PEOPLE’S REPUBLIC OF CHINA

SUBSIDY PROGRAMS: GENERAL

Last Reviewed February 2009

Effective February 15, 2000, Import Administration began publishing “Decision Memos” to reduce the size of antidumping and countervailing duty Federal Register notices. In cases in which a Decision Memo was published, you will find a link to the memo listed below.

In addition, in the following programs, in instances below in which a proceeding was a Sunset Review, you will see the letters SR after the product name.

The subsidy programs listed below have been investigated by the Department and have been found to be "countervailable" based on the criteria established in the Tariff and Trade Act of 1930, as amended. Please refer to this Act for further detail of the criteria applied. In addition, you may click on the cases listed below the subsidy program title for a full explanation of the Department's analysis in those cases.

[from CFS Paper] The purpose of this program is to promote: (1) Technological renovation in key industries, key enterprises, and key products; (2) facilitation of technology upgrade; (3) improvement of product structure; (4) improvement of quality; (5) increase of supply; (6) expansion of domestic demand; and (7) continuous and healthy development of the state economy. Under the Key Technology Program, companies can apply for funds to cover the cost of financing specific technological renovation projects. Under Article 9 of the Special Fund Measures, Key Technology Program grants are disbursed in the form of “project investment facility” grants covering two years' worth of interest payable on loans to fund the project, or up to three years for enterprises located in certain regions. Under Article 11 of the Special Fund Measures, Key Technology Program funds may also be disbursed as “loan interest grants,” which are calculated with reference to the amount of the project loans and prevailing interest rates during a period of one to two years. Pursuant to Article 4 of Circular No. 886, the recipients of these funds will mainly be selected from large-sized state-owned enterprises and large-sized state holding enterprises among the 512 key enterprises, 120 pilot enterprise groups and the leading enterprises in industries. To be considered for funding, the enterprise files an application that is reviewed at various levels of government, with final approval given by the State Council. Once approved, the local finance bureaus appropriate the funds into the enterprise's account.

[from CFS Paper] According to Article 8 of the FIE Tax Law, FIEs that are “productive” and scheduled to operate not less than 10 years are exempt from income tax in their first two profitable years and pay half of their applicable tax rate for the following three years. FIEs are deemed “productive” if they qualify under Article 72 of the Detailed Implementation Rules of the Income Tax Law of the People’s Republic of China of Foreign Investment Enterprises and Foreign Enterprises. This provision specifies a list of industries in which FIEs must operate in order to qualify for benefits under this program. The activities listed in the law are: (1) machine manufacturing and electronics industries; (2) energy resource industries (not including exploitation of oil and natural gas); (3) metallurgical, chemical and building material industries; (4) light industries, and textiles and packaging industries; (5) medical equipment and pharmaceutical industries; (6) agriculture, forestry, animal husbandry, fisheries and water conservation; (7) construction industries; (8) communications and transportation industries (not including passenger transport); (9) development of science and technology, geological survey and industrial information consultancy directly for services in respect of production and services in respect of repair and maintenance of production equipment and precision instruments; (10) other industries as specified by the tax authorities under the State Council. If an FIE meets the above conditions, eligibility is automatic and the amount exempted appears on the enterprise’s tax return.

[from CFS Paper] FIEs are encouraged to locate in designated coastal economic development zones, special economic zones, and economic and technical development zones in the PRC through preferential income tax rates. This program was originally created in 1988 under the Provisional Rules on Exemption and Reduction of Corporate Income Tax and Business Tax of FIE in Coastal Economic Zone of the Ministry of Finance and is currently administered under the FIE Tax Law, and Decree 85 of the State Council of 1991 (Decree 85). Under Article 7 of the FIE Tax Law and Article 71 of Decree 85, “productive” FIEs located in the designated economic zones pay corporate income tax at a reduced rate of either 15 or 24 percent, depending on the zone.

[from CFS Paper] Under Article 9 of the FIE Tax Law, the governments of the provinces, the autonomous regions, and the centrally governed municipalities have been delegated the authority to provide exemptions and reductions of local income tax for industries and projects for which foreign investment is encouraged. As such, the local governments establish the eligibility criteria and administer the application process for any local tax reductions or exemptions. Therefore, the requirements and application procedures for this program may vary between jurisdictions.

[from LWTP] GG reported that it has been designated a high-tech domestic enterprise and, therefore, pays a 15 percent income tax rate, compared to the regular income tax rate of 33 percent (30 percent national plus 3 percent local). As shown in GG's 2006 financial statements, the company was designated as a “Key High-tech Enterprise of the Torch Program” in 1997 through Guo-Ke-Huo-Zi (1997) No. 52. The company was also placed on Guandong Province's list of high-tech enterprises through Yue-Di-Shui-Han (1997) No. 49. According to Yue-Fa (1998) No. 16 (Decision on Promoting the Optimization and Updating of Industrial Structure through Scientific and Technological Progress by Guangdong Provincial Party Committee and the Municipal Government of Guangdong Province of the Central Committee), GG pays a reduced 15 percent tax because it is on the provincial list of high-tech industries. We preliminarily determine that the reduced income tax rate applied to GG under the Yue-Fa (1998) No. 16 is a financial contribution in the form of revenue forgone by the GOC, and it provides a benefit to the recipient in the amount of the tax savings. See section 771(5)(D)(ii) of the Act and 19 CFR 351.509(a)(1). We also preliminarily determine that the reduction afforded by this program is limited as a matter of law to certain high-tech enterprises listed on Yue-Di-Shui-Han (1997) No. 49, and, hence, is specific under section 771(5A)(D)(i) of the Act.

[from CFS Paper] Provisions in GUOSHUIFA (2000) No. 90, Administrative Measures on Enterprise Income Tax Credits for Purchase of Domestic Equipment by FIEs and Foreign Enterprises, and CAISHUI (2000) No. 49, Circular of the Ministry of Finance and the State Administration of Taxation on Enterprise Income Tax Credits for Purchase of Domestic Equipment by Foreign Invested Enterprises and Foreign Enterprises, permit FIEs to obtain tax credits of up to 40 percent of the purchase value of domestically produced equipment. Specifically, the tax credit is available to FIEs and foreign-owned enterprises whose projects are classified in either the Encouraged or Restricted B categories of the Catalog of Industrial Guidance for Foreign Investment. The credit applies to any domestically produced equipment so long as the equipment is not listed in the Catalog of Non-Duty-Exemptible Articles of Importation. The program has been in effect since 1999 and its purpose, according to the GOC, is to attract foreign investment. To receive a tax credit under this program, requesting enterprises must submit an application to the local tax authority within two months of purchasing the equipment. Once approved, the credit can be claimed on the enterprise's income tax return. The amount of the credit is limited to the lesser of 40 percent of the purchase price of the domestically produced equipment or the incremental increase in income taxes owed over the previous year.

[from Line Pipe] We determine that the income tax deductions provided under the program constitute a financial contribution, in the form of revenue forgone, and a benefit, in an amount equal to the tax savings, under sections 771(5)(D)(i) and 771(5)(E) of the Act, respectively. We further find that this program is specific under section 771(5A)(A) of the Act because the receipt of the tax savings is contingent upon the use of domestic over imported goods.

[from Citric Acid] Article 73 of the Implementing Rules of the Foreign Investment Enterprise and Foreign Enterprise Income Tax Law authorizes a reduced income tax rate of 15 percent for ``productive'' FIEs located in coastal economic zones, special economic zones, or economic and technical development zones if they undertake: (1) Technology-intensive or knowledge-intensive projects; (2) projects with foreign investment of $30 million or more and a long payback period; or (3) energy, transportation and port construction projects. Additionally, FIEs that have been established in other zones specified by the State Council and are engaged in projects encouraged by the State may qualify for the reduced income tax rate of 15 percent upon approval by the State Taxation Bureau.

[from Lawn Groomers] The government of Guangdong province provides income tax incentives to FIEs operating within the province. Productive FIEs operating for at least 10 years may take advantage of a ``Two Free, Three Half'' program similar to that operated by the central government. Further,`export-oriented'' FIEs that export 70 percent or more of their produced goods may qualify for a reduced income tax rate once the ``Two Free, Three Half'' period has expired. Export-oriented FIEs operating in SEZs within Guangdong province may qualify for a further reduced income tax rate of 10 percent. Further, an FIE may receive an income tax refund ranging from 40 to 100 percent when its profits are either reinvested into the enterprise, or reinvested in an export-oriented FIE.

[from Lawn Groomers] Article 75 of the Detailed Implementation Rules of the Income Tax Law of the People's Republic of China of Foreign Investment Enterprises an Foreign Enterprises (FIE Tax Rules) provides that FIEs that export 70 percent or more of the total value of their products may benefit from reduced tax rates. Income tax rates for enterprises participating in this program may be reduced by 50 percent.

[from Lawn Groomers] Export-oriented FIEs are eligible for tax refunds on profits that are reinvested in the FIE, or into a new high- technology enterprise or EOE.

[from CFS Paper] As outlined in GUOSHUIFA (1999) No. 171, Trial Administrative Measures on Purchase of Domestic Equipment by Projects with Foreign Investment (1999 VAT Measures), the GOC refunds the VAT on purchases by FIEs of certain domestically produced equipment. Article 3 of the 1999 VAT Measures specifies that this program is limited to FIEs including exclusively foreign-owned enterprises. Article 4 of the 1999 VAT Measures defines the type of equipment eligible for the VAT exemption, which includes equipment falling under the Encouraged and Restricted B categories listed in the Notice of the State Council Concerning the Adjustment of Taxation Policies for Imported Equipment (No. 37 (1997)) and equipment for projects listed in the Catalogue of Key Industries, Products and Technologies Encouraged for Development by the State. The receipt of the VAT rebates on domestically produced equipment is granted to FIEs upon presentation of documents showing their FIE status.

[from CFS Paper] Enacted in 1997, the Circular of the State Council on Adjusting Tax Policies on Imported Equipment (GUOFA No. 37) (Circular No. 37) exempts both FIEs and certain domestic enterprises from the VAT and tariffs on imported equipment used in their production. The objective of the program is to encourage foreign investment and to introduce foreign advanced technology equipment and industry technology upgrades.

[from CFS Paper] According to Yangpu local tax regulations, enterprises located in the Economic Development Zone of Hainan may enjoy several tax preferences. These preferences are described in Preferential Policies of Taxation, which includes the eligibility criteria needed to qualify for the preferences. Under “Preferential Policies Regarding Investment by Manufacturer,” high-tech or labor intensive enterprises with investment over RMB 3 billion and more than 1000 local employees may be refunded 25 percent of the VAT paid on domestic sales (the percentage of the tax received by the local government) starting in the first year the company has production and sales. The VAT refund can continue for five years.

[from Lawn Groomers] This program offers VAT and import tariff rebates on imported equipment. This program is available to both FIEs and domestic enterprises, and its purpose is to encourage foreign investment and introduce foreign advanced technology equipment and industry technology upgrades.

[from LW Sacks] Both SSJ and Aifudi are located in industrial parks within Shandong Province. SSJ is located in Chenming Industrial Zone (also know as Chenming Industrial Park or Garden) in the Shouguang municipal division of the city of Weifang. Aifudi is located in Huantai New Century Industry Park in the neighboring city of Zibo. According to SSJ's supplemental response, only projects that exceed a certain amount of investment level are allowed to locate in the park. Moreover, payment for its use of land within the park is waived as long as it meets certain additional investment and fixed assets density (i.e., RMB per Mu) requirements. If it fails to meet its obligations, it must pay for its land-use rights. In such case, it would pay a predetermined fee stipulated in its contract. The exact figure is business proprietary. According to an excerpt from Weifang's Web site provided by the petitioners, preference may be given to potential residents with ``new productive projects'' that ``focus on paper making, textile,'' and several other types of products. Other information submitted by the petitioners also indicates that preference is given to ``three low, three high'' projects (low energy consumption, low pollution, low land usage, high profit, high technology, and high value-added) and that Chenming Industrial Park included 77 enterprises in 2007.

[from LWTP] At verification, the Department learned that neither GG nor Guanlong paid land-use taxes and fees during the POI. According to the company officials, GG has never paid such taxes or fees, and it was their understanding that no such taxes or fees were owed. With regard to Guanlong, company officials explained that the company was exempted from these taxes and fees by virtue of its status as an FIE. However, that exemption ended in 2007. Guanlong officials provided copies of the government circular that originally granted the exemption to all FIEs and the subsequent circular rescinding the exemption as of 2007. As the government verification occurred prior to the companies' verification, we did not pursue this issue with the GOC.
Analysis: Evidence shows that Guanlong was exempted from land-use taxes and fees because it is an FIE. The basis for GG’s exemption is not clear (GG is not an FIE) and, hence, whether the taxes and fees were otherwise due is also unclear. Nor do we know the amount of taxes and fees that GG might have owed.
Recommendation: We recommend preliminarily determining that the exemption of land-use taxes and fees for Guanlong confers a countervailable subsidy. The exemption of land-use taxes and fees constitutes a government financial contribution in the form of revenue foregone within the meaning of section 771(5)(D)(ii) of the Act, with the benefit equaling the tax savings (see 19 CFR 351.510(a)). Regarding specificity, the exemption for Guanlong is de jure specific in that it is limited by law to FIEs. Although it is possible that GG got an exemption because it was located in an economic zone, the record with regard to GG, which is not an FIE, is insufficient to make such a specificity finding.

[from LWTP] Specificity of domestic subsidies is determined by reference to the granting authority. While contrary to our finding regarding Shandong Province in CWP, the facts in this investigation indicate that electricity rates for enterprises located in Guangdong were set at the national level. The record further shows that the NDRC set different rate adjustments for different jurisdictions. These facts support a finding of regional specificity with respect to electricity rates in Guangdong Province.
To determine whether a benefit was conferred through the provision of electricity, we have analyzed potential benchmarks in accordance with 19 CFR 351.511(a) to determine whether the GOC received adequate remuneration. Under 19 CFR 351.511(a)(2)(i), we look first to whether there are market-determined prices within the country. According to the GOC, private ownership of power plants is increasing in China, but the two transmission companies (State Grid and China Southern Power Grid) are state-owned and the prices for uploading electricity to the power grid, transmitting and selling electricity to end users are generally regulated by the GOC. Also, the GOC has provided import prices for electricity imported into China, but has noted that this electricity is uploaded onto the grid for distribution across the grid. Therefore, it is not a retail price and, hence, does not reflect a price that would be available to individual enterprises. Moreover, the end-user prices of any imported electricity are likewise regulated by the GOC. Therefore, we preliminarily determine that there are no “tier one” market-determined prices in China to use as a benchmark.
Under 19 CFR 351.511(a)(2)(ii), we look next to world market prices, where we can reasonably conclude that such a price would be available to users in China. However, the record contains no such information for world market prices for electricity that would be available to users in China.
Finally, under 19 CFR 351.511(a)(2)(iii), we look to whether the government price is consistent with market principles. According to the preamble, this analysis can entail looking at the government’s price-setting philosophy, costs (including rates of return sufficient to ensure future operations), or possible price discrimination. The GOC has submitted the regulations in effect at the time of this investigation regarding reform of electricity prices in China. The regulations appear to address, inter alia, the government’s price-setting philosophy. However, because a key aspect of our understanding of the level of government setting electricity rates came to light only at verification, we did not have the opportunity to seek the extensive information needed to analyze the government’s price-setting philosophy or its costs for electricity. Nevertheless, the information that has been provided indicates that preferential pricing exists within Guangdong Province.
Recommendation: We recommend preliminarily determining that the provision of electricity in Zhanjiang municipality confers a countervailable benefit on GG and Guanlong. The provision of electricity is a government financial contribution in the form of the provision of a good or service (section 771(5)(D)(iii)). The facts available in this investigation indicate that this electricity is being provided at preferential rates and, hence, for less than adequate remuneration (section 771(5)(E)(iv)). Finally, the subsidy is provided regionally and, hence, is specific (section 771(5A)(D)(iv)). Based on the facts available, we find that the amount of the countervailable benefit is the difference in the rates for the applicable user category between Guangzhou and Zhanjiang.
We also recommend clearly indicating that, in light of the new evidence regarding the role of the NDRC in setting prices discovered during the verification of this case, in any future administrative review of this proceeding as well as in other China CVD proceedings (where relevant and practicable), we intend to investigate and analyze further the electricity rate-setting authority in China and the considerations that go into setting those rates. We may also consider alternative approaches for determining a benefit, such as through an analysis of the government’s price setting philosophy or its costs. See e.g., Final Affirmative Countervailing Duty Determination: Steel Wire Rod from Trinidad and Tobago, 62 FR 55003 (October 22, 1997); Final Affirmative Countervailing Duty Determination: Certain Hot-Rolled Carbon Steel Flat Products from Thailand, 66 FR 50410 (October 3, 2001) and the accompanying “Issues and Decision Memorandum.”

[from LWTP] The purpose of the program is to provide eligible private enterprises in Guangdong Province special funding for the development of export activities. The Implementing Measures indicate that this program supports the development of international trade and economic cooperation through the establishment of different funds to provide payments to enterprises for international market exploration, export credit insurance assistance, the development of trade through science and technology, export product research and development, support for defense expenses in antidumping duty cases, loan interest grants for various export-related loans and development of outward-looking enterprises. The local Department of Foreign Trade and Economic Cooperation is responsible for approving applications filed under this program and the local Bureau of Finance disburses the approved funds. We preliminarily determine that the Outward Expansion Program grant is a countervailable subsidy within the meaning of section 771(5) of the Act. It is a financial contribution under section 771(5)(D)(i), and it provides a benefit in the amount of the grant (see 19 CFR 351.504(a)). Finally, because it is contingent upon export performance, the subsidy is specific under section 771(5A)(B).

[from LWTP] GG reported receiving export assistance from the municipal government and ZETDZ in several years. The GOC has claimed that any benefits under this program are recurring and, consequently, only assistance paid out in the POI is countervailable. The GOC, however, proffered no evidence in support of its claim.
Analysis: Under 19 CFR 351.524(c)(1), grants are normally treated as non-recurring subsidies. Parties may present evidence addressing the factors listed in 19 CFR 351.524(c)(2) to argue that grants should, instead, be treated as recurring subsidies, but the GOC has not done so in this case.
Recommendation: We recommend preliminarily determining that the export assistance provided by the municipal government and ZETDZ confers a countervailable subsidy on GG. The assistance is a direct transfer of funds (section 771(5)(D)(i)), with the benefit equaling the amount of the grant (19 CFR 351.504(a)). The subsidy is specific because it is contingent upon export performance (section 771(5A)(B)). We further recommend treating these grants as non-recurring subsidies under 19 CFR 351.524(c)(1). Consequently, any grants that exceed 0.5 percent of export sales in the year the grant was approved will be allocated over time, while grants that are less than 0.5 percent of export sales in the year of approval will be expensed in the year of receipt.

[from LWTP] Analysis: At the company verification, we reviewed the Zhangjiang Finance Bureau’s award notice listing the grant recipients for 2006. This document indicated that awards were made to “aquaculture and processing key industries” and that only two firms received such awards in 2006.
Recommendation: We recommend preliminarily determining that this environmental grant confers a countervailable subsidy on Guanlong. The assistance is a direct transfer of funds (section 771(5)(D)(i)), with the benefit equaling the amount of the grant (19 CFR 351.504(a)). The subsidy is specific because the actual recipients are limited in number (section 771(5A)(D)(iii)(I)).

[from LWTP] At verification, Department officials found that GG converted 12 percent of its total shares from non-tradable shares (“NTS”) to tradable shares (“TS”) with an even distribution to public shareholders, pursuant to a pilot government marketization program (i.e., the Non-tradable Share Reform program (“NTSR”)) in 2006. The ratio of free or bonus shares relative to the outstanding public shares resulted from discussion and negotiation between the NTS and TS shareholders. Company officials explained that stamp taxes for these transfers are specifically waived under this program. Furthermore, the shareholders were exempted from paying income tax on the share transfer. However, company officials explained that these tax effects were borne by the shareholders involved and not by the company itself, so it could provide no information on this aspect of the NTSR.
Analysis: In Tires, the Department found aspects of the NTSR to be countervailable. Specifically, we found that the GOC’s waiver of stamp taxes otherwise due upon transfer of bonus shares was countervailable. With respect to the income tax exemption, the Department found that it did not have sufficient information to reach a determination.
Recommendation: We recommend preliminarily determining that the waiver of stamp taxes under NTSR confers a countervailable subsidy. The waiver of stamp taxes constitutes a financial contribution in the form of revenue forgone within the meaning of section 771(5)(D)(ii) of the Act, with the benefit equaling the tax savings (see 19 CFR 351.510(a)). With respect to specificity, the record evidence shows that the underlying criterion for participation in NTSR is that listed companies must have NTS, regardless of whether those NTS were issued by SOEs, FIEs, or private enterprises. Accordingly, we find that the NTSR, including the stamp tax exemption, is specific within the meaning of section 771(5A)(D)(i) of the Act, in that it is limited to only those companies that participated in the NTSR.

[from Line Pipe] The interest assistance provided to exporting enterprises is to be used to pay interest on bank loans.21 The provisional measure states that the Liaoning Department of Finance determines the interest assistance amount in accordance with the short-term loan benchmark interest rate of commercial banks, the term of the enterprise’s short-term loans, and the short-term loan amounts.22 Specifically, Article 5 of the provisional measure refers to “export loans,” which means “short-term loans obtained by enterprises that produc{e} high-tech products and equipment manufacturing products in {the} province from banks and non-bank financial institutions due to the shortage of necessary funds for production and operation between products export declaration and receipt of payment.”23
To be eligible for interest assistance a legally registered enterprise must have an annual exportation value above $1,000,000, have exported products that fall in the scope of the “China High-Tech Product Export Catalog” or the scope of equipment manufacturing products, and have short-term loans provided during the period from the products’ export declaration to receipt of payment.24 To receive interest assistance, eligible companies must submit a separate application each year accompanied with export contracts, export declaration forms, a description of the exported product, and bank loan contracts.25
We determine that the export interest subsidies that Huludao Steel Pipe and Northern Steel received from the Liaoning provincial government constitute a financial contribution in the form of a direct transfer of funds from the government bestowing a benefit in the amount of the grants within the meaning of sections 771(5)(D)(i) and 771(5)(E) of the Act. We also find that, because the receipt of the export interest subsidies is contingent upon export performance, the program is specific within the meaning of section 771(5A)(A) of the Act.

[from Line Pipe] As discussed in prior China CVD cases, under the Department’s practice, loans provided by government policy banks are considered government loans and, thus, constitute direct financial contributions under the Act. See e.g., CFS Decision Memorandum at Comment 8, and Thermal Paper Decision Memorandum at Comment 6. Loans by SOCBs, however, are not necessarily treated as government loans because these types of banks may operate on a commercial basis in some countries. See Preamble, 63 FR 65363. However, as discussed in prior cases, the Department has found that the PRC’s banking system remains under state control and continues to suffer from the legacies associated with the longstanding pursuit of government objectives. See “Subsidies Valuation Information” section above and CFS Decision Memorandum at Comment 8. These factors undermine the SOCBs’ ability to act on a commercial basis and allow for continued government control resulting in the allocation of credit in accordance with government objectives. Therefore, treatment of SOCBs in China as commercial banks is not warranted in this case. As such, the Department determines that loans provided by SOCBs in China constitute a direct financial contribution from the government, pursuant to section 771(5)(D)(i) of the Act.
We further determine that the export loans received by the respondents are specific under section 771(5A)(A) of the Act because receipt of the financing is contingent upon exporting and that these export loans confer a benefit within the meaning of section 771(5)(E)(ii) of the Act.

[from Line Pipe] The GOC states that the goal of the Five Points One Line Program is to accelerate the development of the coastal economic belt of Liaoning Province. Eligibility under the program is limited to enterprises located within designated industrial zones and other areas within Liaoning Province, as specified under the program.
We determine that the grants and fees received by Huludao Steel Pipe and Huludao Bohai Oil Pipe under the program constitute a financial contribution in the form of a direct transfer of funds from the government, which bestow a benefit equal to the amount of the grants within the meaning of sections 771(5)(D)(i) and 771(5)(E) of the Act. We also find that, because the receipt of grants under the program are limited to enterprises located in certain geographical regions within the Liaoning Province, the program is specific within the meaning of section 771(5A)(D)(iv) of the Act.

[from Line Pipe] This program was exstablished by the ``Provisional Administration Measures on Northeast Old Industrial Base Foreign Trade Development Fund of Liaoning Province'' (No. 559), on November 18, 2004. The provisional measure states that the Foreign Trade Development Fund supports projects undertaken by exporting enterprises to improve the competitiveness of their exported products, to develop an export processing base, to support the registration of trademarks in foreign countries, to support the training of foreign trade professionals, and to explore international markets.\20\The provisional measure states that monies distributed by the fund are to be used only for the approved project and that the funding proportion of the applied project shall not exceed 50 percent of the total expense of the project. The fund is administered by the Liaoning Provincial Bureau of Foreign Trade and Economic Cooperation and Liaoning Department of Finance. Companies eligible for assistance are export enterprises with legal person status and export performance in Liaoning Province,and are required to submit a separate application to the authorities each time assistance is requested.

[from Citric Acid] According to the Implementing Opinions of City Government on Further Advancing the Brand Construction of Enterprise, the Government of Yixing City provides a lump sum award to enterprises that receive a ``famous brands'' certificate from either the Famous Brand Promotion Committee of China or the Famous Brand Promotion Committee of Jiangsu. To receive an award, the enterprise must present its ``famous brands'' certificate from either promotion committee to the Quality and Technology Supervision Bureau of Yixing and the Finance Bureau of Yixing. The Bureaus will then review the submitted certificate and approve the award.

[from Citric Acid] This program provides non-recurring grants from the Anqiu Finance Bureau. The GOC reported that to receive this grant an enterprise submits a project feasibility study to the municipal government who then, in turn, recommends the project to the Administration of Finance of Shandong Province and the Economic and Trade Commission of Shandong Province for approval. We find that this grant is a direct transfer of funds within the meaning of section 771(5)(D)(i) of the Act, providing a benefit in the amount of the grant. See 19 CFR 351.504(a).

The subsidy programs listed below have been investigated by the Department and have been found to be "not countervailable" based on the criteria established in the Tariff and Trade Act of 1930, as amended. Please refer to this Act for further detail of the criteria applied. In addition, you may click on the cases listed under the subsidy program title for a full explanation of the Department's analysis in each case where the subsidy program has been examined.

[from LWR Pipe] According to the GOC, the “exemption, deduction and refund” of VAT applies if a manufacturer exports its self-produced goods by itself or via a trading company. See Article 1 of the Circular on Further Promotion of Methodology of “Exemption, Deduction, and Refund” of Tax for Exported Goods (CAISHUI (2002) No. 7), GOC response (September 28, 2007) at Exhibit 98. Under the “VAT refund system,” when a producer/ exporter purchases inputs (e. g,, raw materials, components, fuel and power) it pays a VAT based on the purchase price of inputs. The GOC reported the VAT rates paid by LWRP producers/exports for inputs are as follows: raw materials and electricity - 17 percent; and, fuel and water - 13 percent. Once the exporter/producer exports subject merchandise, a VAT payment and tax exemption form is prepared and filed with the relevant state tax authority. LWRP exporters received a VAT refund of 13 percent of the export price during the POI. The Department's regulations state that in the case of an exemption upon export of indirect taxes, a benefit exists only to the extent that the Department determines that the amount exempted “exceeds the amount levied with respect to the production and distribution of like products when sold for domestic consumption. 19 CFR 351.517(a); see also 19 CFR 351.102 (for a definition of “indirect tax”). Information in the companies' responses shows that Lets Win and ZZPC paid the VAT on their inputs, and applied for and received a VAT refund on their export sales. To determine whether a benefit was provided under this program, the Department analyzed whether the amount of VAT exempted during the POI exceeded the amount levied with respect to the production and distribution of like products when sold for domestic consumption. Because the VAT rate levied on LWRP in the domestic market (17 percent) exceeded the amount of VAT exempted upon the export of LWRP (13 percent), the Department preliminarily determines that, for the purposes of this investigation, the VAT refund received upon the export of LWRP does not confer a countervailable benefit. The GOC has additionally reported that effective July 1, 2007, the VAT refund rate for exports of LWRP was set at zero percent.

[from LWR Pipe] According to the GOC, electricity in the PRC is produced by numerous power plants and it is transmitted for local distribution by two state-owned transmission companies, State Grid and China South Power Grid. Generally, prices for uploading electricity to the grid and transmitting it are regulated by the GOC, as are the final sales prices. Electricity consumers are divided into broad categories such as residential, commercial, large-scale industry and agriculture. The rates charged vary across customer categories and within customer categories based on the amount of electricity consumed. Moreover, among industrial users, certain industries are specifically broken out and these industries receive special, discounted rates. Based on our review of the rate schedules submitted for Jiangsu Province (where both Lets Win and ZZPC are located), discounted rates are established for producers of calcium carbide, electrolyte caustic soda, synthetic ammonia, yellow phosphorus with electric furnace, chlorine alkali, electrolyzed aluminum, and fertilizer. Thus, there is not a discounted rate for LWRP producers and, according to the GOC, the types of industries in Jiangsu province that fall into the large-scale industry category (which includes the LWRP producers) cover virtually all economic sectors outside of agriculture and services. Based on the record evidence, we preliminarily determine that the provision of electricity to large-scale enterprises in the PRC is neither de jure nor de facto specific. Although producers in a few particular industries are eligible for discounts under the law, all other large-scale enterprises within a locality pay the same rate for their electricity. Moreover, the absence of price discrimination among most users may also support a preliminary finding that electricity is not being provided to LWRP producers for less than adequate remuneration.

[from CW Pipe] According to the GOC, water suppliers in the PRC are highly localized. Many suppliers are SOEs, particularly in cities, but there is also private ownership. Water prices generally are regulated by the local governments. See, e.g., the Regulation on Administration of City Water Supply (Decree 158 of the State Council, 1994), provided within the GOC response at Exhibit 118 (September 17, 2007). East Pipe's water supplier, Weifang Treated Water Company, Ltd., is a majority privately owned company. Therefore, for East Pipe, we preliminarily determine that water is not provided by an ``authority'' and, hence, that no countervailable subsidy is bestowed. For Kingland, the GOC has provided the Circular on Adjusting the Water Resource Charge Rate ZHEJAIFEI [2004] No. 209 and Circular of Huzhou City People's Government on Approving and Forwarding the Provisional Regulation on the Collection of River Network Water Supply Fee Issued by City Water Resource Bureau HUZHENGFA [2002] No. 39, provided within the GOC supplemental response as exhibits S - 5 and S - 6 (October 23, 2007). These two schedules show that uniform rates are charged, with no discounts for any industry groups. Therefore, for the same reasons described above for electricity, we preliminarily determine that record evidence demonstrates that the provision of water in Zhejiang Province and Huzhou City (location of Kingland Pipe) is neither de jure nor de facto specific. Consequently, we preliminarily find that the government's provision of water does not confer a countervailable subsidy on Kingland.

[from OTR Tires] In our Post -Preliminary Analysis, we preliminarily determined that Provincial/Municipal Technology Programs are not de jure specific under section 771(5A)(D)(i) of the Act. We continue to find that the programs are not de jure specific under section 771(5A)(D)(i) of the Act. We also note that the record information did not demonstrate that these grants were de facto specific. As there was insufficient time remaining in this investigation to reopen the record for new factual information regarding these small grants, we intend to further examine grants disbursed under this program if a CVD order is issued and an administrative review is requested.

[from LWTP] GG and the GOC reported that GG received a grant pursuant to Guangdong Province’s “Measures of Identifying and Fostering Privately Owned Intellectual Property Stronghold Enterprises in Guangdong” (YUEZHIGUIHAN {222003} No. 49). The purpose of this program is to increase awareness of intellectual property by private enterprises in Guangdong Province, to increase their capability and knowledge of the intellectual property system, to increase the quantity and quality of the patents they hold, and to increase their competitiveness at home and abroad.
Companies seeking assistance submit applications to their municipal level IP offices, which review the applications and make recommendations to the provincial level IP office. Under the program regulations, the applicant must have: (1) managers who place a high priority on intellectual property; (2) an IP office with full-time employees; (3) a relatively complete IP management system; (4) employees who have basic IP knowledge; (5) increasing investment in patent development and increasing sales of patented products; (6) increasing number of patents; (7) no record of patent infringement.
Analysis: Our review of the regulation establishing the program shows that no industries are excluded and that any company with “a fairly good basis in terms of intellectual properties” can apply for assistance and potentially selected. The GOC has also provided data showing that the recipient enterprises are numerous and represent a wide variety of industries, and that neither GG nor the papermaking industry was a predominant or disproportionate user of the program.
Recommendation: We recommend preliminarily determining that this program is neither specific in law or in fact, and hence does not provide a countervailable subsidy. As noted above, the program is open to all industries and the authority and legislation pursuant to which the subsidy is provided is not otherwise limited to an enterprise or industry. Further, the recipients are spread across numerous enterprises and industries, and neither GG nor the papermaking industry is a dominant or disproportionate user of the program.

[from Citric Acid] Grants are provided under this program as the result of a science and technology award.

[from Citric Acid] Information submitted by the GOC shows that grants provided under the program are available to any enterprise that has productive fixed asset investment for a single project of more than RMB 10 million. If the aforementioned criterion is met, any enterprise will receive a benefit and there is no discretion to approve or disapprove. Further, the GOC reported that eligibility is not limited by law or in fact, to any enterprise or group of enterprises, or to any industry or group of industries. We do not find any basis to determine that the program is specific.

SUBSIDY PROGRAMS THAT HAVE BEEN TERMINATED

The subsidy programs listed below have been investigated by the Department and have been found to have been terminated based on the criteria established in the Tariff and Trade Act of 1930, as amended. Please refer to this Act for further detail of the criteria applied. In addition, you may click on the cases listed below the subsidy program title for a full explanation of the Department's analysis in each of these cases.

[from CFS Paper] In its response, the GOC submitted a circular showing that this program was terminated on January 1, 2002. We confirmed at verification that no residual benefits would exist in our POI.

When potential subsidy programs are investigated and found not to be used by the companies being investigated, the Department makes no determination as to their countervailability. If you click on the cases listed under the subsidy program title, you will be linked to each case in which the subsidy program was referenced.

[from CFS Paper] The purpose of this program is to provide incentives and rewards (monetary or non-monetary) to encourage enterprises to conduct clean production inspections, with the goal of protecting the environment. The program entered into force in October 2004, and was authorized by Decree No. 16 of the NDRC and the National Administration of Environmental Protection entitled Provisional Measures on Clean Production Inspection (Decree No. 16).

[from CFS Paper] Record information indicates that among the SMPI companies only GHS received subsidies under this program. See GE Supplemental Questionnaire Response (April 17, 2007) at 17. As we have determined that subsidies received by GHS should not be attributed to the subject merchandise, we are now treating this program as not used by GE.

The following subsidy programs were alleged by the petitioning industries and were investigated by the Department. However, during the investigation we found no evidence that such programs actually existed. If you click on the cases listed under the subsidy program title, you will be linked to each case in which the subsidy program was referenced. It is possible that, while the program named did not exist, a similar program having a different name actually was investigated. If this is the case, you will find that program listed elsewhere in this library.