Statement of reasons—Final decisions: Thermoformed molded fiber tableware (TMFT 2025 IN)

Definition

[23] For the purpose of these investigations, subject goods are defined as:

[24] For additional product information, the production process, the classification of imports, like goods and classes of goods, and information on the Canadian industry, refer to the Initiation Statement of Reasons.

Normal value

[34] Normal values are generally determined based on the domestic selling prices of like goods in the country of export, in accordance with the methodology of section 15 of SIMA, or on the aggregate of the cost of production of the goods, a reasonable amount for administrative, selling and all other costs, plus a reasonable amount for profits, in accordance with the methodology of paragraph 19(b) of SIMA.

[35] Where, in the opinion of the CBSA, sufficient information has not been furnished or is not available, normal values are determined pursuant to a ministerial specification in accordance with subsection 29(1) of SIMA.

Export price

[36] The export price of goods sold to importers in Canada is generally determined in accordance with the methodology of section 24 of SIMA based on the lesser of the adjusted exporter’s sale price for the goods or the adjusted importer’s purchase price. These prices are adjusted where necessary by deducting the costs, charges, expenses, duties and taxes resulting from the exportation of the goods as provided for in subparagraphs 24(a)(i) to 24(a)(iii) of SIMA.

[37] Where, in the opinion of the CBSA, sufficient information has not been furnished or is not available, normal values are determined pursuant to a ministerial specification in accordance with subsection 29(1) of SIMA.

Margin of dumping

[38] The margin of dumping by an exporter is equal to the amount by which the total normal value exceeds the total export price of the goods, expressed as a percentage of the total export price. All subject goods imported into Canada during the POI are included in the margins of dumping of the goods. Where the total normal value of the goods does not exceed the total export price of the goods, the margin of dumping is zero.

Background of section 20 inquiry

[39] Section 20 is a provision of SIMA that may be applied to determine the normal value of goods in a dumping investigation where certain conditions prevail in the domestic market of the exporting country. In the case of a prescribed country (which includes China), under paragraph 20(1)(a) of SIMA, it is applied where, in the opinion of the CBSA, the government of that country substantially determines domestic prices and there is sufficient reason to believe that the domestic prices are not substantially the same as they would be in a competitive market.^{Footnote 45}

[40] The provisions of section 20 are applied on a sectoral basis rather than on the country as a whole. The relevant sector includes the industry producing and exporting the goods under investigation.

[41] The complainant alleges that the conditions described in section 20 of SIMA prevail in the pulp and paper sector, which includes the production of TMFT, in China. That is, the complainant alleges that this industry sector in China does not operate under competitive market conditions and consequently, the domestic prices of TMFT established in China, would not be reliable for determining normal values.

[42] In the event that the CBSA forms an opinion that domestic prices of pulp and paper in China are substantially determined by the government, and there is sufficient reason to believe that the domestic prices are not substantially the same as they would be if they were determined in a competitive market, the normal values of the goods under investigation will be determined, pursuant to paragraph 20(1)(c) of SIMA, where such information is available, on the basis of the domestic selling prices or the aggregate of the cost of production, a reasonable amount for administrative, selling and all other costs, and a reasonable amount for profits of like goods sold by producers in any country designated by the CBSA and adjusted for price comparability; or, pursuant to paragraph 20(1)(d) of SIMA, where such information is available, on the basis of the selling price in Canada of like goods produced and imported from any country designated by the CBSA and adjusted for price comparability.

Analysis of section 20 conditions

Government control analysis

[43] This section will present the CBSA’s analysis of the extent to which the Government of China exercises control over the pulp and paper sector, and the pricing therein in China, by examining the following:

• Government of China’s plans, policies and directives impacting the pulp and paper sector and associated industries
• Government of China’s state-ownership and control of producers in the pulp and paper sector
• Government of China intervention in the cost of production of raw material inputs and
• The subsidization of TMFT producers and input suppliers

Government of China’s plans, policies and directives impacting the pulp and paper sector and associated industries

[44] The Government of China’s five-year plans and industrial policies are used by the government and industry parties as a roadmap and direction in relation to the development of a specific industry. These five-year plans and industrial policies exist on both a national and provincial level. At the national level, the CBSA found several five-year plans (current and past plans), as well as other national policy documents, to demonstrate that the Government of China directs the forestry, pulp and paper industries in China.

Five-year plans

[45] Within the 14th Five Year Plan (2021–2025), the Government of China’s National Economic and Social Development and Long Range Objectives outline a continued emphasis on industrial transformation, with papermaking and green manufacturing identified as the key sectors targeted for accelerated upgrading. The policy direction signals an intention to modernize light industries, such as pulp and paper production and reduce environmental impacts across the value chain.^{Footnote 46}

[46] Under the 14th Five Year Plan (2021–2025), the Government of China has continued to advance its national Plastics Pollution Control Action Plan, placing particular emphasis on the phased substitution of conventional plastics with environmentally preferable alternatives including use of bamboo, wood, paper products, biodegradable plastic products and other resources throughout the life cycle.^{Footnote 47} The CBSA finds that the 14th Five Year Plan supports growth and development of the Chinese TMFT industry as an environmentally sustainable alternative to plastic and petrochemical based products, such as disposable plastic or foam plates.

Structural industrial policies

[47] The Catalogue for Guiding Industry Restructuring designates large scale paper and pulp product manufacturing as an “Encouraged” sector, signaling the Government of China’s intent to prioritize investment, modernization, and capacity expansion within the pulp and paper sector. This classification reflects a policy emphasis on consolidating production, improving resource efficiency, and achieving economies of scale across the pulp and paper value chain.^{Footnote 48} To support large scale operations, the Catalogue for Guiding Industry Restructuring prohibits smaller scale pulp and paper facilities, which reflects the Government of China’s influence resulting in the consolidation of the pulp and paper industry into larger, more technologically advanced producers.

Other industrial policies

[48] In 2021, the Government of China implemented its Opinions on Accelerating the High-Quality Development of the Manufacturing Service Industry. The Government of China has committed to accelerating the high quality development of the manufacturing services industry and advancing green manufacturing across key sectors, including pulp and paper sector. Responsibility for implementing the green transformation agenda has been assigned to the Ministry of Science and Technology, the Ministry of Industry and Information Technology, and the National Development and Reform Commission. These agencies are tasked with coordinating and executing green transformation actions within the manufacturing sector, such as the pulp and paper sector.^{Footnote 49}

China Paper Association

[49] The China Paper Association (“CPA”) provides a controlling mechanism over the paper-making industry in China. Article 3 of the Association specifies that it adheres to the leadership of the CCP. In 2021, CPA issued the Outline for the 14th Five Year Plan and Medium and Long term High quality Development of the Papermaking Industry, establishing strategic priorities and setting production output targets for the sector of paper-making through 2035. A central development objective of the plan is to “adjust the raw material structure” by enhancing the domestic supply capacity of wood fiber raw materials.^{Footnote 50}

Conclusion

[50] The CBSA finds that the presence of government plans, directives and targets provides evidence that the Government of China may substantially control prices in the China’s pulp and paper sector.

Government of China’s state-ownership and control of producers in the pulp and paper sector

[51] As shown in the table below, of the top ten Chinese pulp and paper manufacturers, by revenue, seven of them are controlled by the Government of China through a controlling ownership interest, or are owned and operated by prominent members of the Chinese Communist Party (“CCP”).

[52] The following companies are listed as major players in the pulp and paper sector in China:

Nine Dragons Paper (Holdings) Limited

According to its 2024 Interim Report, the company is majority owned and controlled by Zhang Yin, a prominent member of the Chinese national government committee^{Footnote 52}

Shandong Chenming Paper Holdings Limited (“Shandong Chenming”)

According to its 2023 Annual Report, controlling interest is held by Chenming Holdings Company Limited, a state-owned enterprise^{Footnote 53}

Zhanjiang Chenming Pulp & Paper Co. Ltd.

A subsidiary of Shandong Chenming—controlling interest held by Chenming Holdings Company Limited, a state-owned enterprise^{Footnote 54}

Huanggang Chenming Pulp & Paper Co. Ltd.

A subsidiary of Shandong Chenming—controlling interest held by Chenming Holdings Company Limited, a state-owned enterprise^{Footnote 55}

Guangxi Yuegui Guangye Holdings Co., Ltd.

Based on its 2023 Annual Report, the company is state-owned, with its controlling shareholder being Guangxi State-Owned Assets Supervision and Administration Commission (SASAC)^{Footnote 56}

Zhejiang Jinlong Recycled Resources Technology Co., Ltd.

The second largest shareholder is ultimately Longyou County People's Government State-owned Assets Supervision and Administration Office with government representative (Luo Xu) on Board of Directors^{Footnote 57}

[53] The CBSA has determined that individuals occupying prominent positions within the governing party of China are likely to advance governmental objectives through their leadership roles within the company. Their senior standing may also afford them the capacity to influence broader government policy in ways that could be favourable to the interests of the enterprises concerned.

[54] Moreover, the Government of China has steered the paper industry by promoting consolidation, investing in large modern mills, and phasing out smaller producers. Consistent with these policies, major industry participants have adopted a forest pulp paper integration strategy to increase capacity in a sector that continues to experience persistent overcapacity. At the time of the Economic Policy Institute report in 2009, more than 88 percent of producers were small sized and 12 percent were medium sized, while the top ten producers accounted for only approximately 20 percent of domestic production.^{Footnote 58}

[55] Since 2010, China’s pulp and paper industry has consolidated significantly, with leading firms gaining about 25% more market share; by 2024, the top five producers controlled roughly 45% of the market. Government-led policies have driven this trend. Despite rising output, ongoing capacity expansions and low operating rates (around 60%) point to persistent structural overcapacity.^{Footnote 59}

[56] According to the WTO Secretariat’s Trade Policy Review of China (November 19, 2024), the number of state-owned enterprises (SOEs) in the industrial and construction sectors—including light industries such as pulp and paper—increased during the review period. State ownership remains significant across the economy, with SOEs holding substantial market shares and accounting for a large portion of assets and profits.^{Footnote 60}

Conclusion

[57] The significant presence of state-owned and state-controlled enterprises in the pulp and paper sector facilitates the attainment of Government of China’s policy objectives and industrial planning. As such, these non-market factors influence the sales and pricing of pulp and paper products. The CBSA finds that the policy and direction of consolidation have contributed to persistent overcapacity and have resulted in an increasingly concentrated market in which prices may not be determined by independent market forces, but are significantly influenced by government intervention.

Government of China intervention in the cost of production of raw material inputs

Wood and forestry

[58] China’s Forest Law establishes that all forest resources are either state owned or collectively owned, with 2020 data indicating that approximately 42.5% of forestland is directly state owned and 57.6% held by collectives. In practice, collectively owned forests remain under effective state control through village level governance structures. The China Forestry Group, a state owned enterprise, plays a central role in national forestry management and is heavily involved in the import and export of timber and pulp. In addition, the China Forestry Group is identified as the sole central level enterprise in China’s forestry sector under the supervision of the SASAC of the State Council.^{Footnote 61} The SASAC of the State Council has direct oversight of a large proportion of companies operating in that sector, and according to pricing information for Oct 2024 -Jan 2025 the Government of China’s policies have led to significantly lower pulp prices during overlapping months of the POI.

Bagasse

[59] Bagasse, a by product of sugarcane processing, is the principal raw material input used in TMFT exported from China and most recent imports into Canada consist primarily of bagasse based products. The prices for bagasse are based on Government of China’s pricing setting. Sugarcane prices in China are subject to a statutory floor price.^{Footnote 62} The government’s statutory floor price for sugarcane artificially increases sugarcane production, which expands the supply of bagasse and lowers its market price. As a result, the cost of bagasse—and therefore TMFT production costs—reflects government directed pricing rather than market determined conditions.

Bamboo

[60] Government of China policies actively promote bamboo as a substitute for plastics, including through subsidies and production targets. This support has contributed to a significant increase in China’s production of bamboo based disposable tableware in recent years. In 2022, the government issued a Three Year Action Plan for Replacing Plastics with Bamboo, which calls for a 20% increase in bamboo utilization by 2025.^{Footnote 63} The CBSA has observed that this government support has resulted in bamboo product prices that are lower than would be expected under competitive market conditions.

Conclusion

[61] The CBSA finds that the wood pulp, bagasse pulp, and bamboo pulp are interchangeable in the production of TMFT. Consequently, price changes in one input, such as a decline in bagasse pulp, can exert downward pressure on the prices of other inputs, including wood pulp. The CBSA further finds that government policies affecting one input may indirectly influence the pricing of other interchangeable inputs.

[62] The information on the record indicates that bagasse and bamboo are the main inputs for the TMFT produced and exported from China. The Government of China’s influence over forestry, sugarcane and bamboo may result in distorted selling prices of these goods.

Subsidization of TMFT producers/inputs suppliers

[63] The CBSA has received information from the Government of China regarding subsidies provided to producers of goods in the pulp and paper sector. In addition, the CBSA determined a specific amount of subsidy for fiveexporters in China of TMFT. These five exporters accounted for a significant portion of all subject imports of TMFT into Canada. This indicates the extent of subsidization in the pulp and paper sector in China.

[64] Similarly, the CBSA received responses to the subsidy RFI from related and unrelated input suppliers in China. Two of the related input suppliers specifically reported that they received benefits related to the production of pulp. This evidence further shows the level of subsidization provided by the Government of China in the pulp and paper sector. Consequently, domestic selling prices for TMFT in China may not be substantially the same as they would be if they were determined in a competitive market.

Summary of government control analysis

[65] The information reviewed by the CBSA indicates a material level of government influence in the pulp and paper sector. Several of the aforementioned polices, guidelines, plans, and directives show that the Government of China exerts influence and control in the pulp and paper sector, including related sectors (i.e. sugarcane production and wood). Consequently, domestic selling prices for TMFT in China may not be substantially the same as they would be if they were determined in a competitive market.

Results of the section 20 inquiry

[70] For the purposes of the final determination of dumping, the CBSA has formed the opinion that domestic prices in the pulp and paper sector in China are substantially determined by the Government of China and that domestic prices are not substantially the same as they would be in a competitive market.

Cooperative exporters

[71] Where section 20 conditions exist, the CBSA may determine normal values using the selling prices, or the total costs of production and profit, of like goods sold by producers in a surrogate country designated by the President, in accordance with the provisions of paragraph 20(1)(c) of SIMA.

[72] At the initiation of the section 20 inquiry of China’s pulp and paper sector, the CBSA identified the United States, Brazil, Italy, South Korea, and Chinese Taipei as reasonable surrogate countries for China. These countries were selected as they produce comparable goods and operate under market conditions. The CBSA received one response to the surrogate producer RFI from a producer of TMFT in the United States, namely: Huhtamaki.^{Footnote 64} However, there was not sufficient information to determine normal values for like goods pursuant to paragraph 20(1)(c) of SIMA.

[73] Where normal values cannot be determined under paragraph 20(1)(c), SIMA provides an alternative methodology to calculate normal values under paragraph 20(1)(d), using re sales in Canada of like goods imported from a third country. The CBSA determined that this provision could also not be used given that the importers did not provide sufficient re sale information.

[74] As a result, and in the absence of sufficient information to determine normal values under section 20 of SIMA, normal values were determined pursuant to a ministerial specification in accordance with subsection 29(1) of SIMA, on the basis of facts available.

[75] In establishing the methodology for determining normal values, the CBSA determined normal values for the subject goods from China following a methodology similar to section 20 of SIMA, based on the adjusted domestic selling price of TMFT provided by the surrogate producer in the United States. The CBSA determined a per kilogram (kg) normal value for each 60-day period during the POI for exporters from China.

All other exporters

[76] In establishing the methodology for determining the normal values and export prices for all other exporters, the CBSA considered all of the information on the administrative record, including the complaint filed by the domestic industry, information submitted by parties who responded to the dumping RFI, and CBSA customs entry documentation.

[77] The CBSA decided that the normal values and export prices determined for the exporters, whose submission was complete for purposes of the final determination, rather than the information provided in the complaint or estimated at initiation, would be used to establish the methodology for estimating normal values for all other exporters of subject goods from China.

[78] The CBSA examined the difference between the normal value and the export price for each individual transaction of the exporters that provided a complete submission for the final determination and considered that the highest amount (expressed as a percentage of the export price) was an appropriate basis for determining normal values. The transactions were examined to ensure that they were not affected by anomalies, such as very low volume and value, effects of seasonality or other business factors. This methodology relies on the information that was used to determine normal values and export prices for the goods that originated in China and limits the advantage that an exporter may gain from not providing necessary information requested in a dumping investigation as compared to an exporter that did provide the necessary information.

[79] As a result, based on the information available, for all other exporters that did not provide a complete response to the dumping RFI, normal values of subject goods originating in or exported from China were determined based on the highest amount by which a normal value exceeded the export price, on an individual transaction basis made by the cooperative exporters during the POI.

[80] The CBSA considered that the information submitted on the CBSA customs entry documentation was the best information on which to determine the export price of the goods, as it reflects actual import data.

[81] Using the above methodologies, for the final determination, the margin of dumping for all other exporters in China is 332.4%, expressed as a percentage of the export price.

Summary of results: Dumping

[82] A summary of the results of the dumping investigation respecting all subject goods released into Canada during the POI are as follows:

[83] In order to make a final determination of dumping, the CBSA must be satisfied that:

1. the subject goods have been dumped and
2. that the margin of dumping of a particular exporter is not insignificant

[84] Under paragraph 41(1)(a) of SIMA, the CBSA is required to terminate an investigation in respect of any goods of an exporter if it is satisfied that the goods have not been dumped or the margin of dumping of the goods of that exporter is insignificant, meaning a margin of dumping that is less than 2% of the export price of the goods.

[85] The margin of dumping determined for all exporters of subject goods originating in or exported from China is greater than the threshold of 2% and is therefore not considered insignificant. As a result, the legislative requirements are satisfied for making a final determination of dumping respecting TMFT from China.

[86] A summary of the margins of dumping by exporter is presented in Appendix 1.

Government of China

[96] The Government of China provided a response to the Government Subsidy RFI. For the purposes of the final determination, the CBSA is treating the Government of China’s response as partially complete. For programs where complete information was provided by the Government of China, the CBSA used this information in its determination of specificity. For programs where the Government of China’s response was incomplete or contradictory to other evidence obtained by the CBSA, the CBSA relied on the best information available.

[97] At the initiation of the subsidy investigation, the CBSA requested information on 25 potential subsidy programs that could confer benefits to producers/exporters of TMFT in China. At the preliminary determination, the CBSA found 28 potential subsidy programs that could confer benefits to producers/exporters of TMFT in China.

[98] For the final determination, the CBSA removed four subsidy programs that were found to be countervailable at the preliminary determination. Additionally, the CBSA found an additional three subsidy programs that were reported by the cooperative exporters. In total, for the final determination, the CBSA found 27 subsidy programs that potentially confer benefits to producers/exporters of TMFT in China. A summary of the findings for the subsidy programs can be found in Appendix 3 of this document.

[99] The Government of China’s response regarding the determination of specificity for the 27 subsidy programs fell into one of the three following categories:

1. Confirmation of specificity of certain programs
2. Failure to provide sufficient information to determine specificity of certain programs or
3. Provision of information contradicted by other compelling evidence on the record

[100] For programs in category ii), due to the lack of information provided by the Government of China with respect to these programs, there is insufficient information on the record to determine whether these programs are specific pursuant to subsection 2(7.2) or subsection 2(7.3) of SIMA; nor is there sufficient information to indicate that the subsidy is not specific pursuant to the criteria set out in subsection 2(7.1) of SIMA. Based on facts available, the CBSA found the programs in category ii) to be specific for the purposes of the final determination. This method of determining the amount of subsidy limits the advantage that an exporter may gain where the necessary information cannot be corroborated by the appropriate government agency.

[101] For programs in category iii), the CBSA weighed the evidence available on the administrative record from both the cooperative exporters and from the Government of China. The evidence provided by the cooperative exporters, which includes information on programs that they received during the POI, contradicted the information provided by the Government of China in its response. In instances where the Government of China stated that a subsidy program did not exist, the CBSA found compelling evidence to the contrary from the exporters. On the basis of the information available, programs in category iii) were considered to be specific for the purposes of the final determination.

[102] For the final determination, the CBSA determined all 27 subsidy programs to be specific, and therefore actionable, as detailed in Appendix 3.

Cooperative exporters

Guangdong Shaoneng Group Luzhou Technology Development Co., Ltd.

[103] Luzhou Tech is an exporter of subject goods located in Shaoguan City, Guangdong Province. Luzhou Tech exports of subject goods represent 0.04% of imports from all countries during the POI. Luzhou Tech provided a response to the subsidy RFI. For purposes of the final determination, Luzhou Tech was found to have received countervailable benefits from nine subsidy programs.

1. Program 1: Pulp and Paper Integration Development Grants
2. Program 4: Performance Award Grants
3. Program 5: Subsidies Related to Company/Enterprise Development and Innovation
4. Program 8: Other Science and Technology Related Subsidies
5. Program 10: National and Local Investment Promotion Grants
6. Program 11: Subsidies Related to Employment, Training and Recruitment
7. Program 12: Subsidies Related to Environmental Protections, Energy Conservation, Water Saving, Pollution Treatment, and other Environmental Initiatives
8. Program 14: Subsidies Related to Social Security
9. Program 24: Government Policy Loans and Loan Guarantees

[104] Further to its analysis of the information on the administrative record, the CBSA considers that financial contributions conferring a subsidy were provided to the exporter pursuant to the above subsidy programs. The CBSA also considers these programs as specific and therefore actionable.

[105] For purpose of the final determination, the amount of subsidy for Luzhou Tech is 2.3%, expressed as a percentage of the export price.

Guangxi Ecolink Technology Co., Ltd.

[106] Guangxi Ecolink exports of subject goods located in the Gangxi Province, representing 0.1% of imports from all countries during the POI. Guangxi Ecolink provided a response to the subsidy RFI. For purposes of the final determination, Guangxi Ecolink was found to have received countervailable benefits from six subsidy programs.

1. Program 2: Export development and performance grants
2. Program 4: Performance Award Grants
3. Program 5: Subsidies Related to Company/Enterprise Development and Innovation
4. Program 11: Subsidies Related to Employment, Training and Recruitment
5. Program 12: Subsidies Related to Environmental Protections, Energy Conservation, Water Saving, Pollution Treatment, and other Environmental Initiatives
6. Program 32: Subsidies related to reducing utility costs

[107] Further to its analysis of the information on the administrative record, the CBSA considers that financial contributions conferring a subsidy were provided to the exporter pursuant to the above subsidy programs. The CBSA also considers these programs as specific and therefore actionable.

[108] For purpose of the final determination, the amount of subsidy for Guangxin Ecolink is 2.8%, expressed as a percentage of the export price.

Guangxi Huabao Fiber Products Co., Ltd.

[109] Guangxi Huabao is a producer and exporter of subject goods located in Laibin City, Guangxi Province. Guangxi Huabao exports of subject goods represent 2.3% of imports from all countries during the POI. Guangxi Huabao provided a response to the subsidy RFI. For purposes of the final determination, Guangxi Huabao was found to have received countervailable benefits from 19 subsidy programs.

1. Program 2: Export Development and Performance Grants
2. Program 4: Performance Award Grants
3. Program 5: Subsidies Related to Company/Enterprise Development and Innovation
4. Program 6: Subsidies for Industrial and/or Technology Transformation or Restructuring
5. Program 8: Other Science and Technology Related Subsidies
6. Program 9: Grants Related to Intellectual Property Rights
7. Program 10: National and Local Investment Promotion Grants
8. Program 11: Subsidies Related to Employment, Training and Recruitment
9. Program 12: Subsidies Related to Environmental Protections, Energy Conservation, Water Saving, Pollution Treatment, and other Environmental Initiatives
10. Program 14: Subsidies Related to Social Security
11. Program 15: Corporate Income Tax Reduction for New High-Tech Enterprises
12. Program 17: Income Tax Deductions for Research and Development Expenses Under the Enterprise Income Tax Law
13. Program 24: Government Policy Loans and Loan Guarantees
14. Program 26: Tax Incentives for the Development of the Western Region
15. Program 28: Sugar Industry Development Grants
16. Program 30: Grants Related to Parties and Other Organizations
17. Program 31: Preferential Tax Treatment for Projects related to Environmental Protection, Water and Energy Conservation
18. Program 32: Subsidies related to reducing utility costs
19. Program 33: Preferential Land-use Tax Policy

[110] Further to its analysis of the information on the administrative record, the CBSA considers that financial contributions conferring a subsidy were provided to the exporter pursuant to the above subsidy programs. The CBSA also considers these programs as specific and therefore actionable.

[111] For purposes of the final determination, the amount of subsidy for Guangxi Huabao is 5.7%, expressed as a percentage of the export price.

Shaoneng Group Guangdong Luzhou Eco Technology Co, Ltd.

[112] Guangdong Luzhou is a producer and exporter of subject goods located in Nanyoung City, Guangdong Province. Guangdong Luzhou exports of subject goods represent 0.4% of imports from all countries during the POI. Guangdong Luzhou provided a response to the subsidy RFI. For purposes of the final determination, Guangdong Luzhou was found to have received countervailable benefits from 10 subsidy programs.

1. Program 1: Pulp and Paper Integration Development Grants
2. Program 4: Performance Award Grants
3. Program 5: Subsidies Related to Company/Enterprise Development and Innovation
4. Program 8: Other Science and Technology Related Subsidies
5. Program 10: National and Local Investment Promotion Grants
6. Program 11: Subsidies Related to Employment, Training and Recruitment
7. Program 12: Subsidies Related to Environmental Protections, Energy Conservation, Water Saving, Pollution Treatment, and other Environmental Initiatives
8. Program 14: Subsidies Related to Social Security
9. Program 24: Government Policy Loans and Loan Guarantees
10. Program 25: Export Loans and Credits from Chinese State-Owned Banks

[113] Further to its analysis of the information on the administrative record, the CBSA considers that financial contributions conferring a subsidy were provided to the exporter pursuant to the above subsidy programs. The CBSA also considers these programs as specific and therefore actionable.

[114] For purposes of the final determination, the amount of subsidy for Guangdong Luzhou is 1.9%, expressed as a percentage of the export price.

Shaoneng Group Luzhou Eco (XinFeng) Technology Co., Ltd.

[115] Luzhou Xinfeng is a producer and exporter of subject goods located in Shaoguan City, Guangdong Province. Luzhou Xinfeng exports of subject goods represent 11.5% of imports from all countries during the POI. Luzhou Xinfeng provided a response to the subsidy RFI. For purposes of the final determination, Luzhou Xinfeng was found to have received countervailable benefits from 11 subsidy programs.

1. Program 1: Pulp and Paper Integration Development Grants
2. Program 2: Export Development and Performance Grants
3. Program 4: Performance Award Grants
4. Program 5: Subsidies Related to Company/Enterprise Development and Innovation
5. Program 8: Other Science and Technology Related Subsidies
6. Program 10: National and Local Investment Promotion Grants
7. Program 11: Subsidies Related to Employment, Training and Recruitment
8. Program 12: Subsidies Related to Environmental Protections, Energy Conservation, Water Saving, Pollution Treatment, and other Environmental Initiatives
9. Program 14: Subsidies Related to Social Security
10. Program 24: Government Policy Loans and Loan Guarantees
11. Program 25: Export Loans and Credits from Chinese State-Owned Banks

[116] Further to its analysis of the information on the administrative record, the CBSA considers that financial contributions conferring a subsidy were provided to the exporter pursuant to the above subsidy programs. The CBSA also considers these programs as specific and therefore actionable.

[117] For purposes of the final determination, the amount of subsidy for Luzhou Xinfeng is 0.5%, expressed as a percentage of the export price. This amount is insignificant, and as such, the subsidy investigation in respect of the goods of this exporter was terminated pursuant to paragraph 41(1)(a) of SIMA.

Zhejiang Zhongxin Environmental Protection Technology Group Co., Ltd.

[118] Zhejiang Zhongxin is a producer and exporter of subject goods located in Zhejiang Province. Zhejiang Zhongxin exports of subject goods represent 5.1% of imports from all countries during the POI. Zhejiang Zhongxin provided a response to the subsidy RFI. For purposes of the final determination, Zhejiang Zhongxin was found to have received countervailable benefits from 18 subsidy programs.

1. Program 4: Performance Award Grants
2. Program 5: Subsidies Related to Company/Enterprise Development and Innovation
3. Program 6: Subsidies for Industrial and/or Technology Transformation or Restructuring
4. Program 8: Other Science and Technology Related Subsidies
5. Program 9: Grants Related to Intellectual Property Rights
6. Program 10: National and Local Investment Promotion Grants
7. Program 11: Subsidies Related to Employment, Training and Recruitment
8. Program 12: Subsidies Related to Environmental Protections, Energy Conservation, Water Saving, Pollution Treatment, and other Environmental Initiatives
9. Program 14: Subsidies Related to Social Security
10. Program 15: Corporate Income Tax Reduction for New High-Tech Enterprises
11. Program 17: Income Tax Deductions for Research and Development Expenses Under the Enterprise Income Tax Law
12. Program 24: Government Policy Loans and Loan Guarantees
13. Program 26: Tax incentives for the development of the western region
14. Program 28: Sugar Industry Development Grants
15. Program 30: Grants Related to Parties and Other Organizations
16. Program 31: Preferential Tax Treatment for Projects related to Environmental Protection, Water and Energy Conservation
17. Program 32: Subsidies related to reducing utility costs
18. Program 33: Preferential Land-use Tax Policy

[119] Further to its analysis of the information on the administrative record, the CBSA considers that financial contributions conferring a subsidy were provided to the exporter pursuant to the above subsidy programs. The CBSA also considers these programs as specific and therefore actionable.

[120] For purposes of the final determination, the amount of subsidy for Zhejiang Zhongxin is 9.9%, expressed as a percentage of the export price.

All other exporters

[121] For exporters of subject goods originating in or exported from China that did not provide a response to the subsidy RFI, or did not furnish sufficient information, the CBSA calculated an amount of subsidy on the basis of the following methodology:

1. the highest amount of subsidy for each of the 21 programs, as found at the final determination, for the cooperative exporters located in China for whom the CBSA has sufficient information to estimate an amount of subsidy plus
2. the average of the highest amounts of subsidy of the 21 programs listed in (1), applied to each of the remaining six potentially actionable subsidy programs for which information sufficient to determine an amount of subsidy is not available or has not been provided by the final determination

[122] The potentially available programs include programs identified in the Government of China’s subsidy response and other programs identified by the CBSA. The six potentially available programs include:

1. Program 7: National Key Technology Research and Development (“R&D”) Funding
2. Program 16: Accelerated Depreciation of Fixed Assets for Light Industry and High-tech Enterprises
3. Program 18: Income Tax Concessions for Enterprises Engaged in Comprehensive Utilization of Resources
4. Program 19: Income Tax Deductions/Credits for Purchase of Special Equipment
5. Program 20: Import Tariff and VAT Exemptions on Imported Equipment for Encouraged Industries
6. Program 21: VAT Rebates on Domestically Produced Equipment

[123] In establishing the methodology for the amount of subsidy for all other exporters from China, the CBSA considered all of the information on the administrative record, including the complaint filed by the domestic industry and information submitted by the Government of China, exporters, and their related affiliates in China who responded to the subsidy RFI and SRFI(s). This method of determining the amounts of subsidy is based on information on the record and limits the advantage that an exporter may gain from not providing necessary information requested in a subsidy investigation as compared to an exporter that did provide the necessary information.

[124] Using the above methodology, for the final determination, the amount of subsidy for all other exporters in China is 18.9% expressed as a percentage of the export price.

Summary of results: Subsidy

[125] A summary of the results of the subsidy investigation respecting all subject goods released into Canada during the POI is as follows:

[126] Under paragraph 41(1)(a) of SIMA, the CBSA is required to terminate an investigation in respect of any goods of an exporter if the CBSA is satisfied that the goods have not been subsidized or the amount of subsidy on the goods of that exporter is insignificant.

[127] Pursuant to subsection 2(1) of SIMA, an amount of subsidy of less than 1% of the export price of the goods is defined as insignificant.

[128] The amount of subsidy for Shaoneng Group Luzhou Eco (XinFeng) Technology Co., Ltd. is below 1% of the export price and was, therefore, determined to be insignificant. As a result, the CBSA is required to terminate the subsidy investigation with respect to these goods pursuant to paragraph 41(1)(a) of SIMA.

[129] For all other exporters, the amounts of subsidy, expressed as a percentage of the export price, is above 1% and is, therefore, not insignificant. As a result, with respect to these exporters, the legislative requirements are satisfied for making a final determination of subsidy respecting TMFT originating in or exported from China.

[130] A summary of the results of the subsidy investigation respecting the subject goods released into Canada during the subsidy POI are presented in Appendix 1.

Category 1: Grants

Program 1: Pulp and paper integration development grants

General information

This program refers to a set of government-backed financial incentives and policy measures aimed at promoting the integration of domestic wood pulp production with plantation development and downstream paper manufacturing. These grants are part of a broader Government of China strategy to reduce reliance on imported pulp and modernize the industry. The Chinese government has supported this initiative through discounted loans, capital subsidies, and fast-track investment approvals, targeting the creation of millions of hectares of fast-growing pulpwood plantations and large-scale integrated pulp-paper projects.

Financial contribution

For the purposes of the final determination, this program provides a financial contribution pursuant to paragraph 2(1.6)(a) of SIMA in the form of a direct transfer of funds from the government, and it confers a benefit to the recipient equal to the amount of the grant.

Specificity

For the purposes of the final determination, this program is determined to be specific pursuant to subsection 2(7.3) of SIMA because it is limited to enterprises in certain industries and may not be generally available.

Program 2: Export development and performance grants

General information

Companies in China receive such grants provided by the Government of China to assist in the development of export markets or to recognize export performance.

Financial contribution

For the purposes of the final determination, this program provides a financial contribution pursuant to paragraph 2(1.6)(a) of SIMA in the form of a direct transfer of funds from the government, and it confers a benefit to the recipient equal to the amount of the grant.

Specificity

For the purposes of the final determination, this program is determined to be an export subsidy and is therefore prohibited. Pursuant to paragraph 2(7.2)(b) of SIMA, this program is specific.

Program 4: Performance award grants

General information

Subsidies provided under this program relate to grants that provide financial aid to enterprises with excellent performance.

Financial contribution

For the purposes of the final determination, this program provides a financial contribution pursuant to paragraph 2(1.6)(a) of SIMA in the form of a direct transfer of funds from the government, and it confers a benefit to the recipient equal to the amount of the grant.

Specificity

Due to the lack of information provided by the Government of China on this program, there is not sufficient information on the record to determine whether this program is specific pursuant to subsection 2(7.2) or subsection 2(7.3) of SIMA; nor is there sufficient information to indicate that the subsidy is not specific pursuant to the criteria set out in subsection 2(7.1). On the basis of the information available, this program does not appear to be generally available to all enterprises in China and thus the CBSA has determined this program to be specific for the purposes of the final determination.

Program 5: Subsidies related to company/enterprise development and innovation

General information

Subsidies provided under this program relate to grants and incentives given to companies and enterprises for development and innovation.

Financial contribution

For the purposes of the final determination, this program provides a financial contribution pursuant to paragraph 2(1.6)(a) of SIMA in the form of a direct transfer of funds from the government, and it confers a benefit to the recipient equal to the amount of the grant.

Specificity

Due to the lack of information provided by the Government of China on this program, there is not sufficient information on the record to determine whether this program is specific pursuant to subsection 2(7.2) or subsection 2(7.3) of SIMA; nor is there sufficient information to indicate that the subsidy is not specific pursuant to the criteria set out in subsection 2(7.1). On the basis of the information available, this program does not appear to be generally available to all enterprises in China and thus the CBSA has determined this program to be specific for the purposes of the final determination.

Program 6: Subsidies for industrial and/or technology transformation or restructuring

General information

Grants and incentives related to facilitating the transformation or restructuring of industries and/or technologies.

Financial contribution

For the purposes of the final determination, this program provides a financial contribution pursuant to paragraph 2(1.6)(a) of SIMA in the form of a direct transfer of funds from the government, and it confers a benefit to the recipient equal to the amount of the grant.

Specificity

For the purposes of the final determination, this program is determined to be specific pursuant to paragraph 2(7.2)(a) of SIMA, as the Government of China has confirmed that this program is de jure specific.

Program 7: National key technology research and development (“R&D”) funding

General information

Grants and incentives provided to support technological upgrades in key industries, key enterprises, and key products; promote technological progress in enterprises; adjust product structure; improve product quality; develop import-substituting products; increase effective supply; and expand domestic demand.

Financial contribution

For the purposes of the final determination, this program provides a financial contribution pursuant to paragraph 2(1.6)(a) of SIMA in the form of a direct transfer of funds from the government, and it confers a benefit to the recipient equal to the amount of the grant.

Specificity

For the purposes of the final determination, this program is determined to be specific pursuant to paragraph 2(7.2)(a) of SIMA, as the Government of China has confirmed that this program is de jure specific.

Program 8: Other science and technology related subsidies

General information

Subsidies provided under this program relate to science and technology grants and awards.

Financial contribution

For the purposes of the final determination, this program provides a financial contribution pursuant to paragraph 2(1.6)(a) of SIMA in the form of a direct transfer of funds from the government, and it confers a benefit to the recipient equal to the amount of the grant.

Specificity

Due to the lack of information provided by the Government of China on this program, there is not sufficient information on the record to determine whether this program is specific pursuant to subsection 2(7.2) or subsection 2(7.3) of SIMA; nor is there sufficient information to indicate that the subsidy is not specific pursuant to the criteria set out in subsection 2(7.1). On the basis of the information available, this program does not appear to be generally available to all enterprises in China and thus the CBSA determined this program to be specific for the purposes of the final determination.

Program 9: Grants related to intellectual property rights

General information

Subsidies provided under this program are grants and incentives related to intellectual property rights, which are awarded at the local and national levels.

Financial contribution

For the purposes of the final determination, this program provides a financial contribution pursuant to paragraph 2(1.6)(a) of SIMA in the form of a direct transfer of funds from the government, and it confers a benefit to the recipient equal to the amount of the grant.

Specificity

Due to the lack of information provided by the Government of China on this program, there is not sufficient information on the record to determine whether this program is specific pursuant to subsection 2(7.2) or subsection 2(7.3) of SIMA; nor is there sufficient information to indicate that the subsidy is not specific pursuant to the criteria set out in subsection 2(7.1). On the basis of the information available, this program does not appear to be generally available to all enterprises in China and thus the CBSA determined this program to be specific for the purposes of the final determination.

Program 10: National and local investment promotion grants

General information

Subsidies under this program are grants and incentives related to promoting investments at the national and local levels.

Financial contribution

For the purposes of the final determination, this program provides a financial contribution pursuant to paragraph 2(1.6)(a) of SIMA in the form of a direct transfer of funds from the government, and it confers a benefit to the recipient equal to the amount of the grant.

Specificity

Due to the lack of information provided by the Government of China on this program, there is not sufficient information on the record to determine whether this program is specific pursuant to subsection 2(7.2) or subsection 2(7.3) of SIMA; nor is there sufficient information to indicate that the subsidy is not specific pursuant to the criteria set out in subsection 2(7.1). On the basis of the information available, this program does not appear to be generally available to all enterprises in China and thus the CBSA determined this program to be specific for the purposes of the final determination.

Program 11: Subsidies related to employment, training and recruitment

General information

Subsidies under this program are grants and incentives related to employment, talent, skills, and recruitment.

Financial contribution

For the purposes of the final determination, this program provides a financial contribution pursuant to paragraph 2(1.6)(a) of SIMA in the form of a direct transfer of funds from the government, and it confers a benefit to the recipient equal to the amount of the grant.

Specificity

Due to the lack of information provided by the Government of China on this program, there is not sufficient information on the record to determine whether this program is specific pursuant to subsection 2(7.2) or subsection 2(7.3) of SIMA; nor is there sufficient information to indicate that the subsidy is not specific pursuant to the criteria set out in subsection 2(7.1). On the basis of the information available, this program does not appear to be generally available to all enterprises in China and thus the CBSA determined this program to be specific for the purposes of the final determination.

Program 12: Subsidies related to environmental protections, energy conservation, water saving, pollution treatment, and other environmental initiatives

General information

Subsidies under this program are grants given to promote energy conservation, improve energy efficiency, and protect and improve the environment.

Financial contribution

For the purposes of the final determination, this program provides a financial contribution pursuant to paragraph 2(1.6)(a) of SIMA in the form of a direct transfer of funds from the government, and it confers a benefit to the recipient equal to the amount of the grant.

Specificity

For the purposes of the final determination, this program is determined to be specific pursuant to paragraph 2(7.2)(a) of SIMA, as the Government of China has confirmed that this program is de jure specific.

Program 14: Subsidies related to social security

General information

Subsidies under this program are grants and incentives related to social security.

Financial contribution

For the purposes of the final determination, this program provides a financial contribution pursuant to paragraph 2(1.6)(a) of SIMA in the form of a direct transfer of funds from the government, and it confers a benefit to the recipient equal to the amount of the grant.

Specificity

Due to the lack of information provided by the Government of China on this program, there is not sufficient information on the record to determine whether this program is specific pursuant to subsection 2(7.2) or subsection 2(7.3) of SIMA; nor is there sufficient information to indicate that the subsidy is not specific pursuant to the criteria set out in subsection 2(7.1). On the basis of the information available, this program does not appear to be generally available to all enterprises in China and thus the CBSA determined this program to be specific for the purposes of the final determination.

Program 27: Income tax handling fee refund

General information

Subsidies under this program are refunds and incentives related to the handling of income taxes.

Specificity

The CBSA has determined this program to be not specific as set out in subsection 2(7.1) of SIMA. As such, this program was removed for the purposes of the final determination.

Program 28: Sugar industry development grants

General information

Subsidies under this program are grants and incentives related to the development of the sugar cane industry.

Financial contribution

For the purposes of the final determination, this program provides a financial contribution pursuant to paragraph 2(1.6)(a) of SIMA in the form of a direct transfer of funds from the government, and it confers a benefit to the recipient equal to the amount of the grant.

Specificity

For the purpose of the final determination, this program is determined to be specific pursuant to subsection 2(7.3) of SIMA because it is limited to enterprises in certain industries and may not be generally available.

Program 29: Subsidies related to deferred income

General information

Subsidies under this program are grants and incentives related to the deferral of income from previous years.

For the final determination, the CBSA has sufficient information to consolidate this program into several other individual programs.

Program 30: Grants related to parties and other organizations

General information

Subsidies under this program are grants and incentives related to the support of parties and other organizations.

Financial contribution

For the purposes of the final determination, this program provides a financial contribution pursuant to paragraph 2(1.6)(a) of SIMA in the form of a direct transfer of funds from the government, and it confers a benefit to the recipient equal to the amount of the grant.

Specificity

Due to the lack of information provided by the Government of China on this program, there is not sufficient information on the record to determine whether this program is specific pursuant to subsection 2(7.2) or subsection 2(7.3) of SIMA; nor is there sufficient information to indicate that the subsidy is not specific pursuant to the criteria set out in subsection 2(7.1). On the basis of the information available, this program does not appear to be generally available to all enterprises in China and thus the CBSA determined this program to be specific for the purposes of the final determination.

Program 32: Subsidies related to reducing utility costs

General information

Subsidies under this program are grants and incentives related to reducing the cost of electricity.

Financial contribution

For the purposes of the final determination, this program provides a financial contribution pursuant to paragraph 2(1.6)(a) of SIMA in the form of a direct transfer of funds from the government, and it confers a benefit to the recipient equal to the amount of the grant.

Specificity

Due to the lack of information provided by the Government of China on this program, there is not sufficient information on the record to determine whether this program is specific pursuant to subsection 2(7.2) or subsection 2(7.3) of SIMA; nor is there sufficient information to indicate that the subsidy is not specific pursuant to the criteria set out in subsection 2(7.1). On the basis of the information available, this program does not appear to be generally available to all enterprises in China and thus the CBSA determined this program to be specific for the purposes of the final determination.

Category 2: Preferential tax programs

Program 15: Corporate income tax reduction for new high-tech enterprises

General information

Under Article 28 of the Enterprise Income Tax Law in China, companies designated as high- and new-Technology Enterprise (“HNTE”) are entitled to a reduced income tax rate of 15 percent rather than the normal national corporate tax rate of 25 percent.

Financial contribution

For the purposes of the final determination, this program provides a financial contribution pursuant to paragraph 2(1.6)(b) of SIMA. That is, amounts that would otherwise be owing and due to the government are reduced and/or exempted, and confer a benefit to the recipient equal to the amount of the reduction/exemption.n

Specificity

For the purposes of the final determination, this program is determined to be specific pursuant to paragraph 2(7.2)(a) of SIMA, as the Government of China has confirmed that this program is de jure specific.

Program 16: Accelerated depreciation of fixed assets for light industry and high-tech enterprises

General information

The purpose of the program is to support manufacturing enterprises to accelerate technological transformation and equipment upgrading. The nature of the program is to provide companies, when calculating the income tax payable, to accrue more depreciation expenses as costs and expenses deducted from current taxable income during the initial stage of use of fixed assets.

Financial contribution

For the purposes of the final determination, this program provides a financial contribution pursuant to paragraph 2(1.6)(b) of SIMA. That is, amounts that would otherwise be owing and due to the government are reduced and/or exempted, and confer a benefit to the recipient equal to the amount of the reduction/exemption.

Specificity

For the purposes of the final determination, this program is determined to be specific pursuant to paragraph 2(7.2)(a) of SIMA, as the Government of China has confirmed that this program is de jure specific.

Program 26: Tax incentives for the development of the Western Region

General information

Companies located in the Western Regions of China are entitled to a reduced income tax rate.

Financial contribution

For the purposes of the final determination, this program provides a financial contribution pursuant to paragraph 2(1.6)(b) of SIMA. That is, amounts that would otherwise be owing and due to the government are reduced and/or exempted, and confer a benefit to the recipient equal to the amount of the reduction/exemption.

Specificity

For the purposes of the final determination, this program is determined to be specific pursuant to paragraph 2(7.2)(a) of SIMA, as the program is limited in law to particular enterprises in a designated geographic region within the jurisdiction of the granting authority.

Program 31: Preferential tax treatment for projects related to environmental protection, water, and energy conservation

General information

Preferential tax treatment for projects related to environmental protection, water, and energy conservation. This program is intended to protect the environment, conserve energy and resources, and promote resource recycling.

Financial contribution

For the purposes of the final determination, this program provides a financial contribution pursuant to paragraph 2(1.6)(b) of SIMA. That is, amounts that would otherwise be owing and due to the government are reduced and/or exempted, and confer a benefit to the recipient equal to the amount of the reduction/exemption.

Specificity

For the purposes of the final determination, this program is determined to be specific pursuant to paragraph 2(7.2)(a) of SIMA, as the Government of China has confirmed that this program is de jure specific.

Program 33: Preferential land-use tax policy

General information

Preferential tax treatment which exempts companies in certain areas from paying land use tax.

Financial contribution

For the purposes of the final determination, this program provides a financial contribution pursuant to paragraph 2(1.6)(b) of SIMA. That is, amounts that would otherwise be owing and due to the government are reduced and/or exempted, and confer a benefit to the recipient equal to the amount of the reduction/exemption.

Specificity

Due to the lack of information provided by the Government of China on this program, there is not sufficient information on the record to determine whether this program is specific pursuant to subsection 2(7.2) or subsection 2(7.3) of SIMA; nor is there sufficient information to indicate that the subsidy is not specific pursuant to the criteria set out in subsection 2(7.1). On the basis of the information available, this program does not appear to be generally available to all enterprises in China and thus the CBSA determined this program to be specific for the purposes of the final determination.

Category 3: Relief from duties and taxes

Program 17: Income tax deductions for research and development expenses under the Enterprise Income Tax Law

General information

According to Article 30 of the Corporate Income Tax Law of the People's Republic of China, the expenses born by the enterprise incurred in the work of researching and development of new technologies, products, or techniques can be expensed and not capitalized, thereby reducing the enterprise’s actual income tax payable.

Financial contribution

For the purposes of the final determination, this program provides a financial contribution pursuant to paragraph 2(1.6)(b) of SIMA. That is, amounts that would otherwise be owing and due to the government are reduced and/or exempted, and confer a benefit to the recipient equal to the amount of the reduction/exemption.

Specificity

For the purposes of the final determination, this program is determined to be specific pursuant to paragraph 2(7.2)(a) of SIMA, as the Government of China has confirmed that this program is de jure specific.

Program 18: Income tax concessions for enterprises engaged in comprehensive utilization of resources

General information

Article 33 of the Corporate Income Tax Law of the People's Republic of China allocates a reduction in taxable income for enterprises “producing products complying with the industrial policies of the state by comprehensively utilizing resources.” If a Chinese enterprise utilizes resources listed in the Catalogue of Preferential Income Tax Policies for Enterprises Utilizing Comprehensive Resources to produce goods also listed in the Catalogue that meet national and industrial standards, the enterprise may be entitled to a reduced income tax rate.

Financial contribution

For the purposes of the final determination, this program provides a financial contribution pursuant to paragraph 2(1.6)(b) of SIMA. That is, amounts that would otherwise be owing and due to the government are reduced and/or exempted, and confer a benefit to the recipient equal to the amount of the reduction/exemption.

Specificity

For the purposes of the final determination, this program is determined to be specific pursuant to paragraph 2(7.2)(a) of SIMA, as the Government of China has confirmed that this program is de jure specific.

Program 19: Income tax deductions/credits for purchase of special equipment

General information

According to Article 34 of the Corporate Income Tax Law of the People's Republic of China, tax deductions are awarded to enterprises that purchase “special equipment for protecting environment, saving energy, work safety, etc.”

Financial contribution

For the purposes of the final determination, this program provides a financial contribution pursuant to paragraph 2(1.6)(b) of SIMA. That is, amounts that would otherwise be owing and due to the government are reduced and/or exempted, and confer a benefit to the recipient equal to the amount of the reduction/exemption.

Specificity

For the purposes of the final determination, this program is determined to be specific pursuant to paragraph 2(7.2)(a) of SIMA, as the Government of China has confirmed that this program is de jure specific.

Program 20: Import tariff and VAT exemptions on imported equipment for encouraged industries

General information

This program is to encourage foreign investment and to introduce advanced technology and equipment from abroad. The Government of China provides a subsidy to Foreign Invested Enterprises (FIEs) and certain domestic enterprises engaged in “encouraged” industries in the form of import tariffs and VAT exemptions on imported equipment, including components and parts.

Financial contribution

For the purposes of the final determination, this program provides a financial contribution pursuant to paragraph 2(1.6)(b) of SIMA. That is, amounts that would otherwise be owing and due to the government are reduced and/or exempted, and confer a benefit to the recipient equal to the amount of the reduction/exemption.

Specificity

For the purposes of the preliminary determination, this program is determined to be specific pursuant to paragraph 2(7.2)(a) of SIMA, as the Government of China has confirmed that this program is de jure specific.

Program 21: VAT rebates on domestically produced equipment

General information

Foreign-invested enterprises that meet the conditions for tax refunds can purchase equipment that conforms to the "Foreign Investment Industry Guidance Catalogue" (encouraged and restricted category B) as stipulated in the Notice of the State Council on Adjusting the Tax Policy for Imported Equipment and the Current National Key Encouraged Industries, Products and Technologies Catalogue for investment projects, and purchase such equipment domestically, could get a VAT refund for the purchase.

Financial contribution

For the purposes of the final determination, this program provides a financial contribution pursuant to paragraph 2(1.6)(b) of SIMA. That is, amounts that would otherwise be owing and due to the government are reduced and/or exempted, and confer a benefit to the recipient equal to the amount of the reduction/exemption.

Specificity

For the purposes of the final determination, this program is determined to be specific pursuant to paragraph 2(7.2)(a) of SIMA, as the Government of China has confirmed that this program is de jure specific.

Category 4: Provision of goods or services at less than adequate remuneration

Program 22: Provision of government inputs/utilities at less than adequate remuneration

General information

This program related to the acquisition of inputs materials and utilities from state owned enterprises (SOE) at below fair market value. These could include inputs for TMFT, such as bagasse and bamboo pulp.

Due to the lack of available benchmark pricing on the record, the CBSA was unable to determine the fair market value for inputs and utilities under this program. As a result the CBSA was unable to calculate an amount of benefit conferred to the exporters. For the purposes of the final determination, the CBSA has removed this program.

Program 23: Provision of land for less than adequate remuneration

General information

All land in China belongs to the Government of China (i.e., either national or local governments, or through a “collective” at the township or village level), and government land agencies across China control the allocation of land through the granting of land use rights.

The CBSA was unable to determine whether a benefit was conferred to the exporters. For the purposes of the final determination, the CBSA has removed this program.

Category 5: Preferential loans and loan guarantees

Program 24: Government Policy Loans and Loan Guarantees

General information

This program relates to government loans at a preferential rate of interest. The benefit provided in this case is a lower rate of interest than would otherwise be available if the enterprises had to obtain a non-guaranteed commercial loan (i.e. the benchmark non-guaranteed commercial loan). A loan guarantee is assurance provided by the Government of China, a SOE bank or public body (the guarantor) to assume the debt obligation of a borrower if that borrower defaults. A guarantee can be limited or unlimited, making the guarantor liable for only a portion or all of the debt.

Financial contribution

For the purposes of the final determination, this program constitutes a financial contribution pursuant to paragraphs 2(1.6)(a) and (b) of SIMA. Loans are a financial contribution in the form of amounts that would otherwise be owing and due to the government are reduced and/or exempted, and confers a benefit to the recipient equal to the amount of the reduction/exemption. Loan guarantees are in the form of a direct transfer of funds from the government, and it confers a benefit to the recipient equal to the amount of the grant.

Specificity

Due to the lack of information provided by the Government of China on this program, there is not sufficient information on the record to determine whether this program is specific pursuant to subsection 2(7.2) or subsection 2(7.3) of SIMA; nor is there sufficient information to indicate that the subsidy is not specific pursuant to the criteria set out in subsection 2(7.1). On the basis of the information available, this program does not appear to be generally available to all enterprises in China and thus appears to be specific for the purposes of the preliminary determination.

Program 25: Export loans and credits from Chinese state-owned banks

General information

The China Exim Bank and Sinosure, a state-funded policy-oriented insurance company, were established to promote China’s foreign trade, investment, and international economic cooperation. The China Exim Bank and Sinosure each provide export loans and credit guarantees which, according to information from the Bank, have “played a key role in supporting Chinese companies to go global” and promoted “the export of new and high tech products”.

Financial contribution

For the purposes of the final determination, this program constitutes a financial contribution pursuant to paragraphs 2(1.6)(a) and (b) of SIMA. Export loans are in the form of a benefit that amounts that would otherwise be owing and due to the government are reduced and/or exempted, and confers a benefit to the recipient equal to the amount of the reduction/exemption. Export credits are in the form of a direct transfer of funds from the government, and it confers a benefit to the recipient equal to the amount of the grant.

Specificity

For the purposes of the final determination, this program is determined to be an export subsidy and is therefore prohibited. Pursuant to paragraph 2(7.2)(b) of SIMA, this program is specific.