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ANNEX 5B SUBSIDIES TO BE PHASED OUT
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ANNEX 5b

 

SUBSIDIES TO BE PHASED OUT

 

 

I.          SUBSIDIES PROVIDED TO CERTAIN STATE-OWNED ENTERPRISES WHICH ARE RUNNING AT A LOSS

 

1.    Title of the subsidy program

       Subsidies provided to certain State-owned enterprises which are running at a loss.

 

2.    Period covered by the notification

       1990-1998.

 

3.    Policy objective and/or purpose of the subsidy

            To promote structural adjustment of those State-owned enterprises which are running at a loss, especially those in coal-mining and oil-drilling sectors, while keeping employment by means of promoting rationalization and maintaining stable production and safety.

 

4.    Background and authority for the subsidy

       Ministry of Finance.

 

5.    Legislation under which it is granted

       Assistance by budget.

 

6.    Form of the subsidy

       Grant and tax forgiving

 

7.    To whom and how the subsidy is provided

            Subsidy is provided to severe loss-making State-owned enterprises due to either fixed price of  the products they produce or the increasing cost of exploitation of the resources.

 

8.         Subsidy per unit, or in cases where this is not possible, the total amount or the annual amount budgeted for that subsidy

 

Unit: 100 million RMB

 Sector/Year

  1990

  1991

  1992

  1993

  1994

1995

1996

1997

1998

Metallurgic industry

   1.16

   1.46

   1.35

   3.13

   4.07

3.02

5.04

10.96

8.36

Ferrous-metal industry

   0.63

   0.86

   1.28

   1.51

   5.80

5.86

4.78

6.58

4.65

Machinery industry

   3.80

   5.07

  14.61

   3.98

  14.09

8.34

9.67

11.17

8.38

Coal industry

  55.86

  66.70

  70.14

  49.80

  47.19

12.13

13.21

16.83

14.85

Oil industry

  42.53

  54.36

  52.89

  28.08

   0.00

0.00

0.00

6.78

3.28

Chemical industry

   3.83

   4.03

   3.70

   4.11

   6.90

3.47

4.26

5.32

4.96

Textile industry

   1.90

   2.39

   2.07

   3.09

   2.65

3.38

6.97

16.41

15.36

Light industry

   6.65

   7.88

   6.31

   9.30

   3.99

1.52

2.63

6.82

2.35

Tobacco industry

   0.00

   0.00

   0.00

   0.00

  12.00

8.62

9.26

10.25

8.83

Total of the nine sectors

 116.36

 142.75

 152.35

 103.00

  96.69

46.34

55.92

91.12

71.02

Other sectors

   1.65

   1.94

   1.99

   1.53

   1.24

0.42

1.28

4.62

3.67

Total

 118.01

 144.69

 154.34

 104.53

  97.93

46.76

57.2

95.74

74.69

 

9.    Duration of the subsidy and/or any other time-limits attached to it

       1949-2000.

 

10.   Statistical data permitting an assessment of the trade effects of a subsidy

       Not available.

 

II.        THE PRIORITY IN OBTAINING LOANS AND FOREIGN CURRENCIES BASED ON EXPORT PERFORMANCE

 

1.    Title of the subsidy program

       The priority in obtaining loans and foreign currencies based on export performance.

 

2.    Period covered by the notification

       1994-1999.

 

3.    Policy objective and/or purpose of the subsidy

       To promote the exportation of automobiles. 

 

4.    Background and authority for the subsidy

       State Planning Commission.

 

5.    Legislation under which it is granted

       State Council Circular on Industrial Policy on Automobiles..

 

6.    Form of the subsidy

       Priority in obtaining loans and foreign currencies.

 

7.    To whom and how the subsidy is provided

       Priority is given to:

                        (1)       Automotive production enterprises whose export of whole vehicle products has reached the percentage points in the volume of their sales as indicated in the following chart;

 

Vehicles Types

Category

Percentages

Passenger

Vehicles

M1

3%

M2

5%

M3

8%

Freight

Vehicles

N1

5%

N2, N3

4%

Motorcycles

L

10%

 

       and

 

                        (2)       Automobile and motorcycle components manufacturing enterprises whose exports account for 10 per cent of their total annual sales.

 

8.         Subsidy per unit, or in cases where this is not possible, the total amount or the annual amount budgeted for that subsidy

       Zero, because no enterprises have reached the level for enjoying the priority up till now. 

 

9.    Duration of the subsidy and/or any other time-limits attached to it

       China commits itself to eliminate this measure by the year of 2000.

 

10.   Statistical data permitting an assessment of the trade effects of a subsidy

       Zero.

 

III.       PREFERENTIAL TARIFF RATES BASED ON LOCALIZATION  RATE OF AUTOMOTIVE PRODUCTION

 

1.    Title of the subsidy program

       Preferential tariff rates based on localization  rate of automotive production. 

 

2.    Period covered by the notification

       1994-1999

 

3.    Policy objective and/or purpose of the subsidy

       To promote the localization process of automobile industry of China.

 

4.    Background and authority for the subsidy

       State Planning Commission.

 

5.    Legislation under which it is granted

       State Council Circular on Industrial Policy on Automobiles.

 

6.    Form of the subsidy

       Preferential tariff rates.

 

7.    To whom and how the subsidy is provided

            The preferential tariff rates are granted to the automotive enterprises whose localization reaches the following ratios:

 

                        (1)       Localization rate reaches 40 per cent, 60 per cent or 80 per cent on products that incorporate imported technology on whole vehicles of M Category;

 

                        (2)       Localization rate reaches 50 per cent, 70 per cent or 90 per cent on products that incorporate imported technology on whole vehicles of N and L Categories; and

 

                        (3)       Localization rate reaches 50 per cent, 70 per cent or 90 per cent on products that incorporate imported technology on automobile and motorcycle assemblies and key components.

 

8.         Subsidy per unit, or in cases where this is not possible, the total amount or the annual amount budgeted for that subsidy

       Not available.

 

9.    Duration of the subsidy and/or any other time-limits attached to it

       China commits itself to phase out this measure by the year of 2000.

 

10.   Statistical data permitting an assessment of the trade effects of a subsidy

       The trade effect is negligible.

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