Ta Kung Wen Wei Media Center:
Do China's subsidy policies comply with the relevant provisions of the WTO? Do they create unfair competition? Thank you.
Zou Jiayi:
Thank you for your questions. Under market economic conditions, subsidies are widely used by many countries and regions, including the US and China, as one of the tools to address market failure and imbalanced economic development. However, subsidy policies should follow certain rules. As one of the WTO members, China formulates the policies of subsidies in conformity with the stipulations of the WTO, which divides subsidies into three categories: prohibited subsidies, actionable subsidies and non-actionable subsidies.
Prohibited subsidiesrefer to mainly export subsidies and import substitution subsidies. Actionable subsidies may result in trade-distortion and unfair effects on international trade, and harm the interests of members, but WTO members can recourse to the WTO dispute settlement mechanism. Non-actionable subsidies will not result in social distortions and unfair trade and are used mainly for supporting research and development, a country's undeveloped regions and support enterprises to achieve new and higher standards of ecological environment protection and so on.
Since China joined the WTO, we have actively pressed ahead with reform to ensure the compliance of domestic policies.Most of China's subsidies are non-actionable subsidies, and supplemented by actionable subsidies. Prohibited subsidies have been fully abolished. At the same time, we have earnestly implemented the agreement on subsidies and countervailing measures, which stipulate obligations such as WTO's rule of transparency on subsidies. For example, according to the WTO's transparency principle on subsidies, China strictly follows the requirements to regularly notify the WTO of the revision, adjustment and implementation of relevant laws, regulations and specific measures. Since China's WTO entry, we have submitted to the WTO over one thousand notifications. The latest one was in this July. We notified the WTO of the central and sub-national policies of subsidy policies between 2015 and 2016, covering all the provincial level administrative areas for the first time.
Of course, I don't mean that our policies are impeccable. As a developing country, China has made continuous efforts in reforming and improving the policies of industrial subsidies and the endeavor is still underway. Based on the guideline, subsidies will mostly focus on non-actionable areas, avoiding as much as possible the adoption of actionable aspects. This is exemplified by two cases. The first involves agricultural subsidies. We have scrapped three types of subsidies, namely, direct subsidies to grain growers, comprehensive subsidies for agricultural inputs and subsidies for the seeds of high-quality crops, all of which belong to the yellow box subsidies that we previously adopted. We have replaced them with supportive policies related to the conservation of agrarian lands and appropriate operational land scale, in an attempt to secure the agricultural surroundings and facilitate sustainable development while shifting to green box subsidies. The second one is: not long ago, we undertook a round of reducing capacity among manufacturing industries. To better support this, we established a designated prize fund, primarily spent on trainings and re-employment of the people losing jobs during the process. The financial support of those enterprises is provided with non-actionable subsidies as well.
By and large, China has fulfilled its commitments to the WTO. The subsidies in both the standards and measures have in no way gone beyond the organization's regulations. Hence, we have not caused market disorder and unfair competition. At the same time, during implementation, if some local governments are found to be continuing to provide prohibited subsidies, it is our indomitable resolve to get them to stop such wrongdoing. Thank you.
