China does not make transparent its subsidies related to international trade and foreign investment, concludes a report by the World Trade Organization (WTO) that evaluates that nation’s policies in this regard.
Broadly speaking, the notifications submitted to the WTO and China’s responses to questions posed by other Members “have not allowed” the WTO Secretariat to have “a clear overview of China’s aid programs.”
In particular, the notifications do not contain information on spending levels in certain sectors such as aluminum, electric vehicles, glass, shipbuilding, semiconductors or steel.
No information on subsidies has been made available to the Secretariat after those notified in 2019.
In the WTO Committee on Subsidies and Countervailing Measures, China usually responds to questions that focus on subsidy notifications, but not those regarding subsidy policies not covered by notifications.
For their part, the Chinese authorities have indicated that, under the WTO Agreement on Subsidies and Countervailing Measures, there is no obligation to provide written information on programs that are not listed in the subsidy notifications.
“The fact that the government, through numerous state-owned companies, participates in the financing and management of companies could constitute an obstacle to transparency in the matter of government aid, which makes it difficult to identify specific policy measures” , argues the WTO Secretariat.
The Chinese authorities disagree with this statement and indicate that no implicit subsidies were provided to the Chinese SOEs.
According to them, the Government is not involved in the financing, operation and management of state-owned companies. In addition to the notified programs, there appear to be numerous initiatives to support different industries and attract foreign investment.
But so-called “government guidance funds,” or investment funds run by the Chinese government, use public resources to make capital investments in sectors that the government considers important.
The Secretariat has not been able to obtain clear information on what these funds consist of. Some are still being created, and it is not clear what their final amount will be.
According to some external sources, they are mostly financed by the central government and local governments, large state-owned companies, and state-owned financial institutions.
Most of the funds are used to finance advanced manufacturing processes, new materials and other innovative industries.
The Chinese authorities assert that certain funds are partly privately financed, that they would not constitute a grant and therefore would not be subject to notification.
According to the authorities, it is not necessary to notify these funds to the WTO, as the assistance provided through these funds does not constitute a subsidy.
Reference-www.eleconomista.com.mx