cinematography; Software copyright exists from the date on
graphic works such as drawings of engineering designs and which its development is completed.
product designs, maps and sketches, and model works; For legal persons, audio-visual and
computer software; and other intellectual creations with the photographic works are protected for 50 years,
characteristics of works. and typographical designs are protected for 10
years.
Trademarks Trademark Law Applications to register as a trademark any word, device, 10 years from the day the registration is IP/N/1/CHN/T/5,
(last amended in letter of the alphabet, number, three-dimensional symbol, granted, renewable indefinitely. 30 January 2020
2019) colour combination, sound or any combination thereof that
identifies and distinguishes the goods of a natural person,
legal person or other organization from those of others. The
Law has been amended four times since 1982. The latest
amendment aims to strengthen trademark protection,
promote a fair business environment, effectively curb bad-
faith trademark registrations, and increase compensation for
- 196 -
infringement of trademark rights.
Patents Patent Law (last Inventions and utility models for which patent rights are to be 20 years from the date of filing the application. IP/N/1/CHN/P/2,
amended in 2008) granted shall be ones which are novel, creative and of The term of protection for utility models is 10 21 December 2010
practical use. years, and the term for designs is 15 years,
from the date of application.
Layout-designs Regulations on the Any layout-design which is original in the sense that the 10 years from the date of filing an application ..
of integrated Protection of layout-design is the result of the creator's own intellectual for registration of the layout-design or from the
circuits Layout-Designs of effort and is not commonplace among creators of layout- date on which it was first commercially
Integrated Circuits designs and manufacturers of integrated circuits at the time exploited anywhere in the world, whichever
(promulgated in of its creation. expires earlier. No matter whether it has been
2001) registered or commercially exploited, a layout-
design shall no longer be protected 15 years
after the date of the completion of its creation.
New plant Regulations on the Artificially cultivated plant varieties, or ones developed from 20 years from the date of authorization in the ..
varieties Protection of New discovered wild plants, which possess novelty, distinctness, case of vines, forest trees, and ornamental
Varieties of Plants uniformity and stability, and which are duly named. trees, and 15 years for other plants.
(last amended in
2014)
Anti-Unfair Anti-Unfair Protection of trade secrets. Improves the definition and IP/N/1/CHN/10,
Competition Competition Law expands the scope of infringement, enhances legal liability for IP/N/1/CHN/U/1,
of the People's infringing trade secret and transfers the burden of proof in 30 January 2020
Republic of China civil trial procedures that infringe trade secrets.
(last amended in
2019)
Notification to
Form Main legislation Coverage Period of protection the TRIPS
Council
Criminal Law Criminal Law (last Criminal penalties for IPR infringements, raising the maximum ..
amendment in prison term for trademark and copyright infringements from 7
2020) to 10 years, adding the protection of service marks,
supplementing the types of criminal acts that infringe on
trade secrets, and adding "industrial espionage crime".
In December 2020, the NPC Standing Committee passed the

Criminal Law Amendment (XI), which increased the criminal
penalties for infringement of IPRs. It increased the maximum
sentence for infringement of trademark rights, copyrights,
and trade secrets from 7 to 10 years, and increased the
minimum penalty from control or criminal detention to
fixed-term imprisonment. In addition, the Amendment
enhanced the protection of service trademarks, added the
types of criminal acts that infringed on trade secrets including
the crime of commercial espionage, and added the types of
acts of copyright infringement including the crime of
infringement of performer's rights.
.. Not available.
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Source: Information provided by the authorities; and notifications to the TRIPS Council.1
Notifications to the TRIPS Council: WTO documents IP/N/1/CHN/P/2, 21 December 2010; IP/N/1/CHN/P/3, 26 August 2011; IP/N/1/CHN/C/1 (2001 Version), 8
1
July 2002; IP/N/1/CHN/L/1/Rev.1, 13 October 2003; IP/N/1/CHN/9 (2013 Amendment), 19 October 2017; and IP/N/1/CHN/T/5 (2019 Amendment), 30 January 2020.
Viewed at: https://e-trips.wto.org/.
- 198 -
Table A3.4 Membership in International IPR Conventions, as at January 2021

International International instrument Status Date of accession (or
organization signature, ratification)
WIPO Beijing Treaty In force 28 April 2020
WIPO Copyright Treaty In force 9 June 2007
WIPO Performances and Phonograms Treaty (WPPT) In force 9 June 2007
Strasbourg Agreement In force 19 June 1997
Locarno Agreement In force 19 September 1996
Madrid Protocol In force 1 December 1995
Budapest Treaty In force 1 July 1995
Nice Agreement In force 9 August 1994
Patent Cooperation Treaty (PCT) In force 1 January 1994
Phonograms Convention In force 30 April 1993
Berne Convention In force 15 October 1992
Madrid Agreement (Marks) In force 4 October 1989
Paris Convention In force 19 March 1985
WIPO Convention In force 3 June 1980
Marrakesh VIP Treaty Signed (signed 28 June 2013)
Singapore Treaty Signed (signed 29 January 2007)
Trademark Law Treaty (TLT) Signed (signed 28 October 1994)
Washington Treaty Signed (signed 1 May 1990)
UPOV UPOV Convention In force 23 April 1999
UNESCO Universal Copyright Convention In force 30 October 1992
Source: WIPO IP Portal, WIPO-Administered Treaties: Contracting Parties: China. Viewed at:
https://wipolex.wipo.int/en/treaties/ShowResults?country_id=38C.
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Table A3.5 General regulatory framework of new plant varieties protection

Latest
Laws/regulations Issuing authority
amendment
Regulations on the Protection of New Varieties of Plants State Council 29 July 2014
Implementing Rules for the Regulations of the Protection of New Ministry of Agriculture 25 April 2014
Varieties of Plants (Agriculture Part)
Implementing Rules for the Regulations of the Protection of New Ministry of Forestry 25 January 2011
Varieties of Plants (Forestry Part)
Administrative Execution Measures of the Protection of New Varieties Ministry of Forestry 30 December 2015
of Forestry Plants
Rules for the Review Board on New Plant Varieties Ministry of Agriculture 13 February 2001
Interpretation of the Supreme People's Court concerning Some Supreme People's 5 February 2001
Issues on Disputes of Trial of Cases over New Plant Verities Court
Interpretation of the Supreme People's Court on Some Issues Supreme People's 12 January 2007
Concerning the Application of Law in the Trial of Cases Involving the Court
Disputes over Infringement upon the Rights of New Plant Varieties
Seed Law National People's 4 November 2015
Congress Standing
Committee
Provisions on Infringement Cases of New Plant Varieties in Ministry of Agriculture 12 December 2002
Agriculture

- 200 -
Table A4.1 Central Government support to fisheries as notified to the WTO

Revenue
forgone/
Title Start budgetary
Objective Subsidy and beneficiaries
Legal basis date allocation in
2018 (CNY
million)
Projects of agricultural, Support the development Enterprise income tax 2008 No data on
forestry, animal and of fishery preliminary exemption/reduction from income revenue
fishery processing, among derived by an enterprise from forgone
Law of the People's others. stipulated projects of preliminary
Republic of China on processing related to farming,
Enterprise Income Tax forestry, animal husbandry, and
(2007); Regulations for fisheries.
the Implementation of the
Law of the People's
Republic of China on
Enterprise Income Tax
(2007); MOF Circular Cai
Shui No. 149, 2008; MOF
Circular Cai Shui No. 26,
2011; MOF Circular Cai
Shui No. 73, 2016
Fishery stocks Enhance natural fishery Funds are provided through local 2009 Budgetary
enhancement and fish resources, increase governments to fishermen, relevant allocation:
fries releasing fishermen's income, and scientific research institutions, and 2018:
MOF Circular Cai Nong improve fishery social groups involved in stocks estimated to be
No. 42, 2017 performance. enhancement and fish fries 398.5a
releasing.
Public subsidy for the Promote sustainable Investment funds are provided to 2017 Budgetary
prevention of aquatic development of aquatic animal disease prevention, allocation:
animal diseases aquaculture industry, control and monitoring centres, and 2018: 60
NDRC Circular Fa Gai and support prevention regional centres.
Nong Jing No. 913, 2017 and control of aquatic
animal diseases.
Subsidy for scrapping and Reduce intensity of Provided to/for fishermen for 2015 Budgetary
dismantling vessels and marine fishing and reducing the number of fishing allocation:
for ship type promote the reduction in vessels and quitting marine fishing; 2018: 7,927.15
standardization; subsidy fishing vessels; scrapping, dismantling, and
fund for fishery rehabilitate ecological renovating fishing vessels, with an
development and the environment; emphasis on certain vessels;
scrapping, dismantling, improve fishing vessels construction of fishery equipment
and renovating of vessels safety; and facilities; conservation and
MOF Circular Cai Jian optimize and adjust the utilization of international fishery
No. 977, 2015; MOF industrial structure; resources; scrapping and renovation
Circular Cai Jian No. 418, promote the sustainable of seagoing transport vessels ahead
2016 development of distant of schedule; dismantling of inland
water fishing; and phase vessels; and renovating and building
out vessels with high- new model vessels.
energy consumption,
high emissions, and poor
safety performances.
Subsidy for improved Improve the quality of Provided to eligible aquatic breed 2014 Budgetary
aquatic breed aquaculture species. improving farms. allocation:
Fishery Law of the 2018: 100
People's Republic of
China, 2013
Subsidy for reform in tax Protect fisheries Support takes the form of Central 2015 No data
and fee on refined oil (for resources and facilitate Government funds distributed provided
fisheries) fishery industrial through local governments to
MOF Circular Cai Jian restructuring; reduce fishermen and enterprises involved
No. 499, 2015; MOA fishing intensity; in the reduction of the number of
Circular Nong Ban Yu promote the sustainable fishing vessels and no longer
No. 65, 2015 development of fisheries; engaging in fishing, and whose
maintain the livelihood of fishing vessels are dismantled or
fishermen; increase the transformed into artificial reefs.
incomes of fishermen; Some support is provided to
maintain the stability of fisheries resource conservation, and
fishing areas; and ensure for a closed fishing season, fishery
the safety of the and fishery administration
fishermen's lives and informatization construction,
property. navigation sign-post construction in
fishing ports, etc.
a This is one part of a bigger programme. Disaggregated figures for this single programme are not
available; they have been estimated.
- 201 -
Table A4.2 Local government support to fisheries as notified to the WTO
Budgetary
allocation
10,000)
(CNY
Title Start
Legal basis date
Hebei Province
Subsidy for improving Promote aquaculture industry upgrade Provided to eligible aquatic 2017 2018:
aquatic breeds and protect key aquaculture species breeding production enterprises. 500
Ji Neng Ye Yu Fa No. 4, resources.
2017
Jiangsu Province
Grant for fishermen Alleviate the hard-living conditions of Grant scheme. Provided to 2017 No data
during the Yangtze fishermen during the fishing closed fishermen during the fishing provided
River fishing closed seasons, and secure smooth closed seasons.
seasons (Nanjing City) implementation of closed fishing for the
Ning Nong Cai No. 16, Yangtze River.
2017
Grant for fishermen Safeguard the livelihood of fishermen Grant scheme. Provided to 2003 2018:
during the Yangtze during the fishing closed seasons. fishermen on the Yangtze River. 48.6
River fishing closed
seasons (Zhenjiang
City)
Su Zheng Ban Fa
No. 18, 2003
Grant for fishermen on Provide grant for fishermen during the Grant scheme. Provided to 2017 2018:
the Yangtze River fishing closed period to ensure smooth fishermen during the spring 45
during the spring implementation of the fishing closure. fishing closed seasons.
fishing closed season
(Changzhou City)
Chang Xin Nong No. 16,
2017; Chang Xin Nong
No. 73, 2018
Zhejiang Province
Grant for policy-based Improve fishermen's capacity to Grant scheme. Provided to 2005 2018:
fishery mutual withstand natural disasters, and ensure eligible individuals/organizations 6,550
insurance social stability in the fishing areas. engaged in fishing
Zhe Cai Nong No. 55, production/operation.
2012
Fund for marine and Promote healthy, sustainable Grant scheme. Provided for: 2015 2018:
fishery comprehensive development of marine fisheries and (i) fisheries recovery, fishery 49,506.5
management and recovery of fishery resources. Promote stocks enhancement, and
industry development eco-friendly and safe aquaculture fishermen quitting marine
Zhe Cai Nong No. 47, models and improve marine fishing; (ii) eco-friendly
2015 management and public services. renovation in the fishery industry
and promotion of eco-friendly,
circular, and safe aquaculture
models; (iii) monitoring of
marine environment and
economics and development of
the marine protected areas;
(iv) development or standardized
fishing ports; and (v) quarantine
inspection of aquatic animals and
safeguarding of the quality of
aquatic products.
Grant for supporting Control the intensity of fishing; Grant. Provided to fishing boat 2017 2018:
fishing boat eliminate old, wooden, polluting owners operating legally. 392
standardization projects capture and aquaculture boats that are
(Hangzhou City) highly destructive to resources; and
Cai Jian No. 499, 2015; realize sustainable fisheries
Cai Jian No. 977, 2015; development goals, including well-
Zhe Cai Jian No. 14, ordered production, scientific utilization
2016 of resources, a good ecological
environment, and continuous
improvement of people's livelihoods.
Fund for policy-based Make fishermen better able to Grant to contribute to insurance 2005 2018:
fishery insurance withstand natural disasters and risks, premiums. Provided to fishing 19
(Ningbo City) and maintain the stability of the fishing vessels and owners of fishing
Yong Hai Ban No. 141, community. vessels that engage in or provide
2018 services for fishery production
and management in Ningbo.
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Budgetary
allocation
10,000)
(CNY
Title Start
Legal basis date
Fujian Province
Funds for marine Promote the healthy and sustainable Grant and reward (among 2017 2018:
economic development development of the marine economy, others). Provided to eligible 12,003.6
Min Cai Nong No. 30, and encourage innovation in marine enterprises.
2017 technologies, such as marine
biomedicine, marine aquaculture
equipment, marine renewable energy,
etc.
Fund for marine and Promote the safety of production, Grant. Provided to aquaculture 2017 2018:
fishery structural increase the quality of aquaculture, enterprises, farms, cooperatives, 2,800
adjustment and promote the transformation of the and scientific research institutes.
Min Cai Nong No. 62, development mode of fishery economy.
2014
Fund for aquatic Promote high-quality development of Reward. Provided to eligible 2017 2018:
products processing aquatic products processing industry. aquatic products processing 414
(Fuzhou City) enterprises.
Rong Hai Yu No. 407,
2017; Rong Hai Yu
No 431, 2018
Fund for aquaculture Encourage comprehensive farming of Reward. Provided to eligible 2017 2018:
(Fuzhou City) rice and fish, factory fish farming, etc. aquaculture enterprises. 421.3
Rong Hai Yu No. 406,
2017; Rong Hai Yu
No. 432, 2018
Fund for marine and Promote marine scientific and Grant and reward. Provided to 2018 No data
fishery development technological innovation, aquaculture eligible enterprises that comply provided
(Xiamen City) breeding techniques, recreational with domestic law and
Xia Hai Yu No. 16, 2018 fishery, and distant water fisheries. international fishery
management rules.
Shandong Province
Fund for distant water Promote the healthy and sustainable Grant. Provided to eligible 2017 No data
fishery development development of distant water fisheries, approved distant water fishing provided
(Rizhao City) and improve the stability, safety, enterprises that comply with
Ri Zheng Zi No. 100, resistance to pollution, and habitability domestic law and international
2017 of distant water fishing vessels. fishery management rules.
Fund for distant water Promote healthy and sustainable Grant. Provided to eligible distant 2013 No data
fishery (Qingdao City) development of the fishery industry, water fishery enterprises that provided
Qing Zheng Zi No. 88, and make fishing vessels more energy- comply with domestic law and
2012 saving and environmentally friendly. international fishery
management rules.
Guangdong Province
Fund for developing the Optimize the fishery industry structure, Grant. Provided to eligible 2015 No data
deep water cage and protect marine resources. aquaculture enterprises. provided
aquaculture
Yue Hai Yu Han No. 6,
2015
Production and living Protect fishery resources, promote Grant. Provided to fishermen 2017 2018:
allowances for sustainable development of the fishery subject to fishing closure 12.3
fishermen during closed industry, and address the livelihood practice.
seasons (Zhuhai City) problem of fishermen during closed
Zhu Hai Non Shui fishing periods to maintain social
No. 192, 2017 stability in fishing areas.
Fund for aquaculture Improve aquaculture breeding, Fund support. Granted to 2013 2018:
(Zhongshan City) enhance the quality management of enterprises holding valid farming 108
Zhong Hai Yu No. 73, aquaculture breeds. and realize permits and breed production
2017 sustainable development of the fishery permits.
Zhong Hai Yu No. 74, industry.
2017
Living allowances for Protect fishery resources, promote Allowances. Provided to crew 2009 2018:
fishermen during fishing sustainable development of the fishery members of the fishing boats 208.6
closed seasons. industry, and address the livelihood subject to the fishing closure.
(Zhongshan City) problem of fishermen during closed
Yue Hai Yu No. 25, fishing periods to maintain social
2018 stability in the fishing area.
Guangzhou Province
Fund supporting the Build the risk resistance capacity of Fund support. Provided to 2017 2018:
policy-based aquaculture, reduce the loss resulting farmers and enterprises engaged 462
aquaculture insurance from natural disasters, and promote in legal aquaculture activities and
Hui Nong No. 179, 2017 sustainable development of the have participated in the
aquaculture industry. insurance scheme.
- 203 -
Budgetary
allocation
10,000)
(CNY
Title Start
Legal basis date
Liaoning Province
Subsidy for scrapping Reduce the intensity of marine fishing, Grant. Provided to fishermen or 2017 No data
and dismantling vessels and increase grant on top of Central enterprises that volunteer to quit provided
and for ship type Government funds to fishermen marine capture and/or scrap
standardization (Dalian quitting marine capture. dismantle, and dispose of their
City) ships with no harm done.
Cai Jian No. 977, 2015
Fund for marine and Protect the marine environment, and Grant. Provided for aquatic 2017 No data
fishery development promote healthy and sustainable product safety detection, marine provided
(Dalian City) development of the fishery industry. environment monitoring and
Da Cai Nong No. 431, forecasting, fishery safety
2017 management, stock
enhancement, fisherman
personal accident insurance, and
purchase of standard aquaculture
fishing vessels.
- 204 -
Table A4.3 Tariff lines and rates as per the Resource Tax Law
Tariff lines Tariff objects Tariff rates
Energy Crude oil Raw ore 6%
minerals Natural gas, shale gas, natural gas hydrate Raw ore 6%
Coal Raw ore or 2%-10%
mineral dressing
Coal-derived (bed) gas Raw ore 1%-2%
Uranium, thorium Raw ore 4%
Oil shale, oil sand, natural asphalt, stone coal Raw ore or 1%-4%
mineral dressing
Terrestrial heat Raw ore 1%-20% or
CNY 1-30 per
cubic metre
Metallic Ferrous Iron, manganese, chromium, vanadium, Raw ore or 1%-9%
minerals metals titanium mineral dressing
Non-ferrous Copper, lead, zinc, tin, nickel, antimony, Raw ore or 2%-10%
metals magnesium, cobalt, bismuth, mercury mineral dressing
Bauxite Raw ore or 2%-9%
mineral dressing
Tungsten Mineral dressing 6.5%
Molybdenum Mineral dressing 8%
Gold, silver Raw ore or 2%-6%
mineral dressing
Platinum, palladium, ruthenium, osmium, Raw ore or 5%-10%
iridium, rhodium mineral dressing
Light rare earths Mineral dressing 7%-12%
Medium and heavy rare earths Mineral dressing 20%
Beryllium, lithium, zirconium, strontium, Raw ore or 2%-10%
rubidium, caesium, niobium, tantalum, mineral dressing
germanium, gallium, indium, thallium,
hafnium, rhenium, cadmium, selenium,
tellurium
Non-metallic Minerals Kaolin Raw ore or 1%-6%
minerals mineral dressing
Limestone Raw ore or 1%-6% or
mineral dressing CNY 1-CNY 10
per tonne (or
per cubic
metre)
Phosphorus Raw ore or 3%-8%
mineral dressing
Graphite Raw ore or 3%-12%
mineral dressing
Fluorite, pyrite, natural sulphur Raw ore or 1%-8%
mineral dressing
Natural quartz sand, vein quartz, powder Raw ore or 1%-12%
quartz, crystal, industrial diamond, Iceland mineral dressing
stone, kyanite, sillimanite (sillimanite),
feldspar, talc, corundum, magnesite, pigment
minerals, trona, Glauber's salt, sodium
saltpetre, alunite, arsenic, boron, iodine,
bromine, bentonite, diatomaceous earth,
ceramic clay, refractory clay, bauxite,
attapulgite clay, sepiolite clay, illite clay,
rectorite clay
Pyrophyllite, wollastonite, diopside, perlite, Raw ore or 2%-12%
mica, zeolite, barite, toxoid, calcite, mineral dressing
vermiculite, tremolite, industrial tourmaline,
chalk, asbestos, blue asbestos, andalusite,
garnet, gypsum
Other clays (casting clay, brick clay, Raw ore or 1%-5% or
ceramsite clay, cement batching clay, cement mineral dressing CNY 0.1-CNY 5
batching red clay, cement batching loess, per tonne (or
cement batching mudstone, clay for per cubic
insulation materials) metre)
Stones Marble, granite, dolomite, quartzite, Raw ore or 1%-10%
sandstone, diabase, andesite, diorite, slate, mineral dressing
basalt, gneiss, amphibolite, shale, pumice,
tuff, obsidian, nepheline, feldspar,
serpentinite, medical stone, marl, potassium-
bearing rock, potassium-bearing sand shale,
natural oilstone, peridotite, turpentine,
trachyte, gabbro, pyroxenite, syenite,
volcanic ash, volcanic slag, peat
- 205 -
Tariff lines Tariff objects Tariff rates

Gravel Raw ore or 1%-5% or
mineral dressing CNY 0.1-CNY 5
per tonne (or
per cubic
metre)
Precious Gem, jade, gem-grade diamond, agate, Raw ore or 4%-20%
stones topaz, tourmaline mineral dressing
Water and Carbon dioxide, hydrogen sulphide, helium, radon Raw ore 2%-5%
gas minerals Mineral water Raw ore 1%-20% or
CNY 1-CNY 30
per cubic
metre
Salts Sodium salt, potassium salt, magnesium salt, lithium salt Mineral dressing 3%-15%
Natural brines Raw ore 3%-15% or
CNY 1-CNY 10
per tonne (or
per cubic
metre)
Sea salt 2%-5%

- 206 -
Table A4.4 Tariff lines and tariff rate range before the implementation of the Resource
Tax Law
No. Tariff lines Tariff object Tariff rate range
1 Crude oil, natural gas Raw ore 6%
2 Coal Raw ore 2%-10%
3 Metallic ores Iron ore Mineral concentrate 1%-6%
4 Gold ore Gold ingots 1%-4%
5 Cooper ore Mineral concentrate 2%-8%
6 Bauxite Raw ore 3%-9%
7 Lead-zinc ore Mineral concentrate 2%-6%
8 Nickel ore Mineral concentrate 2%-6%
9 Tin ore Mineral concentrate 2%-6%
10 Tungsten ore Mineral concentrate 6.5%
11 Molybdenum ore Mineral concentrate 11%
12 Light rare earths Mineral concentrate 11.5%, 9.5%, 7.5%.
Applicable tariff rates
are different among
regions in China. For
example, 11.5% in
Inner Mongolia, 9.5% in
Sichuan, and 7.5% in
Shandong.
13 Medium and heavy rare Mineral concentrate 27%
earths
14 Other metallic ore Raw ore or mineral No more than 20%
products not elsewhere concentrate
classified
15 Non-metallic Graphite Mineral concentrate 3%-10%
16 ores Diatomite Mineral concentrate 1%-6%
17 Kaolin Raw ore 1%-6%
18 Fluorite Mineral concentrate 1%-6%
19 Limestone Raw ore 1%-6%
20 Pyrite ore Mineral concentrate 1%-6%
21 Phosphate ore Raw ore 3%-8%
22 Potassium chloride Mineral concentrate 3%-8%
23 Potassium sulphate Mineral concentrate 6%-12%
24 Well salt Sodium chloride 1%-6%
primary products
25 Lake salt Sodium chloride 1%-6%
primary products
26 Salt extracted from Sodium chloride 3%-15%
underground brines primary products
27 Coal seam (formed) gas Raw ore 1%-2%
28 Clay, gravel Raw ore CNY 0.1-5 per tonne or
cubic metre
29 Other non-metallic ore Raw ore or mineral No more than CNY 30
products not elsewhere concentrate per tonne or cubic
classified metre for specific tariff
rate; no more than
20% for ad valorem
tariff rate
30 Sea salt Sodium chloride 1%-5%
primary products
__________

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Trade Policy Review Body

TRADE POLICY REVIEW

REPORT BY THE SECRETARIAT

Document WT/TPR/G/415 contains the policy statement submitted by China.

3.1.4 Other charges affecting imports .................................................................................55

3.3.4.2 Price controls........................................................................................................94

4.1.2.4.3 Internal measures ............................................................................................ 127

4.4.1.3.4.1 Foreign participation ...................................................................................... 162

Chart 4.4 OECD measurement of support, 2010-19 .............................................................. 132

Table 1.1 Selected macroeconomic indicators, 2015-20 ..........................................................16

Table A3.1 MFN applied tariff summary, 2021 ...................................................................... 193

1.1 Main Features of the Economy

Table 1.1 Selected macroeconomic indicators, 2015-20

2015 2016 2017 2018 2019 2020

World Bank Policy Research Working Paper 9298.

1.2 Recent Economic Developments

1.2.1 Growth and impact of COVID‑19

Table 1.2 GDP by sector, 2015-20

1.2.2 Monetary and exchange rate policy

1.2.3 Fiscal policy

1.2.4 Structural measures

1.2.5 Balance of payments

Table 1.3 Balance of payments, 2015-20

1.3 Developments in Trade and Investment

1.3.1 Trends and patterns in merchandise and services trade

Total: USD 2,097.6 billion Total: USD 2,590.6 billion

Total: USD 1,587.9 billion Total: USD 2,055.6 billion

Japan Hong Kong, China Japan Hong Kong, China

Other Asia/ Other Asia/

Other America Other America

Total: USD 2,097.6 billion Total: USD 2,590.6 billion

Other Europe Chinab Other Europe Chinab

EU-27 EU-27 United States

Total: USD 1,587.9 billion Total: USD 2,055.6 billion

Table 1.4 Composition of trade in services, 2015-20

Source: Information provided by the authorities.

1.3.2 Trends and patterns in FDI

Chart 1.3 Foreign direct investment, 2000-19

Left-hand scale: Right-hand scale:

Table 1.5 Inward foreign direct investment by source, 2015-19

Note: Figures refer to foreign capital actually used.

Table 1.6 Inward foreign direct investment by main sectors, 2015-19

Note: Figures refer to foreign capital actually used.

Table 1.7 Outward FDI by main destination, 2015-19

Table 1.8 Outward FDI by main sectors, 2015-19

2 TRADE AND INVESTMENT REGIMES

2.1 General Framework

2.2 Trade Policy Framework and Objectives

2.2.1 Institutional framework

2.2.2 Trade policy formulation and objectives

2.3 Trade Agreements and Arrangements

2.3.2 Regional and preferential agreements

2.32. The authorities indicate that on 11 December 2018, a Memorandum of Understanding

2.3.3 Other agreements and arrangements

2.4 Investment Regime

2.4.1 Regulatory framework and market access

pursuant to statutory procedures and in a non-discriminatory manner, with compensation made