Commission Implementing Regulation (EU) 2025/796 of 24 April 2025 imposing a definitive countervailing duty on imports of mobile access equipment originating in the People’s Republic of China and amending Implementing Regulation (EU) 2025/45 imposing a definitive anti-dumping duty on imports of mobile access equipment originating in the People’s Republic of China

COMMISSION IMPLEMENTING REGULATION (EU) 2025/796 of 24 April 2025 imposing a definitive countervailing duty on imports of mobile access equipment originating in the People’s Republic of China and amending Implementing Regulation (EU) 2025/45 imposing a definitive anti-dumping duty on imports of mobile access equipment originating in the People’s Republic of China

THE EUROPEAN COMMISSION,

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

Having regard to Regulation (EU) 2016/1037 of the European Parliament and of the Council of 8 June 2016 on protection against subsidised imports from countries not members of the European Union (1) (‘the basic Regulation’) and in particular Article 15 thereof,

Whereas:

(1) On 27 March 2024, the European Commission (‘the Commission’) initiated an anti-subsidy investigation with regard to imports of mobile access equipment (‘MAE’) originating in the People’s Republic of China (‘the country concerned’ or ‘the PRC’) on the basis of Article 10 of the basic Regulation. It published a Notice of Initiation in the Official Journal of the European Union (2) (‘the Notice of Initiation’).

(2) The Commission initiated the investigation following a complaint lodged on 13 February 2024 by the ‘Coalition to Restore a Level Playing Field in the EU Mobile Access Equipment Sector’ (‘CMAE’) or (‘the complainant’). The complaint was made on behalf of the Union industry of MAE in the sense of Article 10(6) of the basic Regulation. The complaint contained evidence of subsidies and of resulting injury that was sufficient to justify the initiation of the investigation.

(3) Prior to the initiation of the anti-subsidy investigation, the Commission notified the Government of China (‘GOC’) (3) that it had received a properly documented complaint and invited GOC for consultations in accordance with Article 10(7) of the basic Regulation. Consultations were held on 25 March 2024. However, no mutually agreed solution was reached.

(4) On 13 November 2024, the Commission initiated a separate anti-dumping investigation of the same product originating in the PRC (‘the separate anti-dumping investigation’). On 9 January 2025, the Commission imposed definitive anti-dumping duties and definitively collected provisional duties imposed on imports of the product concerned originating in the PRC (‘the definitive anti-dumping Regulation’) (4). The duties range from 20,6 % to 54,9 %. The analysis of the economic situation of the Union industry of the present Regulation is mutatis mutandis identical to the findings in the separate anti-dumping investigation, since the definition of the Union industry, the sampled Union producers, the period considered, and the investigation period are the same in both investigations.

(5) By Commission Implementing Regulation (EU) 2024/2725 of 24 October 2024, the Commission made imports of the product concerned subject to registration for the purpose of ensuring that, should the investigation result in findings leading to the imposition of countervailing, those duties can, if the necessary conditions are fulfilled, be levied retroactively on the registered imports in accordance with the applicable legal provisions (‘the registration Regulation’) (5).

(6) In the Notice of Initiation, the Commission invited interested parties to contact it in order to participate in the investigation. In addition, the Commission specifically informed the complainant, other known Union producers, the known exporting producers and the Chinese authorities, known importers, and users about the initiation of the investigation and invited them to participate.

(7) Interested parties had an 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.

(8) The Commission did not receive any comments on initiation or request for a hearing.

(9) In the Notice of Initiation, the Commission stated that it might sample the interested parties in accordance with Article 27 of the basic Regulation.

(10) In its Notice of Initiation, the Commission stated that it had provisionally selected a sample of Union producers. The Commission selected the sample on the basis of the largest representative volume of sales and of production of the like product in the Union in the investigation period, which could reasonably be investigated within the time available.

(11) This sample consisted of three Union producers which accounted for 55 % of the estimated total production in the Union and 52 % of sales of all Union producers of the like product on the Union market. By selecting the three largest Union producers and sellers in the investigation period, located in two different Member States, the Commission covered the largest representative volume of production and sales which could reasonably be investigated within the time available, in line with Article 27(1) of the basic Regulation. The Commission invited interested parties to comment on the provisional sample. No comments were received. The Commission concluded that the sample of Union producers was therefore representative of the Union industry.

(12) To decide whether sampling was necessary and, if so, to select a sample, the Commission asked unrelated importers to provide the information specified in Annex 1 of the Notice of Initiation within 7 days of the date of publication of the Notice. No importer provided the information and cooperated with the investigation.

(13) To decide whether sampling was necessary and, if so, to select a sample, the Commission asked all exporting producers in the PRC to provide the information specified in the Notice of Initiation. In addition, the Commission asked the Mission of the People’s Republic of China to the European Union to identify and/or contact other exporting producers, if any, that could be interested in participating in the investigation.

(14) Sixteen exporting producers in the country concerned provided the requested information and agreed to be included in the sample. In accordance with Article 27(1) of the basic Regulation, the Commission selected a sample of four (groups of) companies which could reasonably be investigated within the time available. The selection of the sample was based on the largest representative volume of production, sales or exports to the Union during the investigation period which can reasonably be investigated within the time available. The Commission also considered the potential eligibility of the groups of exporting producers for the subsidy schemes included in the memorandum on sufficiency of evidence (6), hence also looked at production and domestic sales in addition to export sales, on the basis of the replies to the sampling questionnaires.

(15) In accordance with Article 27(2) of the basic Regulation, all known exporting producers concerned, and the authorities of the country concerned were consulted on the selection of the sample. The Commission received comments in this regard from the complainant.

(16) The complainant claimed that: (i) the sample should not include any US-owned companies as they were not likely to be eligible for most of the subsidy schemes and they would have allegedly very limited access to the Chinese domestic market; (ii) the sample overrepresented privately owned Chinese companies and underrepresented publicly owned Chinese companies which are allegedly more integrated, more present on the domestic market, and more eligible for financing and grants.

(17) The Commission, after having carefully analysed the comments, considered that the sample adequately represented the exporting producers of MAEs operating in China and that it was consistent with EU and WTO laws. At the outset, the Commission recalled that Article 27 of the basic Regulation provides for a large degree of discretion in choosing the sample according to the relevant criteria listed therein. In particular, Article 27(2) clearly states that ‘the final selection of parties […] shall rest with the Commission’.

(18) With regard to the specific arguments raised by the complainant, the Commission noted that the selection of the sample was based on the largest representative volume of production, sales or exports to the Union during the investigation period that could reasonably be investigated within the time available. Therefore, the Commission decided, inter alia, to have one US-owned company in the sample, as being the biggest exporting producer and to include the biggest Chinese producer in terms of production and domestic sales in China, although this company was not among the biggest exporters to the Union.

(19) As mentioned in recital (16), the eligibility to subsidy schemes was one of the elements considered by the Commission to select the sample. However, the Commission did not make this criterion the decisive one to ensure that the selection of sample was not biased.

(20) For the same reason as above the Commission did not use as a criterion of sampling the corporate status of the company. All types of the companies: foreign owned, Chinese privately owned and Chinese publicly owned were represented. Furthermore, on the basis of the sampling replies, the Commission did not find grounds for the statement that publicly owned Chinese companies are in general more integrated, more present on domestic market, and more eligible for financing and grants than private ones.

(21) In view of all the above considerations, the Commission decided to confirm its provisional sample which accounted (in number of units) for 54 % of the production, 47 % of the domestic sales, and 59 % of the estimated total export volume to the Union from the PRC in the investigation period. The Commission considered the sample representative under Article 27 of the basic Regulation.

(22) The Commission sent questionnaires to the GOC, the four groups of sampled exporting producers, the three sampled Union producers, the complainant, the known importers and to users. The questionnaires for the companies were also made available online on the day of initiation.

(23) The Commission received questionnaire replies from the GOC, the four groups of sampled exporting producers, one group of exporting producers requesting individual examination, the three sampled Union producers and the complainant.

(25) Terex (Changzhou) Machinery Co., Ltd., an exporting producer in the PRC submitted a request for individual examination under Article 27(3) of the basic Regulation. Subsequently, it also submitted a questionnaire reply, together with its related companies in the PRC.

(26) Taking into account the number of related companies in the Terex group, which would also have to be verified, and the number of companies already covered by the sample, the Commission concluded that it would be unduly burdensome for the timely conclusion of the proceeding to accept the individual examination request. Thus, the request was rejected.

(27) The Terex group challenged the Commission decision in this regard during the hearing requested following the definitive disclosure. However, the Terex group did not present any element that would justify the examination of its individual examination request without challenging the timely conclusion of the investigation. Furthermore, no post hearing presentation or written submission was presented afterwards. The Commission conclusion as to the number of companies of the Terex group potentially involved in the individual examination procedure, rendering the analysis of the request unduly burdensome for a timely conclusion of the investigation, was thus upheld.

(28) The investigation of subsidisation and injury covered the period from 1 October 2022 to 30 September 2023 (‘the investigation period’ or ‘IP’). The examination of trends relevant for the assessment of injury covered the period from 1 January 2020 to the end of the investigation period (‘the period considered’).

(29) Pursuant to Article 12(1) of the basic Regulation, the deadline for imposition of the provisional measures was 26 December 2024. On 2 December 2024, in accordance with Article 29(a) of the basic Regulation, the Commission informed the interested parties of its intention not to impose provisional measures.

(30) The Commission continued to seek and verify all the information it deemed necessary for its final findings.

(31) When reaching its definitive findings, the Commission considered the comments submitted by interested parties.

(32) On 4 March 2025, the Commission informed all the interested parties of the essential facts and considerations on the basis of which it intended to impose a definitive countervailing duty on imports of mobile access equipment originating in the PRC (‘definitive disclosure’). All parties were granted a period within which they could make comments on the definitive disclosure.

(33) Following comments received from Zoomlion Group on the definitive disclosure, the Commission adjusted the calculation of the subsidy rate for this group. The updated calculations were disclosed to Zoomlion Group (‘additional disclosure’), which was granted time to comment.

(34) Following definitive disclosure, comments were received from the GOC, the China Chamber of Commerce for Import and Export of Machinery and Electronic Products (‘CCCME’), Zoomlion Group and CMAE. The Commission held hearings with the CCCME, CMAE and Terex (Changzou) Machinery Co., Ltd. No interested party requested hearing with the Hearing Officer.

(35) In its comments after definitive disclosure, the CCCME raised certain procedural issues concerning lack of disclosure by the Commission of the calculations of external benchmarks to the interested parties. The CCCME also argued that its preliminary comments submitted on 2 December 2024 were not addressed in the definitive disclosure.

(36) The Commission rejected these claims. External benchmarks and detailed calculations of the subsidy amounts were disclosed to the sampled Chinese exporting producers, which are also members of the CCCME. For the sake of clarity, on 17 March 2025 these benchmarks were also added to the open file.

(37) The comments submitted by the CCCME on 2 December were submitted after the deadline provided in the Notice of initiation. The CCCME was informed that it could still re-submit its comments after definitive disclosure, which it did. Such comments are addressed in this Regulation.

(38) Following the definitive disclosure, the CCCME made similar comments to those already made in relation to the final findings established by the Commission in the separate anti-dumping investigation, concerning the product scope, the injury assessment, the causal link and the Union interest.

(39) As indicated in Section 1.1. above, the analysis of the economic situation of the Union industry of the present Regulation is mutatis mutandis identical to the findings in the separate anti-dumping investigation, since the definition of the Union industry, the sampled Union producers, the period considered, and the investigation period are the same in both investigations. Also, the analysis of the product scope, the causal link and the Union interest has remained unchanged. Therefore, the Commission referred for these comments of the CCCME to Sections 2.4, 5.2.3 of Commission Implementing Regulation (EU) 2024/1915 of 11 July 2024 imposing a provisional anti-dumping duty on imports of mobile access equipment originating in the People’s Republic of China (7), and to Sections 2.4, 4.1, 4.5 and 5 of the definitive anti-dumping Regulation, where these comments were addressed in detail.

(40) The product under investigation is mobile access equipment (‘MAE’) designed for the lifting of persons, self-propelled, with a maximum working height of 6 metres or more, and pre-assembled or ready-to-assemble sections thereof, excluding individual components when presented separately, and excluding person lifting equipment mounted on vehicles of Chapter 86 and Chapter 87 of the Harmonised System (‘the product under investigation’), currently falling under CN codes ex 8427 10 10 , ex 8427 20 19 , ex 8428 90 90 , ex 8431 20 00 and ex 8431 39 00 (TARIC codes: 8427 10 10 10, 8427 20 19 10, 8428 90 90 20, 8431 20 00 60 and 8431 39 00 10).

(41) The product scope includes machines used for the lifting of people in a vast range of different applications and it includes articulated boom lifts, telescopic boom lifts, scissor lifts and vertical masts.

(42) Sections, pre-assembled or ready-to-assemble, consist of four categories in particular: (1) chassis; (2) turret or turntables; (3) platform or baskets; (4) lifting mechanism for MAE. The lifting mechanism include booms (telescopic and or articulated, with or without jibs) for telescopic boom lift, articulated boom lift or vertical mast and scissor arms for scissor lift. They do not include individual components when presented separately.

(43) The product concerned is mobile access equipment, originating in the People’s Republic of China (‘the product concerned’).

(45) Before analysing the alleged subsidisation in the form of subsidies or subsidy programmes, the Commission assessed government plans, projects, and other documents, which were relevant for the analysis of the investigated subsidy programmes.

(46) As a preliminary remark, the Commission pointed out that China’s overall economic setup is characterised by a particularly strong role of the State, with the State authorities being in turn controlled by the Chinese Communist Party (‘CCP’), the ruling political entity of the country. As a result, businesses in China operate in a specific environment which – unlike the Western economies where market forces represent the dominant organizing principle – features numerous mechanisms that provide the GOC with substantial degree of control over any aspect of the economic activity in the country. This tight control prevents economic operators from acting as rational market operators seeking to maximise profits, and in fact forces them to act as an arm of the government in implementing its policies and plans.

(47) The following features are most significant in transmitting the GOC policy decisions into the day-to day business conduct of economic operators: (i) doctrine of socialist market economy; (ii) leadership of the CCP; (iii) system of industrial planning; (iv) financial system.

(48) The socialist market economy doctrine, embodied in the Chinese Constitution (8), grants the State an inherent and all-encompassing control over the economy, which goes way beyond the traditional standards of setting a regulatory framework within which market players are free to operate. In particular, according to Article 6 of the Constitution: ‘The basis of the socialist economic system of the People’s Republic of China is socialist public ownership of the means of production […]. In the primary stage of socialism, the State upholds the basic economic system in which the public ownership is dominant and diverse forms of ownership develop side by side and keeps to the distribution system in which distribution according to work is dominant and diverse modes of distribution coexist.’ Moreover, pursuant to Article 15 of the Constitution: ‘The State practices socialist market economy. The State strengthens economic legislation, improves macro-regulation and control. The State prohibits in accordance with law any organization or individual from disturbing the socio-economic order.’ Moreover, Article 11 of the Constitution assigns to the State an interventionist role that goes beyond protecting the rights and interests of the non-public sectors, in that the State shall ‘encourages, supports and guides the development of the non-public sectors of the economy and, in accordance with law, exercises supervision and control over the non-public sectors of the economy.’

(49) These constitutional fundamentals are reflected in all relevant pieces of legislation (9) which emphasize the socialist market economy as the leading principle on which the Chinese economy is based. Moreover, the State, under the leadership of the CCP, indeed makes extensive use of a variety of instruments – both incentivizing and restricting – to guide the economy towards socialist modernization, i.e. towards objectives (including industrial policy objectives) set by the GOC.

(50) The leadership of the CCP – while formally enshrined in the country’s Constitution (10), as well as in relevant secondary legislation and in the Constitution of the Party (11) itself – takes various forms in practice; in particular, as separation of powers does not exist in China and the Party exercises full control over the legislative (12), executive (13), as well as judicial (14) branches of the State apparatus; moreover, the Party oversees crucial areas of the economy, including the financial sector and industrial sectors considered strategic, notably through ownership and/or by appointing and rotating key personnel; in addition, setting up Party cells is mandatory in all enterprises with more than a three members of the Party (15), state-owned and private alike, and Party structures within undertakings claim frequently the right to participate in operational decision-making of companies. All these controlling mechanisms provide the CCP with a tight grip over the country’s economy and allow the Party to formulate and implement its economic policies in line with its strategic considerations and priorities.

(51) 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 at all levels of government and cover 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 the PRC results in resources being allocated to sectors designated by the government as strategic or otherwise politically important, rather than being allocated in line with market forces (16).

(52) To allocate resources in line with the GOC’s policy priorities, instrumentalizing the financial sector is of essence for the Chinese authorities. China’s financial system remains dominated by the banking sector and the State controls the banking sector (see also Section 3.6.1) through ownership (see recitals (134) to (136)), as well as through personal ties. Accordingly, the GOC, in its capacity as the majority/controlling shareholder, has the power to appoint the most important positions within the management state-owned policy banks (see recital (144)), as well as of banks partially or fully owned by the State itself or by State-held legal persons.

(53) Moreover, articles of association of major Chinese banks regularly contain a dedicated chapter on the creation of a Party committee (17). For example, according to the articles of association of the Industrial and Commercial Bank of China (‘ICBC’), ‘the chairman of the board of directors of the Bank and the secretary of the Party Committee shall be the same person’ (18). Article 53 lists the duties of the Party committee, including the monitoring of the practical implementation of Party and State decisions in the bank. The Party committee is also playing a role in the selection and evaluation of personnel, together with the board of directors. Finally, the Party committee is to be involved in the discussion of ‘major operational and management issues and major issues concerning employee interests and put forth comments and suggestions’ (19). Moreover, according to the provisions concerning the board of directors, the Party committee has to be consulted before material issues are decided upon (20). The articles of association of the Agricultural Bank of China contain identical language on establishing the Party committee in Article 58 and on the Committee’s involvement in the discussion of major issues in Article 161 (21).

(54) Beside GOC’s ability to control the banking sector through ownership and organisational setup, the GOC exercises control over the sector also in view of the applicable Chinese legislation (see section 3.6.1.4 for the analysis of the relevant regulatory documents) which requires the banks to align with the country's industrial policy objectives when making financial decisions.

(55) In conclusion, all these elements show that the structure of the legal and political system in the PRC relies on a tight grip by the government on all aspects of the economy and trade, as they are centrally managed and monitored by the GOC. The economic operators are integral part of this system not as free market actors aiming to take business decisions purely driven by economic logic and profit maximisation, but rather as one of the integral actors to implement the overarching policies and their specific objectives set by the GOC at central level.

(56) Against this background, the Commission analysed a number of industrial policy documents which have been successively put in place since at least 2010 and which are listed below, in order to establish whether subsidies or subsidy programmes under assessment form part of the implementation of the GOC’s central planning to encourage the MAE industry.

Introduction: MAE as part of the construction machinery sector

(57) MAE are an integral part of the construction machinery sector, together with other types of equipment primarily used for construction and infrastructure work such as earthmover, cranes, etc. In China, the construction machinery sector is coordinated by the China Construction Machinery Association (CCMA), with MAE activities under the CCMA’s ‘Decoration and Aerial Work Platform’ branch. The construction machinery sector is also known as engineering machinery sector (22).

(58) Furthermore, the 14th FYP Development Plan for the Construction Machinery Industry (23) has references to MAE under engineering machinery. The same is true for plans at provincial and municipal levels (see below under recitals (74) to (77)). On this basis, the Commission concluded that MAE is part of construction / engineering machinery sector.

Decision No 40 of the State Council on Promulgating and Implementing the ‘Temporary Provisions on Promoting the Industrial Structure Adjustment’

(59) Decision No. 40 of the State Council of the People’s Republic of China is a legal document issued in 2005 aiming to promote industrial structure adjustments in China by encouraging the development of high-tech industries and the elimination of outdated production capacity. The ‘Guidance Catalogue for the Industrial Structure Adjustment’ (‘Catalogue’) (24), which is an implementing measure of Decision No 40, sets the basis for guiding investment directions by designating industrial sectors which should benefit from privileged access to credit. It also guides the GOC to administer investment projects and to formulate and enforce policies on public finance, taxation, credit, land, import and export. The National Development and Reform Commission (‘NDRC’) released, and later amended, a guidance catalogue for industrial structure adjustment in February 2013 and in 2019. The Complainant and the Commission identified a reference to the ‘Large construction machinery’ sector, to which MAE belongs, in the Catalogue.

Made in China 2025

(60) In 2015, the GOC published its long-term comprehensive industrial strategy known as Made in China 2025. (25) This strategy set milestones for upgrading the country’s selected manufacturing sectors by 2020 and 2025 and reiterated the GOC’s intention to use in this regard improved financial support policies, including the direction of funding through state owned banks (‘SOBs’) to overseas expansion of the manufacturing industry, as well as for the expansion of fiscal and other taxation support. Crucially, the Made in China Guidelines state that ‘funding [will be] allocated to projects that cannot get funding from the market and need central support.’ Thus, there is substantial government support to advance the development of identified sectors of the economy through the direction of resources in implementation of policy goals (26).

(61) Made in China 2025 also specifically identifies the construction machinery sector. It states that the GOC plans to ‘accelerate improvements to product quality. Implement an action plan for improving the quality of industrial products, targeting key industries such as ... construction machinery’ (27). It also plans to ‘promote the R&D and industrialization of products such as ... smart construction machinery’ (28) and encourage ‘the high-end development of the value chain of industries such as [...] construction machinery[...]’ (29).

(62) In this regard, through the Made in China 2025 programme, the GoC supports the rapid development of the construction machinery industry, while also promoting research and development (R&D) and the industrialisation of the sector.

The Chinese 14th national Five-Year Plan

(63) Given the nature of the Chinese planning system, higher level plans – such as the 12th, 13th or 14th national Five Year Plans (‘FYPs’) – are to be followed-up and implemented by all relevant authorities. The national plans set out explicit obligations in that respect, such as Art. LXV of the 14th national FYP (30), according to which the GOC ‘will strengthen the organization, coordination, and supervision of the implementation of this plan and establish and improve planning and implementation monitoring and evaluation, policy assurance, and assessment and supervision mechanisms.’ Accordingly, lower-level authorities ‘must create a favourable policy environment, institutional environment, and legal environment. The annual plans shall implement the development goals and key tasks proposed in this plan.’ (31)

(64) Crucially, the GOC unequivocally commits to provide financial support, as well as support in the form of other factors of production – such as land – to projects and sectors identified in the Plan: ‘[w]e will adhere to the principle of the plan setting the direction, with fiscal spending as a guarantee, finance as support, and coordination with other policies. […] We will persist in making public fiscal spending obey and serve public policy, enhance financial support for major national strategic tasks, strengthen the coordination of mid-term financial plans and annual budgets, government investment plans, and the implementation of this plan, and prioritize central fiscal funds for the major tasks and major engineering projects identified in this plan. We will insist that projects follow the plan and funds and factors of production follow projects, develop a list of major engineering projects based on this plan, simplify the approval procedures for the projects in the list, and ensure that the priority is given to planning site selection, land supply, and capital needs. The land needs for individual major engineering projects are guaranteed by the state in a unified manner.’ (32)

(65) With regard to MAE and the sector to which it belongs, the plan refers to construction machinery or engineering machinery in Under Part III ‘Accelerating the Development of a Modern Industrial System and Consolidating and Strengthening the Foundation of the Real Economy’, Chapter VIII ‘In-depth implementation of the strategy of manufacturing a strong country’, Section 3 relating to ‘Promoting the optimization and upgrading of the manufacturing industry’.

The 14th Five-Year Development Plan for the Construction Machinery industry

(66) The PRC has also published a specific FYP for the construction machinery. The CCMA itself indicated that ‘[o]n July 8, 2021, entrusted by the Equipment Industry Department of the Ministry of Industry and Information Technology, the China Construction Machinery Industry Association officially released the “14th Five-Year Plan for the Development of Construction Machinery Industry” ’ (33) . This Plan categorises the construction machinery sector as ‘one of the important pillar industries for the construction of the national economy.’ The industry ‘will earnestly implement the decisions and deployments of the Party Central Committee during the “13th Five-Year Plan” period’ and ‘vigorously promote and implement supply-side structural reforms.’ This FYP confirms the construction machinery sector’s objectives in the framework of the Chinese economy as a whole. The top-down direction by the Chinese state is clear when the Plan holds, for instance that the ‘(…) degree of internationalization, technology and innovation capabilities, scale and total volume, quality and quality, comprehensive capabilities of the value chain, and many other aspects have been significantly improved, making great contributions to the construction of the national economy.’ The plan leaves no room for free market development, setting clear environmental and technical goals for the industry: ‘[g]reat progress has been made in the adjustment of the industry structure. Significant achievements in innovation and development, rapid development of intelligent construction machinery, major technical equipment (…), further improvement in quality, performance and reliability and durability, wide application of the industrial Internet, outstanding results in green development, solid progress in standardization, and group standards should be developed in the industry.’

(67) The plan pays particular attention to innovation. The 14th FYP for Construction Machinery highlights that, during the 13th FYP (2016-2020), the construction machinery industry deeply implemented the innovation-driven development strategy. The construction machinery industry ‘[c]ontinuously makes new breakthroughs in the R&D and application promotion of high-end and intelligent product core technologies. It fully meets the needs of major projects of national economic construction, and a large number of scientific research achievements have emerged. As a result, it has become an important driving force for the continuous growth of the industry.’ (34)

(68) Finally, the plan is skewed towards high-end products – a recurring theme in the subsidisation of MAE. Under the heading ‘New high-tech construction machinery innovation pilot project’, the FYP highlights that the GoC ‘encourage[s] enterprises to focus on high-end products.’ It also aims at the basic technologies and key common technologies in the intelligent field of high-end construction machinery. (35) More specifically, the plan refers to ‘aerial work vehicle’ and ‘elevating work platform’ when addressing ‘3. Focus on supporting and encouraging the development of construction machinery products and key components’. (36)

(69) In addition, with respect to inputs for construction machinery, the 14th FYP for the Construction Machinery notes that ‘[t]here is still a certain gap, including core components of construction machinery such as high-end hydraulic components, transmission components and engines.’ It aims to improve the construction machinery sector by creating ‘an industrial collaborative innovation system covering main engine equipment and key components, accelerate the breakthrough and industrialization of core components and common key technologies, and build a world-class advanced construction machinery industrial cluster.’ (37).

(70) The GOC claimed that MAE is not an encouraged industry as the product is not listed in the ‘Catalogue’, 14th FYP for the Construction Machinery, or in the ‘Made in China 2025’ document.

(71) On these grounds, the GOC considered that schemes relating to preferential treatment should not be investigated due to the lack of specificity. The GOC also observed that the fact that some of the upstream and downstream industries belong to encouraged industries does not have an impact on the status of MAE industry itself and that schemes relating to the provision of inputs for less than adequate remuneration should not be investigated either.

(72) The investigation revealed, however, that MAE is a part of the construction machinery sector which itself is an encouraged industry as referred to in Decision No 40 (see recital (59), the Made in China 2025 document (see recital (61) and in the 14th FYP (see recital (65)). The 14th FYP for the Construction Machinery (see recital (69)) identifies MAE as part of the sector with sections relating to ‘aerial work vehicles’ and ‘elevating work platforms’.

(73) There are also references to MAE being an encouraged industry in several documents at provincial and municipal level.

(74) The Zhejiang Province 14th FYP on Developing High-End Equipment Manufacturing identifies ‘intelligent aerial work platforms’ as part of the engineering machinery (38).

(75) The Construction Plan for industrial transformation and upgrading demonstration zone in Xuzhou, Jiangsu 2019-2025 (39) envisages building of ‘a world-class equipment manufacturing industry centre’ and ‘focus on the development of engineering machinery industry with lifting’. Development of Xuzhou cluster is confirmed also by press releases (40). According to the Article, the Xuzhou engineering machinery cluster, is one of the six international advanced manufacturing clusters that Jiangsu province has focused on building during the 14th Five-Year Plan, while Xuzhou Municipal Party Committee and Municipal Government established construction machinery as the city’s ‘No. 1 industry’ and successively compiled the ‘Xuzhou Construction Machinery Industry Development Plan (2021-2030)’ and ‘Xuzhou Construction Machinery Industry Cluster Innovation Development Action Plan (2022-2025)’ to ‘promote the innovative development of the city's construction machinery industry, continue to expand the scale of the industry, comprehensively enhance the competitiveness and influence of the industry, and set a new goal of building the Xuzhou construction machinery industry cluster into a world-class advanced manufacturing cluster’.

(76) As far as Hunan province is concerned, Changsha Municipality work report 2024 (41) envisages implementation of the construction machinery industry cluster promotion action, and promotion of the construction of projects such as Zoomlion Smart Industrial City, Sunny Science and Technology City, and Xingbang Intelligent International Smart Manufacturing City. Hunan province support for MAE industry is also confirmed by press releases: ‘The improvement of stability and smoothness is a microcosm of the systematic transformation and upgrading of aerial work platform manufacturers in Hunan. At present, Hunan is focusing on this advantageous industry, strengthening the reconstruction of the industrial base and the research and development of major technical equipment. Many aerial work platform companies are working towards the development direction of lightweight products, large loads, low energy consumption, precise and intelligent control, and have made certain breakthroughs’ (42) .

(77) Furthermore, Zoomlion signed a strategic cooperation agreement with the Xiangtan Municipal Government, relying on Xiangtan's advantages in special steel, new materials and other fields, to jointly build Zoomlion's supporting industrial park. (43) The second Hunan producer of MAE benefitted from the financial support of SOE Hunan Chasing Financial Holding (44). Both Zoomlion and Sinoboom Groups are sampled exporting producers in this investigation.

(78) The investigation revealed that the PRC provides key support to high and new technology enterprises, a sector that encompasses MAE. As further explained in Sections 3.10.1 and 3.10.2, all sampled exporting producers held a certificate for new and high technology enterprise confirming that MAE exporting producers belong to an encouraged industry.

(79) Finally, as indicated in recital (57), CCMA has in its structure a separate branch dedicated to MAE.

(80) Based on the above the Commission concluded that MAE, being part of the construction machinery sector, is an encouraged industry.

(81) Following definitive disclosure, CCCME claimed that the policy documents and plans described by the Commission in Sections 3.2 and 3.3 were overly broad and referred to the construction machinery sector, ‘… therefore lacking the necessary specificity to demonstrate concrete state intervention in the MAE industry’.

(82) Also, the GOC reiterated its argument that the fact MAE is a part of the construction machinery sector does not automatically imply that MAE products are encouraged, even if construction machinery sector is listed as an encouraged industry.

(83) The Commission disagreed. It has been demonstrated that MAE is a part of construction machinery sector and thus it is a part of the encouraged industry. Furthermore, several documents on provincial and municipal level quoted in recitals (74) to (77) have direct references to ‘aerial work platforms’ or ‘engineering machinery with lifting’. Provincial and municipal plans are considered prolongations of national plans which direct their implementation to subcentral level. Furthermore, MAE producers benefit from Enterprise Income Tax (‘EIT’) reduction for High and New Technology Enterprises as described in Section 3.3.1 below. If these companies are eligible for this reduction, they are considered to be active in the High-tech Fields supported by the State.

(84) Although the GOC responded to certain information requests from the Commission during the investigation, there were notable instances of low cooperation. Specifically, in its reply to the government questionnaire, the GOC failed to provide essential information related to the preparation, monitoring, and implementation of various schemes. All these critical elements were meticulously documented in the Article 28 letter sent to the GOC. The GOC responded with comments, which the Commission addressed in the sections below.

(85) In order to obtain the necessary information from the financial institutions in China effectively and for administrative convenience, the Commission requested the GOC to forward specific questionnaires to any financial institution that had provided loans or export credits to the sampled companies.

(86) The GOC considered that the Commission’s request to the GOC to forward the specific questionnaire violated Articles 12.1 and 12.9 of the SCM Agreement. It considered that the obligation to conduct the investigation and collect information from financial institutions lies with the investigating authority and it cannot request the GOC to forward the questionnaires to financial institutions on a presumption that these entities are public bodies. It argued that this presumptive approach is inconsistent with Article 1.1(a)(1) of the SCM Agreement. The GOC also argued that the Commission already had access to the list of commercial banks of the sampled exporting producers and it could have sent the questionnaires directly to the financial institutions at stake.

(87) The GOC further stated that the financial institutions were not properly notified of the information required of them, were not given 30 days to provide the requested information and were also not provided ample opportunity to provide the relevant information in writing within the meaning of Article 12.1 of the SCM Agreement. Besides, the GOC also considered that staff members of those commercial banks are not allowed to disclose state secrets or commercial secrets that they have become aware of in the course of their employment according to Article 53 of the Commercial Banks Law, and therefore cannot respond to the questionnaire.

(88) The Commission disagreed with this view. First, it is the Commission’s understanding that the information requested from State-owned entities is available to the GOC for all entities where the GOC is the main or major shareholder. In addition, whereas the Commission did not assume in any way that the entities are public bodies, it considered that the GOC also has the necessary authority to interact with the financial institutions even when they are not State-owned, since they all fall under the jurisdiction of the National Financial Regulatory Administration (‘NFRA’), which replaced the China Banking and Insurance Regulatory Commission (‘CBIRC’) (45) in 2023. In this regard, the fact that the Commission could have contacted the financial institutions concerned directly is irrelevant. The form and modalities to collect the necessary information remain within the discretion of the investigating authority (46). The Commission also noted that the GOC had forwarded the questionnaire to certain banks in previous investigations (47) without questioning the approach taken by the Commission. Furthermore, as far as the information requested and deadline to submit a questionnaire reply is concerned, the Commission did not receive any request for clarification or a deadline extension request from any financial institution.

(89) The Commission did not address its questionnaire to the staff of the financial institutions but rather to the institutions themselves. In any case, the fact that certain information may be considered as State or commercial secret is irrelevant in the framework of an anti-subsidy proceeding given the confidentiality treatment given to any submitted information considered confidential. Furthermore, the sampled producers were requested to provide a bank authorization granting express permission to the representatives of the Commission to review all documents (48) pertaining to the loans provided by individual financial institutions. Some of the sampled groups provided the requested authorisation for certain types of loans.

(90) In the absence of such information, the Commission considered that it had not received crucial information relevant to this aspect of the investigation. Therefore, the Commission informed the GOC that it might have to resort to the use of facts available under Article 28(1) of the basic Regulation when examining the existence and the extent of the alleged subsidisation granted through preferential financing. Specifically, the Commission informed the GOC that it had not received any reply from any of the Chinese banks that had provided preferential lending to the sampled producers. On this basis, the Commission could not confirm the claims made by the GOC relating, inter alia, to credit worthiness and the provision of loans or other financing instruments from which the sampled producers had benefitted. Furthermore, the GOC failed to provide information concerning the shareholding of the banks communicated by sampled producers as well as failed to demonstrate and substantiate the formation mechanism of the loan prime rate as explained in its questionnaire reply.

(91) On 21 January 2025, the GOC submitted comments concerning the Commission’s letter dated 15 January 2025 indicating its intention to apply facts available in accordance with Article 28 of the basic Regulation (‘Article 28 Letter’).

(92) In response to the request to forward Appendix A to the financial institutions, the GOC claimed that the Commission should directly address its information requests to the relevant entities. Furthermore, the GOC claimed that financial institutions are independent economic entities, not affiliated with the GOC. Furthermore, the GOC claimed that Appendix A requests confidential and business-sensitive information.

(93) The Commission disagreed with this view. First, it is the Commission’s understanding that the information requested from state-owned entities (be it companies or public/financial institutions) is available to the GOC for all entities where the GOC is the main or major shareholder. Indeed, according to the Law of the People's Republic of China on State-Owned Assets of Enterprises (49), State-owned assets supervision and administration agencies established by the State-owned Assets Supervision and Administration Commission of the State Council and local people’s governments perform the duties and responsibilities of the capital contributor of a State-invested enterprise on behalf of the government. Such agencies are thus entitled to receive returns on assets, to participate in major decision-making and to select managerial personnel of State-invested enterprises. Furthermore, according to Article 17 of the above-mentioned Law on State-owned Assets, State-invested enterprises shall accept administration and supervision by governments and relevant governmental departments and agencies, accept public supervision, and be responsible to capital contributors.

(94) In addition, the GOC also has the necessary authority to interact with the financial institutions even when they are not State-owned, since they all fall under the jurisdiction of the Chinese banking regulatory authority. For example, according to Articles 33 and 36 of the Banking Supervision Law (50), the NFRA has the authority to require all financial institutions established in the PRC to submit information, such as financial statements, statistical reports and information concerning business operations and management. The NFRA can also instruct financial institutions to disclose information to the public.

(95) Furthermore, the Commission requested the GOC merely to forward the specific questionnaires (Appendix A) to the relevant financial institutions and provide the Commission with the proof that the GOC transferred the above-mentioned specific questionnaires. Appendices contained information for the financial institutions in question regarding submission deadlines and methods of submission as well as treatment of non-confidential data. The GOC of China simply failed to forward these questionnaires.

(96) In parallel, the Commission requested the GOC to demonstrate the system and applicable mechanism leading to the formation of the loan prime rate (‘LPR’) in order to assess the quality and transparency of the rate used by Chinese financial institutions to grant loans to the MAE sector. The GOC refused to demonstrate such mechanism. The GOC claimed to have explained the Loan Prime Rate formation mechanism.

(97) The Commission considered the comments to be ill-founded. The Commission repeatedly asked specific clear and relevant questions to which the GOC refused to supply pertinent information. The GOC did not provide evidence of or demonstrate the LPR formation mechanism neither in its questionnaire reply nor during the on the spot verification, preventing confirmation of how it is established.

(98) In the absence of the requested information, the Commission considered that it had not received crucial information relevant to this aspect of the investigation. Therefore, the Commission concluded that it had to rely on facts available for its findings concerning preferential financing.

(99) Following definitive disclosure, the CCCME reiterated the position of the GOC that the application of Article 28 of basic Regulation shall not be derived from the GOC’s refusal to collect the information requested by the Commission, which shall be sought by the Commission on its own from other parties of the investigation. However, this general statement did not challenge the Commission’s specific observations made in recitals (93) to (95). Therefore, the decision to rely on facts available with regard to preferential financing was upheld.

(100) The Commission informed the GOC in Article 28 Letter it had not received crucial information relevant to certain investigated subsidy schemes such as grants, export credit insurance, and the provision of land use. Therefore, the Commission informed the GOC that it might have to resort to the use of facts available under Article 28(1) of the basic Regulation when examining the existence and the extent of the alleged subsidisation granted through the above schemes.

(101) With regard to grants, the GOC failed to provide evidence that it contacted sub-central governments to request information about the grants provided to the sampled producers. Hence, it did not report any grants received by the sampled producers of MAE or provide information on their eligibility criteria or legal basis.

(103) All those documents and information were also not provided by the GOC although they were requested by the Commission during the verification visit.

(104) Following definitive disclosure, the GOC claimed that the Commission had failed to prove that the information not provided was necessary information and contested the application of Article 28(1). In this regard it referred to the Panel and Appellate Body reports in US – Supercalendered paper (51) which concluded that the investigating authority ‘first needed to establish that the information discovered was information necessary to complete a determination on subsidization of the product under investigation’ and that it ‘cannot simply infer, without further clarification, that the missing information is “necessary” within the meaning of Article 12.7’. The GOC also argued that it had supplied a lot of materials regarding the export credit insurance programme and that the information on record was enough for the purpose of investigation.

(105) The Commission notes that information is to be regarded as ‘necessary’ within the meaning of Article 28(1) of the basic regulation if it is such as to enable the Commission to establish appropriate findings in an anti-subsidy investigation. In this regard, the Commission considers that the information requested was necessary in this regard, especially to assess if Sinosure was acting as a public body, was under government control, was acting according to market principles or was profit making. The Commission also considered that the limited information provided by the GOC and the claims made in its questionnaire could not be verified against valid supporting evidence after the GOC refused to provide the requested underlying documents or evidence, leading to the warranted application of facts available in this regard. On this basis, these claims were rejected.

(106) With regard to land use rights, the GOC failed to provide information with regard to the acquisition of land by the producers/exporters of MAE. The GOC was unable to explain how in some circumstances companies were able to receive land for free. The GOC failed to provide data concerning possible benchmarks with regard to the provision of land use rights.

(107) With regard to electricity, income support and input materials, the Commission did not receive several documents and information requested. These documents are listed in the Article 28 letter sent to the GOC (52). However, as mentioned in Section 3.11, the Commission could not conclude on the countervailability of these programmes.

(108) In its reply to the Commission’s Article 28 Letter, the GOC objected to the application of facts available.

(109) The GOC did not comment on the failures to provide requested documents and information concerning grants and export credit insurance.

(110) On land use rights, the GOC argued that the Commission requested documents and information that did not exist.

(111) The Commission disagreed with this statement. The Commission could ascertain during the verification visit with the GOC that it is fully aware of land use right transactions and could demonstrate the price paid for land use right acquired by a sampled exporting producer. Contrary to the GOC’s statement, the investigation revealed that these documents do exist and were available to the GOC. In particular, the Commission could infer this from the fact that the GOC could access the details of land use right transactions (including announcement publication and transaction price) through a web-based platform (53) during the verification visit whereas such information had not been provided as part of its questionnaire reply. On this ground, the Commission considered that the GOC did not act to the best of its abilities when addressing the Commissions requests for information and documents.

(112) Since the Commission received no information from the GOC concerning the elements listed above, the Commission considered that it had not received necessary information relevant to the investigation and that it had to rely on facts available for its findings concerning grants, export credit insurance and provision of land use right for less than adequate remuneration.

(114) According to the information provided by the four sampled groups of exporting producers, 24 financial institutions located within the PRC had provided financing to them. Of these 24 financial institutions, 20 were State-owned. The remaining financial institutions were either privately owned or the Commission was not able to determine whether they were State-owned or privately owned. None of the financial institutions, whether fully or partially State-owned, completed the specific questionnaire despite a request made to the GOC that covered all financial institutions which had provided loans to the sampled companies.

(115) As mentioned in recital (86), the GOC did not forward the questionnaire to financial institutions and did not provide information on the ownership of the financial institutions which provided loans to the sampled companies. Therefore, the Commission was not able to determine whether the remaining four financial institutions were State-owned or privately owned.

Legal standard

(116) The Commission ascertained whether the State-owned banks were acting as public bodies within the meaning of Articles 3 and 2(b) of the basic Regulation. According to the relevant WTO case-law (54), a public body is an entity that ‘possesses, exercises or is vested with governmental authority’. A public body inquiry must be conducted on a case-by-case basis, having due regard to ‘the core characteristics and functions of the relevant entity’, that entity’s ‘relationship with the government’, and ‘the legal and economic environment prevailing in the country in which the investigated entity operates’. Depending on the specific circumstances of each case, relevant evidence may include: (i) evidence that ‘an entity is, in fact, exercising governmental functions’, especially where such evidence ‘points to a sustained and systematic practice’; (ii) evidence regarding ‘the scope and content of government policies relating to the sector in which the investigated entity operates’; and (iii) evidence that a government exercises ‘meaningful control over an entity and its conduct’. When conducting a public body inquiry, an investigating authority must ‘evaluate and give due consideration to all relevant characteristics of the entity’ and examine all types of evidence that may be pertinent to that evaluation; in doing so, it should avoid ‘focusing exclusively or unduly on any single characteristic without affording due consideration to others that may be relevant’.

(117) In particular, WTO case law specified that (55): ‘What matters is whether an entity is vested with authority to exercise governmental functions, rather than how that is achieved. There are many different ways in which government in the narrow sense could provide entities with authority. Accordingly, different types of evidence may be relevant to showing that such authority has been bestowed on a particular entity. Evidence that an entity is, in fact, exercising governmental functions may serve as evidence that it possesses or has been vested with governmental authority, particularly where such evidence points to a sustained and systematic practice. It follows, in our view, that evidence that a government exercises meaningful control over an entity and its conduct may serve, in certain circumstances, as evidence that the relevant entity possesses governmental authority and exercises such authority in the performance of governmental functions. We stress, however, that, apart from an express delegation of authority in a legal instrument, the existence of mere formal links between an entity and government in the narrow sense is unlikely to suffice to establish the necessary possession of governmental authority. Thus, for example, the mere fact that a government is the majority shareholder of an entity does not demonstrate that the government exercises meaningful control over the conduct of that entity, much less that the government has bestowed it with governmental authority. In some instances, however, where the evidence shows that the formal indicia of government control are manifold, and there is also evidence that such control has been exercised in a meaningful way, then such evidence may permit an inference that the entity concerned is exercising governmental authority.’

(118) In order to properly characterize an entity as a public body in a particular case, it may be relevant to consider ‘whether the functions or conduct [of the entity] are of a kind that are ordinarily classified as governmental in the legal order of the relevant Member’ (56), and the classification and functions of entities within WTO Members generally. Thus, whether the functions or conduct are of a kind that are ordinarily classified as governmental in the legal order of the relevant Member may be a relevant consideration for determining whether or not a specific entity is a public body.

(119) There are many different ways in which government in the narrow sense could provide entities with authority. Accordingly, different types of evidence may be relevant to showing that such authority has been bestowed on a particular entity. Evidence that an entity is, in fact, exercising governmental functions may serve as evidence that it possesses or has been vested with governmental authority, particularly where such evidence points to a sustained and systematic practice.

(120) Evidence that a government exercises meaningful control over an entity and its conduct may serve, in certain circumstances, as evidence that the relevant entity possesses governmental authority and exercises such authority in the performance of governmental functions. Indeed, government ownership of an entity, while not a decisive criterion, may serve, in conjunction with other elements, as evidence. However, the existence of mere formal links between an entity and government in the narrow sense is unlikely to suffice to establish governmental authority. Thus, for example, the mere fact that a government is the majority shareholder of an entity in itself does not demonstrate that the government exercises meaningful control over the conduct of that entity, much less that the government has bestowed it with governmental authority. In some instances, however, where the evidence shows that the formal indicia of government control are manifold, and there is also evidence that such control has been exercised in a meaningful way, then such evidence may permit an inference that the entity concerned is exercising governmental authority.

(121) The central focus of a public body inquiry is not whether the conduct that is alleged to give rise to a financial contribution is logically connected to an identified ‘government function’. In this respect, the legal standard for public body determinations under Article 1.1(a)(1) of the SCM Agreement does not prescribe a connection of a particular degree or nature that must necessarily be established between an identified government function and the particular financial contribution at issue. Rather, the relevant inquiry hinges on the entity engaging in that conduct, its core characteristics, and its relationship with government. This focus on the entity, as opposed to the conduct alleged to give rise to a financial contribution, comports with the fact that a ‘government’ (in the narrow sense) and a ‘public body’ share a ‘degree of commonality or overlap in their essential characteristics’ – i.e. they are both ‘governmental’ in nature.

(122) The nature of an entity's conduct or practice may certainly constitute evidence relevant to a public body inquiry. Indeed, the conduct of an entity – particularly when it points to a ‘sustained and systematic practice’ – is one of the various types of evidence that, depending on the circumstances of each investigation, may shed light on the core characteristics of an entity and its relationship with government in the narrow sense. However, the assessment of such evidence is aimed at answering the central question of whether the entity itself possesses the core characteristics and functions that would qualify it as a public body. For instance, relevant for the assessment as to whether an entity is a public body in the context of Chinese State-owned commercial banks (‘SOCBs’) in DS379 included information showing that: (i) ‘[t]he chief executives of the head offices of the SOCBs are government appointed and the [CCP] retains significant influence in their choice’; and (ii) SOCBs ‘still lack adequate risk management and analytical skills’. This evidence was not limited to SOCBs’ lending activity per se, but rather spoke to their organizational features, chains of decision-making authority, and overall relationship with the GOC. Thus, the WTO Appellate body (‘AB’) in DS379 noted that, while the United States Department of Commerce (‘USDOC’) did take into account evidence relating to the conduct of SOCBs [‘making loans’], it did so within the framework of its inquiry into the core characteristics of those entities and their relationship with the GOC. These SOCBs exercised governmental functions on behalf of the Chinese Government.

(123) Moreover, the AB has also given importance to the fact that the government in question failed to cooperate during the investigation. Indeed, in DS379, the AB confirmed the USDOC’s determination that the SOCBs in the CFS Paper investigation constituted ‘public bodies’ on the following considerations: (i) near complete state-ownership of the banking sector in China; (ii) Article 34 of the Commercial Banking Law, which states that banks are required to ‘carry out their loan business upon the needs of [the] national economy and the social development and under the guidance of State industrial policies’; (iii) record evidence indicating that SOCBs still lack adequate risk management and analytical skills; and (iv) the fact that ‘during [that] investigation the [USDOC] did not receive the evidence necessary to document in a comprehensive manner the process by which loans were requested, granted and evaluated to the paper industry’ (57).

(124) In order to determine whether State-owned banks possess, exercise or are vested with governmental authority, the Commission paid due regard to the core characteristics and functions of the banks, their relationship with the government, and the legal and economic environment prevailing in the country in which the investigated entity operates. In this respect, the Commission sought information about State ownership as well as formal indicia of government control in the State-owned banks. It also analysed whether control had been exercised in a meaningful way in view of the normative framework in place. For this purpose, the Commission had to rely on facts available due to the refusal of the GOC to forward the relevant questionnaires to financial institutions concerned and provide evidence on the decision-making process that had led to the preferential lending, as set out in Section 3.4.2.

(125) The Chinese banking sector is dominated by State-owned Banks, based on their specific primary functions typically referred to as SOCBs or State policy banks (see recitals (52) and (113).

(126) Since the State maintains control over the State-owned banks through multiple channels – beside shareholding it also ensures presence of Party structures and their influence in the financial institutions and it mandates certain types of the banks’ commercial conduct by means of regulatory measures (see Section 3.6.1.4) – it is in position to make use of the financial sector’s resources in pursuit of its policy objectives (see also recitals (142) to (144), including the overarching goal to ‘promote the development of the socialist market economy’, as stipulated by Article 1 of the Bank Law (see Section 3.6.1.4 for a more detailed analysis of the Bank Law).

(127) Accordingly, the core functions of banking institutions, in particular their lending policies are shaped to serve policy purposes, the banks’ economic performance is subordinated to the requirements of the GOC’s industrial policies. The applicable legal framework and the institutional setup ensures in this respect that whenever the GOC identifies economic priorities, for example development of the MAE sector, requisite funds are channelled as a priority to corresponding projects via the financial sector. Consequently, State-owned banks effectively perform government functions, insofar as their key management personnel is required to be CCP-affiliated – and, therefore, loyal primarily to the Party – and their core business activities have to be carried out with due regard to policy objectives set by the government authorities.

(128) As indicated in recital (865), the GOC refused to forward the questionnaires to the banks on the grounds that this request breached the SCM Agreement by improperly requesting information from Chinese financial institutions, misclassifying them as public bodies, failing to notify them properly, and disregarding confidentiality concerns under Chinese law.

(129) In the course of the investigation, the Commission clarified its entitlement to request data from Chinese financial institutions, including state-owned entities, under the oversight of Chinese authorities, and confirmed that any confidential information will be managed in accordance with relevant confidentiality protocols. Additionally, the confidentiality requirement has been relinquished, as demonstrated by the written authorization from the sampled companies, explicitly waiving their confidentiality privileges.

(130) Consequently, and as set out in recital (128), none of the State-owned financial institutions, which provided loans to the sampled companies, replied to the specific questionnaire. The list of the banks includes: Agricultural Bank of China, Bank of Beijing (58), Bank of China, Bank of Communications Co. Ltd, Bank of Ningbo, China Construction Bank Corporation, China Industrial Bank Co. Ltd, China Merchants Bank, China Minsheng Bank (59), Export-Import Bank of China (EXIM bank), Industrial and Commercial Bank (ICBC), Ping An Bank (60), Shanghai Pudong Development Bank Co. Ltd, China Postal Savings Bank Co. Ltd., Bank of Changsha, Bank of Hunan, China Bohai Bank, China Development Bank, China Guangfa Bank, Commercial Bank of China, Hongkong and Shanghai Banking Corporation (HSBC), Huxia Bank, City Bank (China).

(131) The GOC did not provide information neither on the ownership of the banks, or on their governance structure, risk assessment or examples relating to specific loans to the MAE industry.

(132) Therefore, the Commission decided to use facts available to determine whether those State-owned financial institutions qualify as public bodies.

(133) In a previous anti-subsidy investigation (61) the Commission established that the banks which had provided loans to the sampled groups of exporting producers in the investigation were partially or fully owned by the State itself or by State-held legal persons. Since the banks did not reply to the specific questionnaire, the Commission used publicly available information, such as the bank’s website, annual reports, information available in bank directories or on the internet. In line with the findings of this past investigation the Commission Staff Working Document (62) confirmed that the State dominates the banking sector (63) by maintaining controlling stakes in all state-owned commercial banks, as well as by being the majority shareholder in a number of joint-stock commercial banks, either through direct investment by Central Huijin or indirectly through other state-owned legal entities. Recital (130) lists those banking entities reported by the exporting producers in which the State holds a majority shareholding and in the absence of changes since recent similar investigations (64), it was considered that all State-owned financial institutions that provided financing to the sampled exporting producers as partially or fully owned by the State itself or by State-held legal persons.

(134) Concerning the formal indicia of government control of State-owned banks, the Commission qualified them as ‘key State-owned financial institutions’. In particular, the notice ‘Interim Regulations on the Board of Supervisors in Key State-owned Financial Institutions’ (65) states that: ‘The key State-owned financial institutions mentioned in these Regulations refer to State-owned policy banks, commercial banks, financial assets management companies, securities companies, insurance companies, etc. (hereinafter referred to as State-owned financial institutions), to which the State Council dispatches boards of supervisors’.

(135) The Board of Supervisors of the key State-owned financial institutions is appointed according to the ‘Interim Regulations of Board of Supervisors of Key State-owned Financial Institutions’. Based on Articles 3 and 5 of these Interim Regulations, the Commission established that Members of the Board of Supervisors are dispatched by and accountable to the State Council, thus illustrating the institutional control of the State on the cooperating State-owned bank’s business activities.

(136) Concerning SOCBs, the Commission observed that the six largest banks accounted for more than 40 % of the Chinese financial sector terms of total assets by the end of 2022 (66). At least two of these six SOCBs, namely ICBC and ABC, are among the financial institutions which provided loans to the sampled groups of exporting producers in the present investigation (see recital (130)). The State holds a majority share both in ICBC (67) and in ABC (68). In addition to controlling the six largest SOCBs, the State maintains significant shares in a number of other SOCBs, in which its involvement is more often indirect, e.g. through SOEs. Accounting for approximately 20 % of the total assets of the Chinese banking sector in 2021, several of these SOCBs, such as Shanghai Pudong Development Bank, China Everbright Bank, Ping An Bank, China Minsheng Bank, are among the financial institutions which provided loans to the sampled groups of exporting producers in the present investigation (see recital (130) for a full list), with a varying degree of State shareholding, ranging from some 3 % in the case of China Minsheng Bank (69) to more than 80 % for China Everbright Bank (70).

(137) The Commission also found that State-owned financial institutions have changed their Articles of Associations in 2017 to increase the role of the CCP at the highest decision-making level of the banks (71).

(139) Recital (53) provides specific examples of these changes to the Articles of Associations with respect to ICBC and ABC.

(141) Reviewing these regulatory documents, the Commission found that financial institutions in the PRC operate within a legal framework that directs them to align with the GOC’s industrial policy objectives, that include the development of the MAE sector. Recognised as part of the construction machinery industry, MAE is highlighted in key national and regional plans, including Made in China 2025, the 14th Five-Year Plan for Construction Machinery, and various provincial and municipal development strategies in Zhejiang, Jiangsu, and Hunan. These policies promote financial support, R&D incentives, and industrial clustering, encouraging financial institutions to prioritize funding for companies in this sector.

(142) At the general level, Article 34 of the Bank law, which applies to all financial institutions operating in China, provides that ‘commercial banks shall conduct their business of lending in accordance with the needs of the national economic and social development and under the guidance of the industrial policies of the State’. Although Article 4 of the Bank Law states that, ‘commercial banks shall, pursuant to law, conduct business operations without interference from any unit or individual. Commercial banks shall independently assume civil liability with their entire legal person property’, the investigation showed that Article 4 of the Bank law is applied subject to Article 34 of the Bank law, i.e. where the State establishes a public policy the banks implement it and follow State instructions.

(143) In addition, Article 15 of the General Rules on Loans provides that ‘In accordance with the State’s policy, relevant departments may subsidize interests on loans, with a view to promoting the growth of certain industries and economic development in some areas’.

(145) The Bank law is legally binding. The mandatory nature of the Five-Year Plans and of Decision No 40 has been established above in Section 3.6.1.4. The mandatory nature of the NFRA regulatory documents derives from its powers as the banking regulatory authority. The mandatory nature of other documents is demonstrated by the supervision and evaluation clauses, which they contain.

(146) Decision No 40 of the State Council instructs all financial institutions to provide credit support only to investment projects pertaining to the encouraged category and promises the implementation of ‘other preferential policies for projects pertaining to the encouraged industries category’. On this basis, banks are required to provide credit support to the MAE industry as an encouraged industry.

(147) Furthermore, even private commercial banking decisions must be overseen by the CCP and remain in line with national policies. In fact, 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 in companies. In this respect, the Three Year Action Plan of the CBIRC for the years 2020 to 2022 instructs to ‘further implement the spirit embodied in General Secretary Xi Jinping’s keynote speech on advancing the reform of corporate governance of the financial sector’. Moreover, the Plan’s Section II aims at promoting the organic integration of the Party’s leadership into corporate governance: ‘we shall make the integration of the Party’s leadership into corporate governance more systematic, standardised and procedure-based […] Major operational and management issues must have been discussed by the Party Committee before being decided upon by the Board of Directors or the senior management.’

(148) Also, the GOC has recently stipulated that even shareholders of financial institutions need to facilitate the exercise of the GOCs control via the institution’s corporate governance framework, as follows: ‘Large shareholders of bank and insurance institutions shall support bank and insurance institutions in establishing an independent and sound corporate governance structure with effective checks and balances, and encourage and support banks and insurance institutions to ensure the organic integration of Party leadership with corporate governance’ (73).

(149) Finally, the performance evaluation criteria of the NFRA for commercial banks now, notably, take into account how financial institutions ‘serve the national development objectives and the real economy’, and in particular how they ‘serve strategic and emerging industries’ (74).

(150) Therefore, the Commission concluded that the GOC has created a normative framework that had to be adhered to by the managers and supervisors of the cooperating State-owned bank, who are appointed by the GOC and accountable to the GOC. Therefore, the GOC relied on this normative framework in order to exercise control in a meaningful way over the conduct of the cooperating State-owned bank whenever it was providing loans to the MAE industry. The core functions of the State-owned bank relate to the specific tasks assigned by the GOC through this normative framework, leading to becoming the GOC’s tool to perform governmental functions.

(151) In the course of the investigation, the GOC referred to the NPC’s interpretation of the Bank law and Article 4, of the Bank law claiming that commercial banks in China were operating as independent legal entities that ‘make their own decisions’, ‘without interference from any unit or individual’ and that ‘no entity or individual may coerce a commercial bank into granting loans or providing a guarantee’.

(152) As explained in recital (145), the Commission considered that the Chinese Bank law and Decision No. 40 are of a mandatory nature. Furthermore, the findings of this investigation as well as the Commission’s findings in previous investigations concerning the same subsidy programme (75) did not support the claim that banks do not take government policy and plans into account when making lending decisions. For example, the Commission found that the four groups of sampled exporting producers benefited from preferential lending at below-market interest rates.

(153) The investigation also determined that Article 4 applies only to the extent that it aligns with Article 33. This means that while banks may operate under their general legal framework, they must comply with state policies when directed. In fact, while Articles 4 of the Bank Law is part of Chapter I, which sets the general provisions, Article 33 is part of Chapter IV, which establishes the basic rules governing loans. The wording of Article 33: ‘commercial banks carry out their loan business upon the needs of national economy and the social development and under the guidance of the State industrial policies’, demonstrates that this provision is not of a guiding nature but has rather a mandatory character and provides a clear instruction to banks to take into account the State industrial policies when carrying out their loan business. The Commission also noted that the Decision No. 40 of the State Council instructs all financial institutions to provide credit support only to encouraged projects and promises the implementation of ‘other preferential policies for projects pertaining to the encouraged industries category’s’. While Article 17 of the same Decision requires banks to respect credit principles, the Commission established that banks were not respecting credit principles during the investigation. The Commission requested supporting documents showing that the financial institutions were respecting such principles. The GOC and the financial institutions did not provide such information. As a result, the Commission had to make such assessment on the basis of facts available. Such facts showed that loans were provided to the exporting producers irrespective of their financial situation and creditworthiness. This finding is not new and was already made in previous investigations (76) where the Commission previously demonstrated that Article 17 does not effectively translate into a credit principle for encouraged industries. During the current investigation, the Commission could not establish compliance due to a lack of cooperation, further reinforcing concerns about transparency and adherence to proper credit assessment procedures.

(154) Finally, as noted in recitals (137) and (138) above, the fact that all the bank’s major operational and management issues are reviewed by the Party, which is thoroughly embedded in the corporate governance structure of the banks, and the fact that the performance of the banks is evaluated in line with their efforts to serve strategic and emerging enterprises such as the MAE industry, also shows the tight and binding nature of the regulatory framework over the operations of the financial institutions.

(155) In the absence of cooperation and concrete evidence of creditworthiness assessments, the Commission therefore examined the overall legal environment as set out above in recitals (142) to (150), in combination with the behaviour of the cooperating State-owned bank regarding loans provided to the sampled companies. This behaviour contrasted with its official stance as in practice State-owned banks were not acting based on thorough market-based risk assessments.

(156) In the course of the investigation, the Commission found that loans were provided to the sampled groups of exporting producers at interest rates below or close to the Loan Prime Rate (‘LPR’), as announced by the National Interbank Funding Center (NIFC). The LPR was introduced on 20 August 2019, and replaces the previous PBOC’s central bank benchmark rate (77). The provision of financing at rates below or close to the country’s risk-free interest rate on the interbank market clearly shows that risk was not adequately taken into consideration. In the absence of cooperation by the GOC and the financial institutions, the Commission had to use facts available and thus concluded that the loans were granted regardless of the companies’ real financial and credit risk situation, as established in Section 3.6.3 below. Hence, the loans were provided below market rates when compared to the rate corresponding to the risk profile of the sampled exporting producers.

(157) On that basis, the Commission concluded that the GOC has created a normative framework with respect to lending to encouraged industries that had to be adhered to by the managers and supervisors of the bank, which are appointed by the GOC and accountable to the GOC. This normative framework did not leave any margin of manoeuvre to the managers and supervisors of the bank as to whether to follow this framework or not with respect to the sampled exporting producers, thus putting the management of that bank in a position of dependence.

(158) Therefore, the GOC relied on the normative framework in order to exercise control in a meaningful way over the conduct of the cooperating State-owned bank whenever it was providing loans to the MAE industry.

(159) In the absence of concrete evidence of credit risk assessments, the Commission examined the overall legal environment applicable to lending to encouraged industries such as the MAE industry in combination with the behaviour of the cooperating State-owned bank and established that the bank was not acting based on thorough market-based credit risk assessments.

(160) Furthermore, as explained in recital (152), loans were provided to the sampled groups of exporting producers at interest rates below or close to the Loan Prime Rate regardless of their financial and credit risk situation. Therefore, considering the risk profile of the sampled exporting producers described in Section 3.6.4.3 below and that, according to the risk analysis performed by the Commission, certain sampled exporting producers should have received a BB and others B credit rating and should thus have paid interest rates significantly above the risk-free rate, the Commission concluded that the loans at issue were provided below market rates.

(161) The Commission therefore concluded that the GOC has exercised meaningful control over the conduct of the cooperating State-owned bank with respect to its lending policies and assessment of risk concerning the MAE industry.

(162) Following definitive disclosure, the GOC reiterated its claim that Article 4 of the Commercial bank law is not subordinate to Article 34 and that Article 34 must not contradict the provision of Article 4 regarding the independence of banks. It also claimed that the Bank law does not impose any punitive consequences for banks that fail to comply with Article 34. In addition, the GOC claimed that Article 15 of the General Rules on Loans could not serve as a basis to claim that the GOC requires commercial banks to provide preferential loans pointing to a review of the General Rules on loans. The GOC also added that Decision No 40 does not apply to the MAE industry as only encouraged projects as detailed in the Catalogue can be considered encouraged.

(163) The Commission referred, once again, to the AB report as provided in recital (123) which confirmed that banks are required to ‘carry out their loan business upon the needs of [the] national economy and the social development and under the guidance of State industrial policies’ and noted that the alleged absence of punitive consequences was irrelevant considering that the Chinese banking sector is mostly State-owned, that commercial banking decisions must be overseen by the CCP and remain in line with national policies, issues not disputed by any interested party. As far as Article 15 of General rules on loan is concerned, the Commission noted that the GOC did not provide evidence of such review and that the law itself had not been amended or repealed whereby this Article still applied, as indicated in its comment to the definitive disclosure by the GOC itself. The Commission also referred to recital (59) where it had concluded that the MAE sector was part of the ‘Large construction machinery’ sector listed in the Catalogue, which confirmed MAE was an encouraged sector. Based on the above, these claims were rejected.

(164) The Commission established that the State-owned banks implemented the legal framework set out above in the exercise of governmental functions with respect to the MAE sector. Therefore, it was acting as public body in the sense of Article 2(b) of the basic Regulation read in conjunction with Article 3(1)(a)(i) of the basic Regulation and in accordance with the relevant WTO case-law.

(165) In addition, even if the State-owned financial institutions were not to be considered as public bodies, the Commission established on the basis of the same information that they would be considered entrusted or directed by the GOC to carry out functions normally vested in the government within the meaning of Article 3(1)(a)(iv) of the basic Regulation for the same reasons, as set out in Section 3.6.2 below. Thus, their conduct would be attributed to the GOC in any event.

(166) The Commission established in the case at hand that the following banks and private financial institutions operating in China had provided loans to the sampled groups of exporting producers in the investigation at hand, Citibank (China) Co., Ltd., China Bohai bank, China Mingsheng bank and HSBS bank.

(167) As in previous investigations (78), in line with the corresponding analysis provided in recitals (140) to (161) it was considered that these banks and private financial institutions have been operating under the supervision of the NFRA (replacing the CBRC) and have been entrusted or directed by the GOC. Since no information was provided indicating otherwise, the Commission maintained the same conclusion in the present investigation.

(168) The Commission analyzed whether all these financial institutions had been entrusted or directed by the GOC to grant subsidies to the MAE sector within the meaning of Article 3(1)(a)(iv) of the basic Regulation.

(169) According to the WTO Appellate Body, ‘entrustment’ occurs where a government gives responsibility to a private body and ‘direction’ refers to situations where the government exercises its authority over a private body (79). In both cases, the government uses a private body as a proxy to make the financial contribution, and ‘in most cases, one would expect entrustment or direction of a private body to involve some form of threat or inducement’ (80). At the same time, Article 3(1)(a)(iv) does not allow Members to impose countervailing measures to products ‘whenever the government is merely exercising its general regulatory powers’ (81) or where government intervention ‘may or may not have a particular result simply based on the given factual circumstances and the exercise of free choice by the actors in that market’ (82). Rather, entrustment or direction implies ‘a more active role of the government than mere acts of encouragement’ (83).

(170) The Commission noted that the normative framework concerning the industry mentioned above in recitals (142) to (147) applies to all financial institutions in the PRC, including privately owned financial institutions. To illustrate this, the Bank Law and the various orders of the NFRA (formerly CBIRC) cover all Chinese-funded and foreign-invested banks under the management of the NFRA.

(171) Furthermore, the majority of loan contracts with private financial institutions had similar conditions as the contracts with State-owned banks, and the lending rates provided by the private financial institutions were similar to the rates provided by the State-owned financial institutions. This shows that de facto preferential lending conditions are granted by those banks in accordance with the GOC’s control over the banking sector.

(172) In the absence of any divergent information received from the private financial institutions, the Commission concluded that, in so far as the MAE industry is concerned, all financial institutions (including private financial institutions) operating in China under the supervision of the NFRA have been entrusted or directed by the State in the sense of Article 3(1)(a)(iv), first indent of the basic Regulation to pursue governmental policies and provide loans at preferential rates to the MAE industry (84), thus, functions which are no different from functions normally carried out by governments.

(173) In previous anti-subsidy investigations, the Commission already determined that domestic credit ratings awarded to Chinese companies were not reliable, based on a study published by the International Monetary Fund (85), showing a discrepancy between international and Chinese credit ratings. Indeed, according to the IMF, over 90 % of Chinese bonds are rated from AA to AAA by local rating agencies. This is not comparable to other markets, such as the EU or the United States of America (‘US’). For example, less than 2 % of firms enjoy such top-notch ratings in the US market. Chinese credit rating agencies are thus heavily skewed towards the highest end of the rating scale. They have very broad rating scales and tend to pool bonds with significantly different default risks into one broad rating category (86). According to the China bond market insight 2021 by Bloomberg (87), five Chinese local rating agencies dominate the bond market: China Chengxin, Dagong, Lianhe, Shanghai Brilliance, and Golden credit rating, and around 90 % of the bonds are rated AAA by local rating agencies. However, many of the issuers have received a lower S&P global issuer rating of A and BBB (88).

(174) In addition, foreign rating agencies, such as Standard and Poor’s and Moody’s, typically apply an uplift over the issuer’s baseline credit rating based on an estimate of the firm’s strategic importance to the Chinese Government and the strength of any implicit guarantee when they rate Chinese bonds issued overseas (89).

(175) To complement this analysis, previous cases showed that the GOC can also exercise its influence over the credit rating market (90).

(176) According to the information provided by the GOC in previous cases, there were 14 credit rating agencies active on China’s bond market, including 12 domestic rating agencies. Second, there is no free entrance on the Chinese credit rating market. It is essentially a closed market, since rating agencies need to be approved by the China Securities Regulatory Commission (‘CSRC’) or the PBOC before they can start operations (91). The PBOC announced mid-2017 that overseas credit rating agencies would be allowed to carry out credit ratings on part of the domestic bond market, under certain conditions. However, these credit rating agencies follow Chinese rating scales and are thus not exactly comparable with international ratings, as explained in recital (174).

(177) A 2021 research by Allianz Global Investors confirms the Commission’s findings, stating that ‘China’s onshore credit rating system differs from international rating conventions. For example, onshore bonds rated AA+ would typically be rated as “high yield” on an international scale’ (92).

(178) Finally, the OECD pointed out in 2022 that ‘[d]eficiencies in the credit-rating market, including inflated ratings and weak warning systems hinder the healthy development of the bond market’ (93) .