Commission Implementing Regulation (EU) 2023/934 of 11 May 2023 imposing a definitive anti-dumping duty on imports of high tenacity yarns of polyesters originating in the People’s Republic of China following an expiry review pursuant to Article 11(2) and a partial interim review pursuant to Article 11(3) of Regulation (EU) 2016/1036 of the European Parliament and of the Council

COMMISSION IMPLEMENTING REGULATION (EU) 2023/934 of 11 May 2023 imposing a definitive anti-dumping duty on imports of high tenacity yarns of polyesters originating in the People’s Republic of China following an expiry review pursuant to Article 11(2) and a partial interim review pursuant to Article 11(3) of Regulation (EU) 2016/1036 of the European Parliament and of the Council

THE EUROPEAN COMMISSION,

Having regard to the Treaty on the Functioning of the European Union,

Having regard to Regulation (EU) 2016/1036 of the European Parliament and of the Council of 8 June 2016 on protection against dumped imports from countries not members of the European Union (1), and in particular Article 11(2) and Article 11(3) thereof,

Whereas:

(1) Anti-dumping measures on imports of high tenacity yarns of polyesters (‘HTYP’) originating in the People’s Republic of China (‘China’ or ‘country concerned’) were originally imposed by Regulation (EU) No 1105/2010 (2) (‘the original measures’)

(2) The original measures imposed took the form of an ad valorem duty and ranged from 5,1 % to 9,8 %.

(3) The original measures applied to all imports of HTYP originating in China, with the exception of imports of HTYP produced by the Chinese exporting producers Zhejiang Hailide New Material Co. Ltd. (‘Hailide’) and Hangzhou Huachun Chemical Fiber Co. Ltd. (‘Huachun’). No duty was imposed on these companies (Regulation (EU) No 1105/2010), as no dumping was found.

(4) Following the first expiry review pursuant to Article 11(2) of Regulation (EU) 2016/1036 of the European Parliament and of the Council of 8 June 2016 on protection against dumped imports from countries not members of the European Union (3) (the ‘basic Regulation’), the Commission, by Commission Implementing Regulation (EU) 2017/325 (4), as amended notably by Commission Implementing Regulation (EU) 2017/1159 (5) maintained the original measures. In line with the WTO Appellate Body report in case Mexico – Definitive Anti-dumping Measures on Beef and Rice (6) (‘the WTO Appellate Body report’), Hailide and Huachun were not examined in the said expiry review.

(5) On 30 June 2022, the Commission also initiated an investigation under Article 5 of the basic Regulation with regard to imports of HTYP manufactured and exported to the Union by Hailide (‘the parallel Article 5 investigation’) (7). Imports from Hailide are not subject to the present expiry review and interim review investigations. Huachun, the other exporting producer which also received no duty in the investigation that led to the imposition of the original anti-dumping measures, ceased to exist in 2021. Therefore, Huachun is no longer considered an exporting producer of HTYP.

(6) Following the publication of a Notice of impending expiry (8) of the anti-dumping measures in force on the imports of high tenacity yarns of polyesters originating in China, a request for a review pursuant to Article 11(2) of the basic Regulation was submitted to the Commission on 24 November 2021 (hereinafter referred to as the ‘expiry review’).

(7) In addition, a request for a partial interim review pursuant to Article 11(3) of the basic Regulation was lodged on 1 April 2022 (hereinafter referred to as the ‘partial interim review’). The scope of the request was limited to dumping. Thus, the injury analysis in this regulation relates exclusively to the expiry review.

(8) Both requests were lodged by the CIRFS – European Manmade Fibres Association (‘CIRFS’ or ‘the applicant’) on behalf of the Union industry of high tenacity yarn of polyesters in the sense of Article 5(4) of the basic Regulation.

(9) The expiry review request was based on the grounds that the expiry of the measures would be likely to result in continuation of dumping and continuation of injury to the Union industry.

(10) The partial interim review request was based on sufficient evidence provided by the applicant that, as far as dumping is concerned, the circumstances on the basis of which the existing measures were imposed have changed and that these changes are of a lasting nature.

(11) Having determined, after consulting the Committee established by Article 15(1) of the basic Regulation, that sufficient evidence existed for the initiation of an expiry review pursuant to Article 11(2) and an interim review pursuant to Article 11(3) of the basic Regulation, the Commission published notices of initiation of these reviews in the Official Journal of the European Union (9) on 23 February 2022 and 30 June 2022 respectively.

(12) A user association commented on the initiation of both procedures, emphasising the importance of supply stability for the users. Further it claimed that European producers have increased their HTYP exports to China and cannot at the same time claim to be damaged by Chinese imports. The user association further claims that the damage to the European producers has not been proven. The Commission has analysed all claims regarding the Union interest in section 3.10 below. The general claim that the injury of the Union industry has not been proven in the review request, was not substantiated and therefore rejected.

(13) The Commission decided to conclude on the two separate investigations in the present legal act, setting out (in order in which the investigations were initiated) first the assessment in the expiry review investigation, followed by the findings from the partial interim review investigation.

(14) The examination of dumping and the likelihood of continuation or recurrence of dumping and injury covered the period from 1 January 2021 to 31 December 2021 (the ‘review investigation period’ or ‘RIP’).

(15) The examination of the trends relevant for the assessment of the likelihood of continuation or recurrence of injury covered the period from 1 January 2018 to the end of the review investigation period (‘the period considered’).

(16) The product subject to the reviews is high tenacity yarn of polyesters not put up for retail sale, including monofilament of less than 67 decitex, (excluding sewing thread and ‘Z’-twisted multiple (folded) or cabled yarn, intended for the production of sewing thread, ready for dyeing and for receiving a finishing treatment, loosely wound on a plastic perforated tube), currently falling under CN Code ex 5402 20 00 (TARIC code 5402200010) (‘the product under review’). The CN and TARIC codes are given for information only without prejudice to a subsequent change in the tariff classification.

(17) HTYP are used in a number of diverse applications such as tyre reinforcement, broad fabrics, seatbelts, airbags, ropes, nets and a number of industrial applications.

(18) Product concerned by the expiry review and partial interim review investigations is the product under review originating in China.

(20) These products are therefore considered to be like products within the meaning of Article 1(4) of the basic Regulation.

(21) In the Notice of Initiation of the expiry review investigation, the Commission invited interested parties to contact it in order to participate in the investigation. In addition, the Commission specifically informed the applicant, known Union producers, producers in China, importers and users in the Union known to be concerned, and the Chinese authorities of the initiation of the expiry review investigation and invited them to participate in the investigation.

(22) All interested parties had the opportunity to comment on the initiation of the investigation and to request a hearing with the Commission and/or the Hearing Officer in trade proceedings.

(23) In the Notice of Initiation, the Commission stated that it might sample interested parties, in accordance with Article 17 of the basic Regulation.

(24) In the Notice of Initiation of the expiry review investigation, the Commission stated that it had provisionally selected a sample of Union producers. The Commission selected the sample based on production and sales volumes, taking into account their geographical location. This sample consisted of 3 Union producers. The sampled Union producers accounted for more than 50 % of the estimated total EU production and EU sales volume of the like product. In accordance with Article 17(2) of the basic Regulation, the Commission invited interested parties to comment on the provisional sample. No interested party submitted comments on the provisional sample, which was confirmed as the definitive sample. The sample is representative of the Union industry.

(25) In order to enable the Commission to decide whether sampling would be necessary in respect of the exporting producers in China and of the unrelated importers in the Union, those parties were requested to make themselves known and to provide the Commission with the information requested in the Notice of Initiation. In addition, the Commission requested the Mission of China to the Union to identify and/or contact other exporting producers, if any, that could be interested in participating in the investigation. No exporting producer came forward. One unrelated importer came forward as an interested party, but did not provide the requested sampling information. Therefore, sampling was not necessary neither for the exporting producers nor the unrelated importers. Since there was no cooperation from the Chinese producers, the findings with regard to the imports from China in relation to the expiry review were made on the basis of the facts available pursuant to Article 18 of the basic Regulation.

(26) The Commission sent a questionnaire concerning the existence of significant distortions in China within the meaning of Article 2(6a)(b) of the basic Regulation to the Government of China (‘GOC’).

(27) The Commission sent questionnaires to the sampled Union producers and to the users. The same questionnaires had also been made available online on the day of initiation.

(28) The Commission received questionnaire replies from the three sampled Union producers and 2 users.

(30) On 20 February 2023, the Commission disclosed the essential facts and considerations on the basis of which it intended to maintain the anti-dumping duties in force. All parties were granted a period within which they could make comments on the disclosure.

(31) The comments made by interested parties were considered by the Commission and taken into account, where appropriate. The parties who so requested were granted a hearing.

(32) As mentioned in recital (25), none of the exporters/producers cooperated in the expiry review investigation. Therefore, the Commission informed the GOC that due to the absence of cooperation, the Commission might apply Article 18 of the basic Regulation concerning the findings with regard to China.

(33) Consequently, in accordance with Article 18 of the basic Regulation, the findings in relation to the likelihood of continuation or recurrence of dumping were based on facts available.

(34) The evidence available at the initiation of the expiry review investigation pointed to the existence of significant distortions in China within the meaning of Article 2(6a), point (b) of the basic Regulation. The Commission therefore considered it appropriate to initiate the investigation having regard to Article 2(6a) of the basic Regulation.

(35) To collect the necessary data for a possible application of Article 2(6a) of the basic Regulation, the Commission invited all exporting producers in the country concerned to provide information regarding the inputs used for producing HTYP. No relevant information was provided in the context of the expiry review investigation.

(36) In addition, the Commission invited all interested parties to make their views known, submit information and provide supporting evidence regarding the application of Article 2(6a) of the basic Regulation within 37 days of the date of publication of the respective Notice of Initiation in the Official Journal of the European Union.

(37) In point 5.3.2 of the Notice of Initiation the Commission informed interested parties that based on the information available at that stage possible appropriate representative countries pursuant to Article 2(6a)(a) of the basic Regulation was Türkiye.

(38) The Commission also stated that it would examine other possibly appropriate representative countries in accordance with the criteria set out in 2(6a)(a) first indent of the basic Regulation.

(39) On 19 July 2022, the Commission issued a First note on the sources for the determination of the normal value (the ‘First Note’) by which it informed interested parties on the relevant sources it intended to use for the determination of the normal value.

(40) In the First Note, the Commission provided a preliminary list of all known factors of production (‘FOP’) such as raw materials, labour and energy, used in the production of HTYP. In addition, the Commission identified Türkiye, Brazil and Thailand as possible appropriate representative countries. The Commission gave all interested parties opportunity to comment. The Commission received comments from the applicant in support of Türkiye as the representative country.

(41) After having analysed the comments and information received, the Commission concluded that Türkiye was an appropriate representative country from which undistorted prices and costs would be sourced for the determination of the normal value. The underlying reasons for that choice are further described in detail in Section 3.4.4.2 below.

(42) In order to obtain information it deemed necessary for its investigation with regard to the alleged significant distortions, the Commission sent a questionnaire to the GOC. No questionnaire reply was received from the GOC. Subsequently, the Commission informed the GOC that it would use facts available within the meaning of Article 18 of the basic Regulation for the determination of the existence of the significant distortions in China.

(43) According to Article 2(1) of the basic Regulation, “the normal value shall normally be based on the prices paid or payable, in the ordinary course of trade, by independent customers in the exporting country”.

(44) However, according to Article 2(6a)(a) of the basic Regulation, “in case it is determined […] that it is not appropriate to use domestic prices and costs in the exporting country due to the existence in that country of significant distortions within the meaning of point (b), the normal value shall be constructed exclusively on the basis of costs of production and sale reflecting undistorted prices or benchmarks”, and “shall include an undistorted and reasonable amount of administrative, selling and general costs and for profits” (“administrative, selling and general costs” is refereed hereinafter as ‘SG&A’).

(45) As further explained below, the Commission concluded that, based on the evidence available and given the lack of cooperation of the GOC, the application of Article 2(6a) of the basic Regulation was appropriate.

(47) As the list in Article 2(6a)(b) of the basic Regulation is non-cumulative, not all the elements need to be given regard to for a finding of significant distortions. Moreover, the same factual circumstances may be used to demonstrate the existence of one or more of the elements of the list. However, any conclusion on significant distortions within the meaning of Article 2(6a)(a) must be made on the basis of all the evidence at hand. The overall assessment on the existence of distortions may also take into account the general context and situation in the exporting country, in particular where the fundamental elements of the exporting country’s economic and administrative set-up provides the government with substantial powers to intervene in the economy in such a way that prices and costs are not the result of the free development of market forces.

(48) Article 2(6a)(c) of the basic Regulation provides that ‘[w]here the Commission has well-founded indications of the possible existence of significant distortions as referred to in point (b) in a certain country or a certain sector in that country, and where appropriate for the effective application of this Regulation, the Commission shall produce, make public and regularly update a report describing the market circumstances referred to in point (b) in that country or sector’.

(49) Pursuant to this provision, the Commission has issued a country report concerning China (hereinafter ‘the Report’) (10), showing the existence of substantial government intervention at many levels of the economy, including specific distortions in many key factors of production (such as land, energy, capital, raw materials and labour) as well as in specific sectors (such as steel and chemicals). Interested parties were invited to rebut, comment or supplement the evidence contained in the investigation file at the time of initiation. The Report was placed in the investigation file at the initiation stage.

(50) More specifically, the interim review request alleged that the factors of production, including the main raw materials and energy to produce HTYP are heavily distorted. The request referred to the Report and the distortions identified therein with respect to the chemical sector, including the monoethylene glycol (‘MEG’) and purified terephthalic acid (‘PTA’) industry. Moreover, the request pointed – with reference to the Report – to existing distortions with respect to energy costs. The request also observed that Chinese authorities support implementing preferential fiscal and financial policies for the chemical industry, not least in line with the Chemical Fiber Industry 13th Five-Year Directive Opinion. The request further noted the State interference with respect to the labour market and the land-use rights.

(51) As indicated in recital (42), the GOC did not comment or provide evidence supporting or contradicting the existing evidence on the case file, including the Report and the additional evidence provided by the applicant, on the existence of significant distortions and/or on the appropriateness of the application of Article 2(6a) of the basic Regulation in the case at hand.

(52) The Commission examined whether it was appropriate or not to use domestic prices and costs in China, due to the existence of significant distortions within the meaning of point (b) of Article 2(6a) of the basic Regulation. The Commission did so on the basis of the evidence available on the file, including the evidence contained in the Report, which relies on publicly available sources. That analysis covered the examination of the substantial government interventions in China’s economy in general, but also the specific market situation in the relevant sector including the product under review. The Commission further supplemented these evidentiary elements with its own research on the various criteria relevant to confirm the existence of significant distortions in China.

(53) The Chinese economic system is based on the concept of a ‘socialist market economy’. That concept is enshrined in the Chinese Constitution and determines the economic governance of China. The core principle is the ‘socialist public ownership of the means of production, namely, ownership by the whole people and collective ownership by the working people’. The State-owned economy is the ‘leading force of the national economy’ and the State has the mandate ‘to ensure its consolidation and growth’ (11). Consequently, the overall setup of the Chinese economy not only allows for substantial government interventions into the economy, but such interventions are expressly mandated. The notion of supremacy of public ownership over the private one permeates the entire legal system and is emphasized as a general principle in all central pieces of legislation. The Chinese property law is a prime example: it refers to the primary stage of socialism and entrusts the State with upholding the basic economic system under which the public ownership plays a dominant role. Other forms of ownership are tolerated, with the law permitting them to develop side by side with the State ownership (12).

(54) In addition, under Chinese law, the socialist market economy is developed under the leadership of the Chinese Communist Party (‘CCP’). The structures of the Chinese State and of the CCP are intertwined at every level (legal, institutional, personal), forming a superstructure in which the roles of CCP and the State are indistinguishable. Following an amendment of the Chinese Constitution in March 2018, the leading role of the CCP was given an even greater prominence by being reaffirmed in the text of Article 1 of the Constitution. Following the already existing first sentence of the provision: ‘[t]he socialist system is the basic system of the People’s Republic of China’ a new second sentence was inserted which reads: ‘[t]he defining feature of socialism with Chinese characteristics is the leadership of the Communist Party of China.’ (13) This illustrates the unquestioned and ever growing control of the CCP over the economic system of China. This leadership and control is inherent to the Chinese system and goes well beyond the situation customary in other countries where the governments exercise general macroeconomic control within the boundaries of which free market forces are at play.

(55) The Chinese State engages in an interventionist economic policy in pursuance of goals, which coincide with the political agenda set by the CCP rather than reflecting the prevailing economic conditions in a free market (14). The interventionist economic tools deployed by the Chinese authorities are manifold, including the system of industrial planning, the financial system, as well as the level of the regulatory environment.

(56) First, on the level of overall administrative control, the direction of the Chinese economy is governed by a complex system of industrial planning which affects all economic activities within the country. The totality of these plans covers a comprehensive and complex matrix of sectors and crosscutting policies and is present on all levels of government. Plans at provincial level are detailed while national plans set broader targets. Plans also specify the means in order to support the relevant industries/sectors as well as the timeframes in which the objectives need to be achieved. Some plans still contain explicit output targets. Under the plans, individual industrial sectors and/or projects are being singled out as (positive or negative) priorities in line with the government priorities and specific development goals are attributed to them (industrial upgrade, international expansion etc.). The economic operators, private and State-owned alike, must effectively adjust their business activities according to the realities imposed by the planning system. This is not only because of the binding nature of the plans but also because the relevant Chinese authorities at all levels of government adhere to the system of plans and use their vested powers accordingly, thereby inducing the economic operators to comply with the priorities set out in the plans (see also section 3.4.4.1.5 below) (15).

(57) Second, on the level of allocation of financial resources, the financial system of China is dominated by the State-owned commercial banks. Those banks, when setting up and implementing their lending policy need to align themselves with the government’s industrial policy objectives rather than primarily assessing the economic merits of a given project (see also section 3.4.4.1.8 below) (16). The same applies to the other components of the Chinese financial system, such as the stock markets, bond markets, private equity markets etc. Also these parts of the financial sector other than the banking sector are institutionally and operationally set up in a manner not geared towards maximizing the efficient functioning of the financial markets but towards ensuring control and allowing intervention by the State and the CCP (17).

(58) Third, on the level of regulatory environment, the interventions by the State into the economy take a number of forms. For instance, the public procurement rules are regularly used in pursuit of policy goals other than economic efficiency, thereby undermining market-based principles in the area. The applicable legislation specifically provides that public procurement shall be conducted in order to facilitate the achievement of goals designed by State policies. However, the nature of these goals remains undefined, thereby leaving broad margin of appreciation to the decision-making bodies (18). Similarly, in the area of investment, the GOC maintains significant control and influence over destination and magnitude of both State and private investment. Investment screening as well as various incentives, restrictions, and prohibitions related to investment are used by authorities as an important tool for supporting industrial policy goals, such as maintaining State control over key sectors or bolstering domestic industry (19).

(59) In sum, the Chinese economic model is based on certain basic axioms, which provide for and encourage manifold government interventions. Such substantial government interventions are at odds with the free play of market forces, resulting in distorting the effective allocation of resources in line with market principles (20).

(60) In China, enterprises operating under the ownership, control and/or policy supervision or guidance by the State represent an essential part of the economy.

(61) While in the HTYP sector, the degree of state ownership does not appear to be significant, the GOC maintains shareholding in a number of producers, such as a stake of more than 12 % in the Unifull Group. (21) Moreover, the companies pledge to cooperate with government authorities in expectation of advancing their business prospects, as can be seen for instance from the 2021 annual report of Zhejiang Unifull Industrial Fibre, (22) according to which: “The company will continue to strengthen cooperation and exchanges with external stakeholders such as local governments at all levels, external financial institutions, customers and suppliers to achieve a win-win situation for the interests of external stakeholders and shareholders.” In addition, given that CCP interventions into operational decision making have become the norm also in private companies (23), with CCP claiming leadership over virtually every aspect of the country’s economy, the influence of the State by means of CCP structures within companies effectively results in economic operators being under control and policy supervision of the government, given how far the State and Party structures have grown together in China.

(62) This is apparent also at the level of the China Chemical Fiber Association (‘CCFA’) (24), the sectoral industry association, of which for example Guxiandao is a member, with Guxiandao’s general manager serving as the association’s Vice President. According to Art. 2 of CCFA’s Articles of Association, the organisation’s purpose is, among others, to “implement the country’s industrial policy”. Article 3 confirms CCFA’s subordination to the CCP by stipulating that “[t]he Association adheres to the overall leadership of the Communist Party of China, establishes organizations of the Communist Party of China, develops party activities, and provides the conditions necessary for the activities of the party organizations in accordance with the provisions of the Constitution of the Communist Party of China.”

(63) Consequently, even privately owned producers in the HTYP sector are prevented from operating under market conditions. Indeed, both public and privately owned enterprises in the sector are subject to policy supervision and guidance as also set out in section 3.4.4.1.5 below.

(64) Apart from exercising control over the economy by means of ownership of State-owned enterprises (‘SOEs’) and other tools, the GOC is in position to interfere with prices and costs through State presence in firms. While the right to appoint and to remove key management personnel in SOEs by the relevant State authorities, as provided for in the Chinese legislation, can be considered to reflect the corresponding ownership rights, (25) CCP cells in enterprises, State-owned and private alike, represent another important channel through which the State can interfere with business decisions. According to China’s company law, a CCP organisation is to be established in every company (with at least three CCP members as specified in the CCP Constitution (26)) and the company shall provide the necessary conditions for the activities of the party organisation. In the past, this requirement appears not to have always been followed or strictly enforced. However, since at least 2016 the CCP has been reinforcing its claims to control business decisions in companies as a matter of political principle (27), including exercising pressure on private companies to put ‘patriotism’ first and to follow party discipline (28). In 2017, it was reported that party cells existed in 70 % of some 1,86 million privately owned companies, with growing pressure for the CCP organisations to have a final say over the business decisions within their respective companies (29). These rules are of general application throughout the Chinese economy, across all sectors, including to the producers of HTYP and the suppliers of their inputs.

(65) In addition, on 15 September 2020 a document titled General Office of CCP Central Committee’s Guidelines on stepping up the United Front work in the private sector for the new era (‘the Guidelines’) (30) was released, which further expanded the role of the party committees in private enterprises. Section II.4 of the Guidelines state: “[w]e must raise the Party’s overall capacity to lead private-sector United Front work and effectively step up the work in this area”; and section III.6 states: “[w]e must further step up Party building in private enterprises and enable the Party cells to play their role effectively as a fortress and enable Party members to play their parts as vanguards and pioneers.” The Guidelines thus emphasise and seek to increase the role of the CCP in companies and other private sector entities (31).

(66) The investigation has confirmed that overlaps between managerial positions and CCP membership/Party functions are commonplace in the chemical fibers sector. For example, the general manager of Unifull holds in parallel the position of the Party branch secretary (32) while in Guxiandao, the executive director serves also as secretary of the Party committee. (33)

(67) The State’s presence and intervention in the financial markets (see also section 3.4.4.1.8 below) as well as in the provision of raw materials and inputs further have an additional distorting effect on the market (34). Thus, the State presence in firms, in the HTYP and other sectors (such as the financial and input sectors) allow the GOC to interfere with respect to prices and costs.

(68) The direction of the Chinese economy is, to a significant degree, determined by an elaborate system of planning which sets out priorities and prescribes the goals the central and local governments must focus on. Relevant plans exist on all levels of government and cover virtually all economic sectors. The objectives set by the planning instruments are of binding nature and the authorities at each administrative level monitor the implementation of the plans by the corresponding lower level of government. Overall, the system of planning in China results in resources being driven to sectors designated as strategic or otherwise politically important by the government, rather than being allocated in line with market forces (35).

(69) The chemical fiber industry is regarded as a key industry by the GOC. This is evident from the 2022 Guiding Opinions on the High-quality Development of Chemical Fiber Industry (‘the Guiding Opinions’) issued by Ministry of Industry and Information Technology National Development and Reform Commission (36), according to which “The chemical fiber industry is an essential pillar of the stable development and continuous innovation of the textile industry chain, an internationally competitive advantage industry, and an important part of the new material industry”. Article I.2. of the Guiding Opinions explicitly articulates the GOC’s intention to determine the geographical and corporate structure of the sector, as well as essential production parameters. (37) The Government intervention may take the form of production sites relocations (“implement the regional development strategy, under the premise of complying with industry, energy, environmental protection and other policies, encourage leading enterprises to build integrated bases for the whole industry chain of chemical fiber textile in Guangxi, Guizhou, Xinjiang and other central and western regions, and form efficient and collaborative supply chain systems with neighbouring countries and regions”), mergers aimed at creating industrial champions (“encourage enterprises to optimize the allocation of production factors through mergers and reorganization, and accelerate business process reengineering and technological upgrading. Support leading enterprises to gather high-quality resources such as technology, brands, channels and talents”), designation of companies as eligible for special support through dedicated Government programs (“promote the integration and development of large, medium and small enterprises, cultivate specialized and specific new "little giant" enterprises and single champion enterprises”) etc. (38)

(70) This central Government’s strategy is confirmed in numerous planning documents focused on the chemical fiber industry issued at provincial and municipal level.

(71) The Zhejiang, Jiangsu, Fujian and Shandong provinces, as well as the Chongqing municipality provide good examples.

(75) Also Shandong’s 14th FYP on developing the chemical industry (47) emphasizes the need to ”[focus on the development of ethylene-based polyolefins and synthetic resins as end-use products, propylene-polypropylene, other engineering plastics as well as modified materials, synthetic and rubber materials made of butene and C4, end-products made with high performance polyurethane isocyanate and toluene, new materials, textile and engineering materials made of nylon, benzene and polyamide, PX-PTA-polyester and six other major industry chains” (48), with similar language present also in Zhejiang‘s 14th FYP on developing new materials industry: (49)„In the field of advanced basic materials, implement a number of digital and green transformation projects and production expansion projects for high-end and scarce products; in the fields of key strategic materials such as advanced semiconductor materials, new display materials, biomedical materials, high-performance fibers and composite materials, implement a number of industrialization and application expansion projects” (50) or Chongqing’s 14 FYP on high quality development of manufacturing industry: (51)„Use the raw material bases to encourage relevant enterprises to research, develop and manufacture high-performance PVA (polyvinyl alcohol) functional fibers, differentiated spandex, special polyester fibers, polyamide fibers, PU (polyurethane) microfibers and other products.” (52)

(76) Through these and other means, the GOC therefore directs and controls virtually every aspect in the development and functioning of the sector.

(77) In sum, the GOC has measures in place to induce operators to comply with the public policy objectives of supporting encouraged industries, including the production the main raw materials used in the manufacturing of HTYP. Such measures impede market forces from operating freely.

(78) According to the information on file, the Chinese bankruptcy system delivers inadequately on its own main objectives such as to fairly settle claims and debts and to safeguard the lawful rights and interests of creditors and debtors. This appears to be rooted in the fact that while the Chinese bankruptcy law formally rests on principles that are similar to those applied in corresponding laws in countries other than China, the Chinese system is characterised by systematic under-enforcement. The number of bankruptcies remains notoriously low in relation to the size of the country’s economy, not least because the insolvency proceedings suffer from a number of shortcomings, which effectively function as a disincentive for bankruptcy filings. Moreover, the role of the State in the insolvency proceedings remains strong and active, often having direct influence on the outcome of the proceedings (53).

(79) In addition, the shortcomings of the system of property rights are particularly obvious in relation to ownership of land and land-use rights in China. (54) All land is owned by the State (collectively owned rural land and State-owned urban land) and its allocation remains solely dependent on the State. There are legal provisions that aim at allocating land use rights in a transparent manner and at market prices, for instance by introducing bidding procedures. However, these provisions are regularly not respected, with certain buyers obtaining their land for free or below market rates (55). Moreover, authorities often pursue specific political goals including the implementation of the economic plans when allocating land (56).

(80) Much like other sectors in the Chinese economy, the producers of HTYP are subject to the ordinary rules on Chinese bankruptcy, corporate, and property laws. That has the effect that these companies, too, are subject to the top-down distortions arising from the discriminatory application or inadequate enforcement of bankruptcy and property laws. Those considerations, on the basis of the evidence available, appear to be fully applicable also in the chemical fibers sector. The present investigation revealed nothing that would call those findings into question.

(81) In light of the above, the Commission concluded that there was discriminatory application or inadequate enforcement of bankruptcy and property laws in the chemical fibers sector, including with respect to the product under review.

(82) A system of market-based wages cannot fully develop in China as workers and employers are impeded in their rights to collective organisation. China has not ratified a number of essential conventions of the International Labour Organisation (‘ILO’), in particular those on freedom of association and on collective bargaining (57). Under national law, only one trade union organisation is active. However, this organisation lacks independence from the State authorities and its engagement in collective bargaining and protection of workers’ rights remains rudimentary (58). Moreover, the mobility of the Chinese workforce is restricted by the household registration system, which limits access to the full range of social security and other benefits to local residents of a given administrative area. This typically results in workers who are not in possession of the local residence registration finding themselves in a vulnerable employment position and receiving lower income than the holders of the residence registration. (59) Those findings lead to the distortion of wage costs in China.

(83) No evidence was submitted to the effect that the chemical fibers sector, including the producers of HTYP, would not be subject to the Chinese labour law system described. The chemical fibers sector is thus affected by the distortions of wage costs both directly (when making the product under review or the main raw material for its production) as well as indirectly (when having access to capital or inputs from companies subject to the same labour system in China).

(84) Access to capital for corporate actors in China is subject to various distortions.

(85) Firstly, the Chinese financial system is characterised by the strong position of State-owned banks (60), which, when granting access to finance, take into consideration criteria other than the economic viability of a project. Similarly to non-financial SOEs, the banks remain connected to the State not only through ownership but also via personal relations (the top executives of large State-owned financial institutions are ultimately appointed by the CCP) (61) and, again just like non-financial SOEs, the banks regularly implement public policies designed by the GOC. In doing so, the banks comply with an explicit legal obligation to conduct their business in accordance with the needs of the national economic and social development and under the guidance of the industrial policies of the State (62). This is compounded by additional existing rules, which direct finances into sectors designated by the government as encouraged or otherwise important (63).

(86) While it is acknowledged that various legal provisions refer to the need to respect normal banking behaviour and prudential rules such as the need to examine the creditworthiness of the borrower, the overwhelming evidence, including findings made in trade defence investigations, suggests that these provisions play only a secondary role in the application of the various legal instruments.

(87) For example, the GOC has clarified that even private commercial banking decisions must be overseen by the CCP and remain in line with national policies. One of the State’s three overarching goals in relation to banking governance is now to strengthen the Party’s leadership in the banking and insurance sector, including in relation to operational and management issues (64). Also, the performance evaluation criteria of commercial banks have now to, notably, take into account how entities ‘serve the national development objectives and the real economy’, and in particular how they ‘serve strategic and emerging industries’. (65)

(89) Similarly, under the 14th FYP on the high-end development of the chemical industry (68) of the Jiangsu province, the local authorities are obliged to “[g]ive full play to the guiding role of government investment funds, flexibly expand funding channels and guide social capital investments.» (69)

(90) These policies of financial support for strategic industries are then implemented at company level, as evidenced for instance by the agreement between Bank of China and Guxiandao on Party building. As explained on the company’s webpage, the Party building agreement, under which Guxiandao and the local branch of Bank of China would “further deepen cooperation and realize the deep integration of party building work with business development” would only represent a first stage, to be followed by Bank of China “further increas[ing] the credit extension to [Guxiandao] taking into account the actual needs of [the] enterprise[…], so as to further increase the international settlement volume“ which in turn „[…] will ensure new business development under the leadership of the party building”. (70)

(91) Furthermore, bond and credit ratings are often distorted for a variety of reasons including the fact that the risk assessment is influenced by the firm’s strategic importance to the GOC and the strength of any implicit guarantee by the government. Estimates strongly suggest that Chinese credit ratings systematically correspond to lower international ratings. (71)

(92) This is compounded by additional existing rules, which direct finances into sectors designated by the government as encouraged or otherwise important (72). This results in a bias in favour of lending to SOEs, large well-connected private firms and firms in key industrial sectors, which implies that the availability and cost of capital is not equal for all players on the market.

(93) Secondly, borrowing costs have been kept artificially low to stimulate investment growth. This has led to the excessive use of capital investment with ever lower returns on investment. This is illustrated by the growth in corporate leverage in the State sector despite a sharp fall in profitability, which suggests that the mechanisms at work in the banking system do not follow normal commercial responses.

(94) Thirdly, although nominal interest rate liberalization was achieved in October 2015, price signals are still not the result of free market forces, but are influenced by government-induced distortions. The share of lending at or below the benchmark rate still represented at least one-third of all lending as of the end of 2018 (73). Official media in China have recently reported that the CCP called for ‘guiding the loan market interest rate downwards.’ (74) Artificially low interest rates result in under-pricing, and consequently, the excessive utilization of capital.

(95) Overall credit growth in China indicates a worsening efficiency of capital allocation without any signs of credit tightening that would be expected in an undistorted market environment. As a result, non-performing loans have increased rapidly, with the GOC a number of times opting to either avoid defaults, thus creating so called ‘zombie’ companies, or to transfer the ownership of the debt (e.g. via mergers or debt-to-equity swaps), without necessarily removing the overall debt problem or addressing its root causes.

(96) In essence, despite the steps that have been taken to liberalize the market, the corporate credit system in China is affected by significant distortions resulting from the continuing pervasive role of the State in the capital markets. Therefore, the substantial government intervention in the financial system leads to the market conditions being severely affected at all levels.

(97) The Commission noted that the distortions described in the Report are characteristic for the Chinese economy. The evidence available shows that the facts and features of the Chinese system as described above in Sections 3.4.4.1.1 – 3.4.4.1.5 as well as in Part I of the Report apply throughout the country and across the sectors of the economy. The same holds true for the description of the factors of production as set out above in Sections 3.4.4.1.6-3.4.4.1.8 and in Part II of the Report.

(98) The Commission recalls that in order to produce HTYP, a range of inputs is needed. When the producers of HTYP purchase/contract these inputs, the prices they pay (and which are recorded as their costs) are clearly exposed to the same systemic distortions mentioned before. For instance, suppliers of inputs employ labour that is subject to the distortions. They may borrow money that is subject to the distortions on the financial sector/capital allocation. In addition, they are subject to the planning system that applies across all levels of government and sectors.

(99) As a consequence, not only the domestic sales prices of HTYP are not appropriate for use within the meaning of Article 2(6a)(a) of the basic Regulation, but all the input costs (including raw materials, energy, land, financing, labour, etc.) are also affected because their price formation is affected by substantial government intervention, as described in Parts I and II of the Report. Indeed, the government interventions described in relation to the allocation of capital, land, labour, energy and raw materials are present throughout China. This means, for instance, that an input that in itself was produced in China by combining a range of factors of production is exposed to significant distortions. The same applies for the input to the input and so forth. No evidence or argument to the contrary has been adduced by the GOC or the exporting producers in the present investigation.

(100) The analysis set out in sections 3.4.4.1.2. to 3.4.4.1.9., which includes an examination of all the available evidence relating to China’s intervention in its economy in general as well as in the chemical fibers sector (including the product under review) showed that prices or costs of the product under review, including the costs of raw materials, energy and labour, are not the result of free market forces because they are affected by substantial government intervention within the meaning of Article 2(6a)(b) of the basic Regulation as shown by the actual or potential impact of one or more of the relevant elements listed therein. On that basis, and in the absence of any cooperation from the GOC, the Commission concluded that it is not appropriate to use domestic prices and costs to establish normal value in this case.

(101) Consequently, the Commission proceeded to construct the normal value exclusively on the basis of costs of production and sale reflecting undistorted prices or benchmarks, that is, in this case, on the basis of corresponding costs of production and sale in an appropriate representative country, in accordance with Article 2(6a)(a) of the basic Regulation, as discussed in the following section.

(103) The Commission’s assessment on the selection of appropriate representative country can be summarised as follows.

(104) In the review investigation period, the World Bank classified countries with a similar level of economic development as China as ‘upper-middle income’ countries on a gross national income basis. In the First Note, a sizeable production of the product under review was found to exist only in five of these countries, namely in Belarus, Brazil, Mexico, Thailand and Türkiye.

(105) However, in view of the fact that Belarus is not a WTO-member and not a market economy, the said country was not examined further as a potential representative country.

(106) The Commission therefore further analysed in more detail Brazil, Mexico, Thailand and Türkiye as potential representative countries.

(107) For the countries considered and mentioned above, the Commission further verified the availability of the public data, including the data on imports of factors of production as well as of financial data from the producers of the product under review in the potential representative countries.

(108) The analysis of imports of the main factors of production showed that Türkiye imported overall more significant and representative undistorted volumes of the key inputs for production of the HTYP (namely PTA, MEG and Polyethylene terephthalate (‘PET’) chips) compared to Brazil, Mexico or Thailand.

(109) The analysis further showed that Turkish imports were not materially affected by imports from China or any of the countries listed in Annex I to Regulation (EU) 2015/755 of the European Parliament and of the Council (77). Furthermore, the HTYP production is significant in Türkiye and no particular trade distortions on the factors of production nor on HTYP exist in the country. Moreover, detailed and sufficiently representative data on import prices of the material inputs are readily available in the Global Trade Atlas (‘GTA’) for Türkiye.

(110) Regarding the producers in representative countries and availability of their data, the Commission identified a HTYP producer KORDSA TEKNIK TEKSTIL A.S. (‘Kordsa Türkiye’) for which consolidated 2021 financial results are available. On the other hand, the financial data for Brazilian (KORDSA BRASIL S.A.), Mexican (Monosuisse, Performance Fibers Mexico Operations and Akra Polyester SA DE CV) and Thai companies (THAI TORAY SYNTHETICS CO LTD and TEIJIN POLYESTER (THAILAND) CO LTD.) producing HTYP are not readily available for the full investigation period and are not fully compliant with the International Financial Reporting Standards (for the Thai producers).

(111) It is observed that Kordsa Türkiye does not produce solely HTYP, but approximately 86 % of its 2021 revenues were in the segment covering HTYP (78). The Commission noted in this respect that if no financial information is readily available specifically and only in relation to the product under review (which is nearly always the case), the Commission seeks the closest readily available proxy, including consolidated information of producer(s) active, among others in the business covering the product under review. In these circumstances, the consolidated SG&A and profit identified for Kordsa Türkiye are therefore deemed sufficiently representative to be applied for the purposes of the present investigations.

(112) Given the public availability of Kordsa Türkiye’s full and comprehensive annual report for 2021 (79), the Commission therefore resorted to the use of the information included therein.

(113) Having established that Türkiye was an appropriate representative country based on all of the above elements, there was no need to carry out an assessment of the level of social and environmental protection in accordance with the last sentence of Article 2(6a)(a) first indent of the basic Regulation.

(114) In view of the above analysis, Türkiye met the criteria laid down in Article 2(6a)(a), first indent of the basic Regulation in order to be considered as an appropriate representative country.

(115) In the absence of cooperation from Chinese exporting producers, and thus in the absence of specific information on Chinese price the dumping margin was determined on the basis of facts available in accordance with Article 18 of the basic Regulation.

(116) To calculate the dumping margin, the Commission would generally construct the normal value multiplying the consumption volumes for each factor of production (as provided by the applicant) by the undistorted costs per unit established in Türkiye, as outlined in Section 4.5.4, further applying the manufacturing overheads to the undistorted costs of manufacturing (see Section 4.5.9) and the SG&A and profit established for Türkiye (see Section 4.5.8). Furthermore, the export price would be determined based on the publicly available import statistics.

(117) However, instead of relying on the information provided by the applicant and/or on import statistics in this case, in light of the interim review investigation (with high level of cooperation covering significant part of the HTYP Union imports) (80), the Commission relied on the published outcome of the said interim review investigation and dumping margins established therein (see recital (356)).

(118) On this basis, the weighted average dumping margins expressed as a percentage of the CIF Union frontier price, duty unpaid, were in the range of 9,7 % to 23,7 %. It was therefore concluded that dumping continued during the review investigation period.

(119) In accordance with Article 11(2) of the basic Regulation, it was examined whether it was likely that dumping established based on Article 18 of the basic Regulation would continue should the measures lapse.

(120) To that end, the Chinese production capacity and spare capacity, the behaviour of Chinese exporters on other markets, the situation on the domestic market of China and the attractiveness of the Union market were considered.

(121) Given the lack of cooperation of the Chinese exporting producers in the expiry review, the spare capacity in China has been determined principally based on the publicly available statistical information (information extracted from Eurostat), the expiry review request, interim review request and on an independent industry report issued by a widely recognised global research and consultancy firm (81) (hereinafter ‘Wood Mac’) active, among others in the chemical sector. Reliability of the figures provided in the Wood Mac industry report was verified against and their accuracy was largely confirmed by the findings from the previous HTYP expiry review investigation (82) (‘2017 expiry review’).

(122) The Commission performed a detailed spare capacity calculation, taking into account the production capacity of Chinese producers subject to measures, their production volumes, their exports to other countries and domestic consumption.

(123) While in 2018, the production capacity was around [2 126 000 – 2 716 000] tonnes (consistent with the capacity in 2015 as outlined in the 2017 expiry review), it rose to [2 508 000 – 3 205 000] tonnes in the RIP. In fact, HTYP capacity of Chinese producers subject to measures in the RIP has superseded the worldwide HTYP consumption in the same period. Such sharp increase in production capacity is however coupled with a stagnant production, which oscillated at around [1 187 000 – 1 746 000] tonnes in the period 2018-2021, production volume being comparable to the review investigation period from the 2017 expiry review. At the same time the domestic consumption in the period 2018-RIP was stable, at around [1 048 000 –1 566 000] tonnes, moving in the same range as in 2015.

(124) Concerning the Chinese exports of HTYP, in the light of the Chinese export statistics, exports grew from 458 246 tonnes in 2018 to 514 141 tonnes in RIP. Compared to the increase of the production capacity, this modest rise had a negligible, if any effect on the ability to absorb the massive Chinese production capacity.

(125) As a result, the stagnant levels of domestic consumption and production in China and the modest growth in exports coupled with a sharp rise of the production capacity led to an increase of already enormous spare capacities of the Chinese HTYP producers.

(126) More specifically and in terms of magnitude, the spare capacity of the Chinese HTYP producers subject to measures was between [1,3 – 1,5] million tonnes in RIP, which corresponds to around 6 times the 2021 Union HTYP consumption and around 12 times the production volumes of Union producers.

(127) Furthermore, the production capacity is projected to be maintained in the period beyond 2021 up until 2025, remaining at [2 508 000- 3 210 000] tonnes.

(128) Therefore, the Commission concluded that compared to the size of the Union market, Chinese producers dispose of vast overcapacity, which is unlikely to be absorbed by domestic consumption or by exports to other third countries. If only portion of these capacities was fully directed to the Union market, significant volumes would be exported to the Union.

(129) The Union market has been consistently considered by China among the most attractive export markets, representing the first export destination in the RIP, with or without the exports not subject to the measures currently in place. Not only were the Chinese exports (subject to measures) to the Union constantly high between 2018-RIP, accounting in total for over 25 % of the market share in the Union; in fact, they almost doubled for the Chinese exports subject to measures between the RIP of the original investigation and 2021. Moreover on the global scale, the sales to the Union represented also nearly 25 % (83) of the total Chinese HTYP exports.

(130) Considering individually the prices in big export destinations for Chinese HTYP, the Chinese producers decreased their export prices to the Union by more than 13 % to keep their export volume steady in the period 2018-RIP. It further follows from the statistics that, while the price in the US (second biggest export market in the RIP) has been at a similar level with the Union prices, the price on the Korean market was approximately 10 % lower than the export prices to the Union. At the same time, the export quantities to Korea rose by more than 50 % in the period 2018-2021. Such behaviour is a manifestation of aggressive pricing policies in the export markets pursued with the objective of increasing the capacity utilisation.

(131) Furthermore, India, which was the fourth largest export market for Chinese HTYP during the RIP, imposed an anti-dumping duty (still in force) on imports of HTYP from China (84) in 2018. These trade defence measures in other export markets further increase the attractiveness of the Union market and would incentivize the Chinese exporting producers to direct their exports at the Union, if the anti-dumping measures in the Union were allowed to lapse.

(132) Moreover, two major Chinese HTYP industry players (85), companies Fujian Billion Polymerization Fiber Technology Industrial Co., Ltd. and Zhejiang Sanwei Material Technology Co., Ltd. have requested and were granted a new exporting producer treatment by the Commission in June 2022 (86), which further shows how attractive the Union market is for the Chinese exporting producers.

(133) Therefore, it is likely that, if the measures were allowed to lapse, the Chinese exporting producers would keep engaging in aggressive pricing practices, in order to increase their (already high) market share in the Union and to direct their significant over-capacity towards the Union market.

(134) The investigation showed that Chinese HTYP producers have been dumping during the review investigation period.

(135) It was further established, consistently with the 2017 expiry review that in China vast spare capacity exists in comparison with the size of the Union market.

(136) Moreover, given the stagnant consumption in the Chinese market and long-standing high attractiveness of the Union market for the Chinese exporting producers, it is likely that the Chinese HTYP producers would keep entering the Union market with increasingly large quantities of HTYP at dumped prices, in the absence of the measures.

(137) Therefore, the Commission concluded that there is a likelihood of continuation of dumping should the measures lapse.

(138) The like product was manufactured by six producers in the Union during the period considered. They constitute the ‘Union industry’ within the meaning of Article 4(1) of the basic Regulation.

(139) The total Union production during the review investigation period was established at around 117 000 tonnes. The Commission established the figure on the basis of all the available information concerning the Union industry, such as figures provided by the Union producers. As indicated in recital (24), three Union producers were selected in the sample representing more than 50 % of the total Union production of the like product.

(140) The Commission established the Union consumption on the basis of the sales volume of the Union industry on the Union market, plus the volume of all imports of HTYP. Since imports of HTYP from China were subject to measures during the period considered, the Commission used the statistics collected pursuant to Article 14(6) (87) of the basic Regulation (‘Article 14(6) database’) to establish the volume and average prices of imports from this country during the period considered, as it contained sufficiently detailed information at the level of the 10-digit TARIC codes and TARIC additional codes per company.

(142) The Union free market consumption within the period considered first decreased by 6 percentage points from 2018 until 2019, followed by a steep decrease of 10 percentage points due to COVID in 2020. However, consumption then recovered and in the RIP was 1 percentage point higher than in 2018.

(143) The Commission established the volume of imports as well as the market share of the imports on the basis of the import statistics from the country concerned of Article 14(6) database which provides data per 10-digit TARIC code and per exporting producer (TARIC additional code).

(145) The Chinese exporters currently subject to the duties under review increased their export volume during the period considered by 17 %. The temporary decline in export volume in 2020 is linked to the lower consumption in that year. Nevertheless, these exporters were able to further extend their market share over the period concerned by 4 percentage points. The slight decrease in market share from 2020 to the RIP can be explained by the shortage of transport containers for shippings from China and the connected steep increase in transport costs for these shippings.

(146) In the absence of cooperation of exporting producers in the expiry review, the Commission established the prices of imports on the basis of the import statistics of the Article 14(6) database. Price undercutting of the imports was established on the basis of the comparison of the figures in the Article 14(6) database with the verified prices of the sampled Union producers.

(148) The import price of the Chinese exporters currently subject to duties was volatile, decreasing by 28 % to a price of 1 195 EUR/ton in 2020 and then increasing by 15 percentage points in the RIP. Despite the price recovery in the RIP to 1 440 EUR/ton, this still shows an overall decrease of 13 % throughout the period considered. While the general decreasing price trend is linked to the strategy of gaining market shares, the increase in the RIP was caused by increased transport costs and a high demand in the RIP.

(150) In addition, the Union industry was unable to raise its prices above the level of its cost of production because of the price pressure from the Chinese exporting producers, whose prices remained below the Union industry’s cost of production during the entire period concerned

(151) In accordance with Article 3(5) of the basic Regulation, the assessment of the economic situation of the Union industry included an evaluation of all economic indicators having a bearing on the state of the Union industry during the period considered.

(152) As mentioned in recital (24), sampling was used for the assessment of the economic situation of the Union industry.

(153) For the injury determination, the Commission distinguished between macroeconomic and microeconomic injury indicators. The Commission evaluated the macroeconomic indicators on the basis of the verified data provided by the Union industry and verified questionnaire replies of the sampled Union producers. The data related to all Union producers. The Commission evaluated the microeconomic indicators on the basis of data contained in the questionnaire replies from the sampled Union producers. The data related to the sampled Union producers. Both sets of data were found to be representative of the economic situation of the Union industry.

(154) The macroeconomic indicators are: production, production capacity, capacity utilisation, sales volume, market share, growth, employment, productivity, magnitude of the dumping margin, and recovery from past dumping.

(155) The microeconomic indicators are: average unit prices, unit cost, labour costs, inventories, profitability, cash flow, investments, return on investments, and ability to raise capital.

(157) The production volume first decreased by 14 % from 2018 to 2020 and then increased by 25 percentage points from 2020 to the RIP, showing an overall increase of 11 % over the period considered. The capacity utilisation decreased from 2018 to 2020 by 17 %, but increased overall 8 % over the period considered.

(159) Total sales volume of the Union industry in the Union market decreased by 5 % during the period considered. The Union industry’s market share decreased by 2 percentage points during the period considered. The market share shows a declining trend over the period considered, interrupted by an intervening upward trend in 2020, which can be explained by the COVID-pandemic and the container shortage in 2020, which made shipping from East Asian countries more difficult.

(160) Between 2018 and the RIP, the Union free market consumption increased by 1 %. The sales volume of the Union industry decreased by 5 %, which translated into a loss in market share of 2 percentage points over the period considered.

(162) Due to the recovery of the demand in the RIP, the employment of the Union industry increased by 1 % during the period considered, despite showing a negative trend from 2018 to 2020. Similarly, the productivity also decreased from 2018 to 2020. However, for the entire period considered, productivity shows an increase.

(163) All dumping margins were above the de minimis level. The impact of the magnitude of the actual margins of dumping on the Union industry was substantial, given the volume and prices of imports from Chinese exporters, currently subject to duties.

(164) Continuous unfair pricing by exporters from China, currently subject to duties, made it also impossible for the Union industry to recover from the past dumping practices. With an average price of 1 440 EUR/tonne their price was also 31 % lower than the import price from South Korea, 6 % lower that the import price from Vietnam and 21 % lower than the import price from Taiwan.

(166) The Union industry’s average unit sales price to unrelated customers in the Union decreased from 2018 to 2020 by 16 % and only partially recovered 12 percentage points in the RIP reaching 1 957 EUR/tonne. The decline of the sales price is mostly linked to the pricing pressure from Chinese exports. In addition, in 2019 and 2020, the global economic slowdown has been affecting the prices of raw materials and, as a consequence, of industrial polyester yarn downwards.

(167) The cost of production developed in a similar trend, partially due to decreasing raw material prices during the global economic slowdown in 2019 and 2020 and partially due to rationalisations like reducing staff during these years. In 2019 and 2020, the Unit cost decreased by 1 percentage point and 13 percentage points respectively. However, the prices decreased at a higher rate of 16 percentage points over these two years. This shows that the Union industry could not benefit from these cost decreases. In the RIP, unit costs increased by 9 percentage points whereas the sales price increased by 12 percentage points. However, compared to the beginning of the period considered the prices decreased almost at the same percentage as the unit costs, showing that the prices were suppressed. The Union industry was not able to benefit from the cost decrease, it could not raise prices, and could not even maintain prices at their original level.

(169) The average labour costs per employee continuously increased, over the period considered by 7 %. This trend was only interrupted in 2020, partially due to rationalisations and partially due to COVID-pandemic specific measures like short-time work.

(171) The level of closing stocks of the sampled Union producers decreased by 9 % over the period considered. In the RIP, the level of stocks represented around 12 % of their production.

(173) The Commission established the profitability of the sampled Union producers by expressing the pre-tax net profit of the sales of the like product to unrelated customers in the Union as a percentage of the turnover of those sales. The profitability of the Union industry was negative throughout the period considered. It started at -10 % in 2018 and extended the loss until 2020 at -17 %. In the RIP, it could slightly improve to -8 % due to high demand.

(174) The net cash flow is the ability of the Union producers to self-finance their activities. The trend in net cash flow was negative throughout the period considered. While it gradually improved from 2018 to 2020, it dropped again in the RIP. While it showed a 40 % improvement over the period considered it continued to be negative. Consequently, the improvement in cash flow does not indicate a stabilizing of the financial situation of the Union industry as it still remains negative.

(175) Investments decreased by 65 % over the period considered. Investments related to compliance improvements in relation to health, safety and environmental requirements, increase in the capacity and effectiveness of the production plants. While in 2018, investments in a capacity increase were possible, in the following years this was no longer possible.

(176) The return on investments is the profit in percentage of the net book value of investments. The return on investment from the production and sale of the like product followed similar trend as the profitability. It dropped from 2018 to 2020 and then in the RIP returned to a level closer to 2018. It stayed negative throughout the entire period considered. Consequently, the return on investment indicates a negative financial situation of the Union industry over the entire period considered.

(177) On a macro level, the investigation showed that the situation of the Union industry did not improve and even the increased demand in the RIP did not lead to higher sales on the EU market than in the beginning of the period considered. Despite investments into a capacity increase, the Union was not able to even maintain its market share.

(178) The investigation has also shown that the situation of the industry on a micro level was not reaching a sustainable level and the industry incurred losses in all years of the period considered, even in the RIP in which the demand had recovered. The economic situation of the Union industry was thus injurious despite the existence of anti-dumping measures at the current levels on the imports of the product under review from the Chinese exporters currently subject to duties.

(179) The imported volumes of the Chinese exporters currently subject to duties over the period considered increased by 17 % while their price further dropped by 13 %.

(180) On the basis of the above, the Commission concluded that the Union industry continued to suffer material injury within the meaning of Article 3(5) of the basic Regulation during the review investigation period.

(181) During the entire period considered, the exports of the Chinese exporters currently subject to duties represented a substantial share of the imports to the EU. They even increased their market share by 4 percentage points from 27 % to 31 %. The price level of their exports decreased by 13 % over the period considered: during the RIP at 1 440 EUR/tonne it undercut the Union industries’ price by 26 %. The Chinese exporters currently subject to duties thereby suppressed the price level for the Union industry, contributing to a situation of continued losses over the period considered for the Union industry. There was a clear coincidence in time between the price pressure of these imports representing an important market share of 31 % and the injury of the Union industry. Therefore, due to the significant volume and price pressure exercised by these exports there was a genuine and substantial relationship of cause and effect between the imports of HTYP from China that were subject to the anti-dumping duties and the injury suffered by the Union industry.

(182) Hangzhou Huachun Chemical Fiber ceased to exist in 2021. Its exports have decreased by 99 % during the period considered and were negligible (below 0,01 % of the Union market share) in the RIP. Furthermore, the export price was significantly above of the Union industry price, as well as above the cost of production of the Union industry. Therefore, these exports did not contribute to the injury in the RIP.

(185) By maintaining a high export volume to the European Union during the period considered representing in the RIP a market share of [18 % – 23 %], at prices below the Union industry’s prices, Hailide has contributed to the injury of the Union Industry. Hailide sold at [1 500 – 1 600] EUR/tonne in the review investigation period, and showed an overall price decrease of 9 % throughout the period considered.

(186) However, these imports did not attenuate the link found between the dumped imports from the exporters currently subject to duties and the material injury suffered by the Union industry such that this link can no longer be characterized as a genuine and substantial relationship of cause and effect. The exports of the exporters currently subject to duties represented a market share of [29 % – 34 %] on the Union market during the RIP. This high market share, coupled with low prices has such an important weight on the market, that it exercised a significant independent price pressure on the Union industry.

(187) Accordingly, the effects of exports from Hailide, even if they contributed to the injury, did not materially diminish the relative importance of the dumped imports of the exporters currently subject to duties in continuing the injury.

(188) The imports into the Union of HTYP from third countries other than China were mainly from South Korea, Vietnam and Taiwan.

(190) In the RIP, 46 137 tonnes of HTYP were imported from third countries excluding China – this volume represents 20 % of the Union market. In total, their market share decreased from 2018 to 2020 from 18 % to 13 % and then increased to 20 % in the RIP. This follows the trend of EU consumption, but in a more pronounced way. The average import price from third countries excluding China increased in 2019 by 5 %, then decreased 8 percentage points in 2020 and further decreased 6 percentage points in the RIP. These imports mainly stem from South Korea (7 % of the Union Market), Vietnam (5 % of the Union market) and Taiwan (3 % of the Union market). Due to the fact that all these countries are located in East Asia, they were affected by the shipping container shortage and the resulting high shipping costs, which explains that in 2020 the market share of these third countries decreased.

(191) Imports from all third countries together have increased their market share on the Union Market by 2 percentage points. However, the average price of all third country imports in the RIP, but also in all previous years of the period considered was substantially above the average EU sales price. Therefore, all third countries together have not contributed to the injury of the Union Industry. The Commission therefore analysed if imports from a specific third country have contributed to the injury of the Union industry.

(192) Imports form South Korea followed the trend of the EU consumption in a more accentuated way, decreasing from 2018 to 2020 and in the RIP recovering closely above the level of 2018. The market share gradually decreased from 2018 to 2020 from 7 % to 5 % and then recovered to 7 % in the RIP. The price level of South Korean imports gradually increased over the period concerned, with the exception of 2020, which shows a price decrease that can be linked to the low demand in that year.

(193) The price level of imports from South Korea during the RIP as well as in the two preceding years was higher than the Union industry’s sales price. Due to the higher price level, the Commission concluded that imports from South Korea have not contributed to the injury.

(194) Imports from Vietnam where at a very low level from 2018 until 2020 representing a market share clearly below 1 % in that period, they increased in the RIP to a quantity representing 5 % of the Union market share. This coincided with a price decrease from levels above the Union Industry’s average sales price to a price of 1 537 EUR/tonne in the RIP, which is substantially lower than the Union Industry’s sales price.

(195) However, imports to the EU from the Chinese exporters currently subject to duties in the RIP were substantially higher. They amounted to [69 000 – 74 000] tonnes, whereas imports from Vietnam only amounted to 12 231 tonnes, thereby only representing a small share of imports to the EU from China.

(196) Therefore, the Commission concluded that while imports from Vietnam may have contributed to the injury of the Union industry, they do not attenuate the causal link as the volume of imports from Vietnam represent only a small fraction of the exports from the Chinese exporters currently subject to duties to the Union and do not have a comparable weight to put pressure on Union industry.

(197) Imports from Taiwan represented a market share of 3 % in the beginning of the period considered as well as in the RIP. While the import price of 1 816 EUR/tonne in the RIP was slightly lower than the Union Industry’s sales price, it was substantially higher than the price of the Chinese exporters currently subject to duties of 1 440 EUR/tonne.

(198) Therefore, the Commission concluded that while imports from Taiwan may have contributed to the injury of the Union Industry, they do not attenuate the causal link as the volume of imports from Taiwan represent only a fraction of imports from the Chinese exporters currently subject to duties, their price was substantially above the price for imports from the Chinese exporters currently subject to duties and do not have a comparable weight to put pressure on Union industry.

(199) Imports from Taiwan and Vietnam, when considered together with the imports from Hailide, did not attenuate the link found between the dumped imports from exporting producers subject to the duties and the injury suffered by the Union industry such that this link cannot be characterized as a genuine and substantial relationship of cause and effect. Exports of exporting producers subject to the duties represented a market share of [29 % – 34 %] on the Union market during the RIP and were sold, on average, substantially below the costs of production of the Union industry. Considering this magnitude and the resulting price pressure imports from Taiwan, Vietnam and Hailide did not materially diminish the relative importance of the dumped imports from the exporting producers subject to the duty in bringing about the injury.

(201) While export volumes over the period considered followed a similar trend than the sales on the Union market, in the RIP, the volumes were only 2 % below the 2018 figures and recovered stronger than sales on the Union market, which were still 5 % below the 2018 volumes.

(202) The average price for exports in every year was clearly above the sales price on the EU market, in the RIP it was more than 10 % higher. The average price for exports followed a trend similar to the prices on the EU market. However, while in 2020 the export price fell stronger, in the RIP it recovered quicker than the prices on the EU market, reaching a level 3 % higher than the 2018 average price, whereas the sales price on the EU market in the RIP was still 4 % below the 2018 price.

(203) The comparison shows that the Union producers are strongly committed to the Union market, while being able to reach higher prices for export sales.

(204) Therefore, the Commission concluded that the export performance of the Union industry has not contributed to the injury, but to the contrary contributed to limiting the loss.

(205) The captive consumption of the Union industry has substantially increased in the RIP. Over the period considered it increased by 39 %. However, the decision to increase the captive consumption in order to sell downstream products at a higher manufacturing level, is a direct result of not being able to reach a fair market price on the free market for HTYP due to the pricing pressure from the dumped imports. Therefore, the Commission concluded that this is not a factor contributing to the injury.

(206) As a reaction to a submission of the applicant on post-RIP developments, several users together with a user association claimed that rising energy costs and inflation crisis breaks the causal link between imports of Chinese HTYP and the injury experienced by the Union industry. The rising energy costs and inflation, as submitted by the applicant, have however occurred post-RIP. The users have not detailed that any such development occurred during the RIP. Therefore, the Commission rejected this argument.

(207) There was a clear coincidence in time between the substantial exports from China of the exporters currently subject to duties and the deterioration of the situation of the Union industry.

(208) The Commission has also investigated other factors of injury and has not found any other factor which would attenuate the causal link between these exports from China and the material injury suffered by the Union industry.

(209) On the basis of the above, the Commission concluded that the dumped exports from the Chinese exporters currently subject to duties materially contributed to the injury of the Union industry and that no other factors, considered individually or collectively, are attenuating the causal link between the dumped exports of the Chinese exporters currently subject to duties and the injury suffered by the Union industry.

(210) The Commission concluded in recital (180) that the Union industry suffered material injury during the review investigation period. Therefore, the Commission assessed, in accordance with Article 11(2) of the basic Regulation, whether there would be a likelihood of continuation of injury caused by the dumped imports from China if the measures were allowed to lapse.

(211) In this respect the following elements were analysed by the Commission: the production capacity and spare capacity in China and the relation between Chinese export prices to third countries and the price level in the Union.

(212) As analysed in detail in section 3.5.1, compared to the size of the Union market, Chinese producers dispose of vast overcapacities, which are unlikely to be absorbed by domestic consumption or by exports to other third countries.

(213) As analysed in detail in section 3.5.2 the Union market remains the largest export market for Chinese exporters also due to its attractive price level. Indeed, even with anti-dumping duties in place, Chinese prices are still undercutting Union industry prices on average by 26 %. While the price in the US (second biggest export market in the RIP) has been at a level similar to the Union prices, the Chinese export price on the Korean market was approximately 10 % lower than the Union export prices. Trade defence measures in other export markets further increase the attractiveness of the Union market.

(214) Therefore, it is likely that if the measures were allowed to lapse, the Chinese exporting producers would keep engaging in aggressive pricing practices, in order to increase their (already high) market share in the Union and to accommodate their significant over-capacity on the Union market.

(215) In view of the above, the Commission concluded that the repeal of the measures would in all likelihood result in a significant increase of dumped imports from China at injurious price levels and would therefore further aggravate the injury suffered by the Union industry. As a consequence, the viability of the Union industry would be at serious risk.

(216) In accordance with Article 21 of the basic Regulation, the Commission examined whether maintaining the existing anti-dumping measures at the revised duty level following the combined interim review would be against the interest of the Union. The determination of the Union interest was based on an appreciation of all the various interests involved, including those of the Union industry, importers, users.

(217) All interested parties were given the opportunity to make their views known pursuant to Article 21(2) of the basic Regulation.

(218) On this basis, the Commission first examined whether, despite the conclusions on the likelihood of a continuation of dumping and continuation of injury, compelling reasons existed which would lead to the conclusion that it was not in the Union interest to maintain the existing measures. It is recalled that, in the original investigation, the adoption of measures was considered not to be against the interest of the Union.

(219) In addition, the Commission examined the impact of the change of the level of the measures resulting from the interim review on the users. Indeed, while the interim review itself does not include a Union Interest analysis, prolonged measures following the expiry review will necessarily take effect at the level of duties as determined by the interim review, since both procedures coincide in timing. The Commission has therefore also taken the level of duties as determined by the interim review into account, when analysing if compelling reasons existed which would lead to the conclusion that it was not in the Union interest to maintain the existing measures.

(220) As explained in recital (215) the repeal of the measures would in all likelihood result in a significant increase of dumped imports from China at injurious price levels, and would therefore further aggravate the injury suffered by the Union industry. As a consequence, the viability of the Union industry would be at serious risk.

(221) Therefore, the continuation of the measures against China would benefit the Union industry.

(222) No unrelated importers cooperated in the current review investigations.

(223) The Commission concluded that there were no compelling reasons from the position of unrelated importers against the prolongation of the measures.

(224) HTYP is used in numerous applications. There are two main groups of different HTYP users: tire producers who account for an estimated 50 % of the HTYP demand in the Union, as well as technical fabrics, tapes, webbings, straps, ropes and belt producers, who also account for around 50 % of the HTYP demand in the Union. Technical fabrics, webbings, straps, ropes and belts are used in automotive, lifting, transport securing and all kinds of machine applications. Due to the high number of applications, the user industry in this segment is quite fragmented.

(225) Upon initiation of the expiry review, 64 known users and user associations in the Union were contacted and invited to cooperate.

(226) Two users replied to the questionnaire in the expiry review and their data was verified by the Commission. Following the initiation of the interim review, five more users came forward together with a user’s association (representing 9 users in total) to participate in the parallel procedures. The users that came forward belong to the segment of technical fabrics, tapes, webbings, straps, ropes and belt producers. The participating users represent more than 10 % of the Union consumption of HTYP. No user of the tire producer segment came forward.

(227) Following the final disclosure, ten users, a user’s association as well as one integrated producer, which also produces woven products, commented on the final disclosure and opposed the Commission’s intention to increase the level of anti-dumping duties in comparison with the original measures.

(228) Several users together with the user’s association claimed that the analysis of the Commission is based on incomplete facts, since the Commission only verified responses from two sampled users and ignored the submissions from the other user companies, who are SMEs, despite their offer for their data to be verified on the spot or via a remote verification.

(229) The Commission disagreed with this claim. In fact, the Commission took into account the submissions of all users when analysing the Union interest. However, since the two users that the Commission verified also fall within the category of SMEs, and since their business models, supply needs and financial situation were comparable to the companies represented by the association, the Commission found that no additional verification was required to reach its conclusions.

(230) The participating users mainly opposed an increased duty. Several users argued that when the measures were imposed in the original procedure, the Commission struck the right balance between the interests of EU producers of HTYP and user industries. Therefore, a continuation of the measures at the original levels could be absorbed by the user industry.

(231) On the other hand, a material increase of the level of the duties would significantly harm the segment of technical fabrics, tapes, webbings, straps, ropes and belt producers. While the tyre industry has not provided data, the Commission has gathered information from HTYP producers that indicate that HTYP only represents a lower percentage of the production cost of tyres. Therefore, the Commission concluded that the financial impact of the measures on that user industry will be minor.

(232) From the sampled users, it is visible that belt products incorporating HTYP have a low profit level. However, the Commission also found that moderate price increases were possible in the past due to increases of raw material costs. Also, none of the sampled users exclusively produces products incorporating HTYP, and their overall financial situation is stable. This was not contradicted by the unverified information brought forward by the non-sampled users. The revised duties range from 9,7 % to 23,7 %, which represents a meaningful increase compared to the existing duties, ranging from 5,1 % to 9,8 %. However, the Commission noted that the users still have the choice of an exporting producer at the lower end of the duties.

(233) Therefore, the Commission concluded that the financial impact on the users by the revised duty range does not constitute a compelling reason against the continuation of the measures at the revised level either.

(234) Following the final disclosure, ten users, the user’s association as well as the integrated producer argued that an additional cost increase coming from increased duties on their main raw material will further erode their competitive position as EU based manufacturers. They provided multiple examples of offers from Chinese manufacturers of downstream products made with HTYP to European clients, whose prices were very close or even below the price of HTYP after addition of the proposed duties. They argued that the biggest problem of increased anti-dumping duties on HTYP is that they do not extend to downstream products like fabrics, belts, lashing straps, round slings and webbing slings.

(235) Following the final disclosure, the applicants also argued that the main concern of the users are related to the unfair competition they are facing from China in downstream markets. This concern would be further exacerbated if the level of the anti-dumping duties on HTYP imports is increased. Indeed, users repeatedly indicated that they did not oppose a prolongation of the original anti-dumping measures.

(236) In order to address the issue of unfair competition on downstream products, five users together with a user’s association requested the Commission to extend the duties to HTYP contained in imported webbings ropes and fire hoses. They referred to the Commission’s Regulation on steel wind towers from China (89), in which the anti-dumping duty applied not only to wind towers, but also to wind turbines, which incorporate steel wind towers.

(237) First, the Commission acknowledged that the competition from Chinese exporters of downstream products limits the users’ possibility to increase prices and pass on the additional costs of increased duties. However, a potential unfair competition on the level of the users cannot by itself constitute a compelling reason for not addressing the injurious dumping found on the upstream market. While the users have demonstrated that the increased duties on HTYP cause a competitive disadvantage against the Chinese manufacturers of the same product, they have also indicated that a protection against these imports of downstream products could be reached by anti-dumping duties on these products. They have not demonstrated that it is not feasible for the user industry to file a complaint to initiate an investigation against potentially dumped imports of HTYP based fabrics or other secondary products.

(238) In addition, the users still have the choice of a Chinese exporting producer at the lower end of the duties, and they have the option to source from other third countries like South and Korea, Taiwan and Vietnam, which are increasing their production capacity.