Commission Implementing Regulation (EU) 2023/1647 of 21 August 2023 imposing a definitive countervailing duty on imports of certain coated fine paper originating in the People’s Republic of China following an expiry review pursuant to Article 18 of Regulation (EU) 2016/1037 of the European Parliament and of the Council

22.8.2023	EN	Official Journal of the European Union	L 207/1

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, and in particular Article 18 thereof,

Whereas:

1. PROCEDURE

1.1.   Previous investigations and measures in force

• (1) Anti-subsidy measures on imports of certain coated fine paper (‘CFP’) originating in the People’s Republic of China (the ‘PRC’ or ‘China’ or ‘country concerned’) were originally imposed in 2011 by Council Implementing Regulation (EU) No 425/2011 ² (‘the original measures’). The investigation leading to the original measures is referred to as ‘the original investigation’.

• (2) The original measures took the form of an ad valorem duty rate ranging from 4% to 12% for imports from individually named exporters, with a residual country wide rate of 12%.

• (3) Following an anti-dumping investigation, by Implementing Regulation (EU) No 451/2011 ³, the Council also imposed a definitive anti-dumping duty on imports of certain coated fine paper originating in the PRC.

• (4) On 4 July 2017, following an expiry review (‘the expiry review’) in accordance with Article 18 of Regulation (EU) 2016/1037 (‘the basic Regulation’), the Commission extended the measures as established in the original investigation for five years by Commission Implementing Regulation (EU) 2017/1187 ⁴ (‘the expiry review Regulation’).

• (5) The countervailing duties currently in force range from 4% to 12%.

1.2.   Request for an expiry review

• (6) Following the publication of a notice of impending expiry ⁵ of the countervailing measures in force on the imports of certain coated fine paper originating in the PRC, the European Commission ('the Commission') received a request for the initiation of an expiry review pursuant to Article 18 of the basic Regulation.

• (7) The request was lodged on 31 March 2022 by five Union producers (Arctic Paper Grycksbo AB, Burgo Group SpA, Fedrigoni SpA, Lecta Group and Sappi Europe SA), jointly referred to as ‘the applicants’, representing more than 50% of the total Union production of certain coated fine paper.

• (8) The request for review was based on the grounds that the expiry of the measures would be likely to result in continuation or recurrence of subsidisation and recurrence of injury to the Union industry.

1.3.   Initiation of an expiry review

• (9) Having determined that sufficient evidence existed for the initiation of an expiry review, on 30 June 2022 the Commission initiated an expiry review of the measures in force with regard to imports into the Union of certain coated fine paper originating in the People’s Republic of China on the basis of Article 18 of the basic Regulation. It published a Notice of Initiation in the Official Journal of the European Union ⁶ (‘the Notice of Initiation’). In view of Article 18(2) of the basic Regulation, the Commission prepared a memorandum on sufficiency of evidence containing the Commission’s assessment on all the evidence at its disposal and on the basis of the investigation was initiated. That memorandum can be found in the file for inspection by interested parties.

• (10) Prior to the initiation of the expiry review, and in accordance with Article 10(7) of the basic Regulation, the Commission notified the Government of China (‘GOC’) that it had received a properly documented review request and invited the GOC for consultations with the aim of clarifying the situation as regards the content of the review request and arriving at a mutually agreed solution. However, no response was received from the GOC.

1.4.   Separate anti-dumping review investigation

• (11) By means of a notice published in the Official Journal of the European Union on 30 June 2022 ⁷, the Commission also announced the initiation of an expiry review pursuant to Article 11(2) of Regulation (EU) 2016/1036 of the European Parliament and of the Council of 8 June 2016 ⁸ of the definitive anti-dumping measures in force with regard to imports into the Union of certain coated fine paper originating in the PRC.

1.5.   Review investigation period and period considered

• (12) The investigation of the likelihood of continuation or recurrence of subsidisation covered the period from 1 January 2021 to 31 December 2021 (‘review investigation period’ or ‘RIP’). The examination of the trends relevant for the assessment of the likelihood of recurrence of injury covered the period from 1 January 2018 to the end of the review investigation period (the ‘period considered’).

1.6.   Interested parties

• (13) In the Notice of Initiation, interested parties were invited to contact the Commission in order to participate in the investigation. In addition, the Commission specifically informed the Union industry, the known exporting producers and the Government of the People’s Republic of China (‘PRC’) about the initiation of the investigation and invited them to participate.

• (14) In parallel, upon initiation, the Commission made the questionnaires for the exporting producers, the unrelated importers, the users and the Union producers available online. It also sent the macro data questionnaire to the complainants. Questionnaires were also made available to unrelated importers and users on the same DG Trade’s website ⁹.

• (15) All parties were invited to make their views known, submit information and provide supporting evidence within the time limits set out in the Notice of Initiation. Interested parties had also the opportunity to comment on the initiation of the investigation and to request a hearing with the Commission and/or the Hearing Officer in trade proceedings.

1.7.   Sampling

1.7.1.   Sampling of exporting producers in the PRC

• (16) In the Notice of Initiation of the expiry review investigation, the Commission stated that it might sample exporting producers in accordance with Article 27 of the basic Regulation.

• (17) 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. No exporting producer came forward.

• (18) In addition, the Commission asked the Mission of the PRC to the European Union to identify and/or contact other exporting producers, if any, that would be interested in participating in the investigation. However, no response was provided.

• (19) Consequently, the Commission informed the authorities of the PRC that absent cooperation, it intended to resort to the use of facts available under Article 28 of the basic Regulation when examining the continuation or recurrence of subsidisation. The authorities of the PRC did not respond.

1.7.2.   Sampling of Union producers

• (20) In the Notice of Initiation of the expiry review investigation, the Commission stated that it had provisionally selected a sample of Union producers. The Commission selected the sample on the basis of the representativity in terms of volume of production and sales of the like product in the EU between 1 January and 31 December 2021. This sample consisted of 3 Union producers. The sampled Union producers accounted for approximately 41 % of the estimated total volume of production and 37 % of the estimated sales of the like product in the Union. The Commission invited interested parties to comment on the provisional sample. No comments were received on the provisional sample and the provisional sample was therefore confirmed. The sample is representative of the Union industry.

1.7.3.   Sampling of unrelated importers

• (21) To decide whether sampling was necessary and, if so, to select a sample, the Commission asked all known unrelated importers to provide the information specified in the Notice of Initiation. However, no importer co-operated with the Commission and provided the requested information.

1.8.   Questionnaires and verification visits

• (22) The Commission sent a questionnaire to the Government of the People’s Republic of China (‘GOC’). No questionnaire reply was received.

• (23) The Commission sent questionnaires to the three sampled Union producers. At the day of initiation, the same questionnaires were made available online on DG Trade’s website ¹⁰. In addition, the Commission sent a questionnaire to the applicants concerning macroeconomic data. Questionnaires were also made available to unrelated importers and users on the same DG Trade’s website ¹¹.

• (24) Questionnaire replies were received from the three sampled Union producers. In addition, the applicants provided the Commission with macroeconomic data. No reply was received from any of the unrelated importers. None of the users provided replies to the questionnaire or came forward during the investigation.

• (25) The Commission verified all the information deemed necessary for the determination of the likelihood of continuation or recurrence of subsidisation and injury and of the Union interest. Verification visits were carried out at the premises of the following Union companies:

Union producers

• — Sappi Europe SA, Brussels, Belgium for Sappi Gratkorn GmbH (Austria)

• — Burgo Group S.p.A. (Italy)

• — Condat SAS (part of Lecta Group) (France)

1.9.   Disclosure

• (26) On 14 June 2023, the Commission disclosed the essential facts and considerations on the basis of which it intended to impose countervailing duties. All parties were granted a period within which they could make comments on that disclosure.

2. PRODUCT UNDER REVIEW, PRODUCT CONCERNED AND LIKE PRODUCT

2.1.   Product under review

• (27) The product under review is the same as in the original investigation and in the previous expiry review, namely certain coated fine paper (‘CFP’) which is paper or paperboard coated on one or both sides (excluding kraft paper or kraft paperboard), in either sheet or rolls, and with a weight of 70 g/m² or more but not exceeding 400 g/m² and brightness of more than 84 (measured according to ISO 2470-1).

• (28) The product under review does not include:

• — Rolls suitable for use in web-fed presses. Rolls suitable for use in web-fed presses are defined as those rolls which, if tested according to the ISO test standard ISO 3783:2006 concerning the determination of resistance to picking accelerated speed method using the IGT tester (electric model), give a result of less than 30 N/m when measuring in the cross-direction of the paper (CD) and a result of less than 50 N/m when measuring in the machine direction (MD).

• — Multi-ply paper and multi-ply paperboard.

2.2.   Product concerned

• (29) Product concerned by the expiry review investigation is the product under review originating in China currently falling under CN codes ex 4810 13 00, ex 4810 14 00, ex 4810 19 00, ex 4810 22 00, ex 4810 29 30, ex 4810 29 80, ex 4810 99 10 and ex 4810 99 80 (TARIC codes 4810130020, 4810140020, 4810190020, 4810220020, 4810293020, 4810298020, 4810991020 and 4810998020).

2.3.   Like product

• (30) As established in the original investigation, as well as in the previous expiry review, this expiry review investigation confirmed that the following products have the same basic physical and technical characteristics, as well as the same basic uses:

• — the product concerned when exported to the Union;

• — the product under review produced and sold by the exporting producers on the domestic market of the PRC;

• — the product under review produced and sold by the exporting producers to the rest of the world; and

• — the product under review produced and sold in the Union by the Union industry.

• (31) The Commission concluded that these products are like products within the meaning of Article 2(c) of the basic Regulation.

3. LIKELIHOOD OF CONTINUATION OF SUBSIDISATION

• (32) In accordance with Article 18 of the basic Regulation, and as stated in the Notice of Initiation, the Commission examined whether the expiry of the existing duties would be likely to lead to a continuation of subsidisation.

3.1.   Non-cooperation and the use of facts available in accordance with Article 28(1) of the basic Regulation

• (33) On 29 September 2022, the Commission sent a questionnaire to the GOC. The GOC was also asked to forward a questionnaire for banks and other financial institutions known by the GOC to have provided loans to the industry concerned or to producers, distributors and other suppliers providing inputs for the production of the product concerned. The Commission did not receive any reply either from the GOC or from any financial institution to which the GOC was asked to forward a questionnaire.

• (34) Furthermore, no Chinese producer of CFP cooperated with the Commission in this investigation.

• (35) By Note Verbale of 18 January 2023, the Commission informed the Chinese authorities of the consequences of non-cooperation and gave them the opportunity to comment. No comments were received. The Commission, in accordance with Article 28 of the basic Regulation, considered the use of facts available necessary in order to examine the continuation of subsidy practices of the PRC in the paper industry generally and the coated fine paper in particular.

• (36) On the use of facts available, the Commission noted that Article 28 of the basic Regulation is similar to Article 12.7 of the SCM Agreement ¹². The Appellate Body has recalled that Article 12.7 of the SCM Agreement permits the use of facts on record solely for the purpose of replacing information that may be missing, in order to arrive at an accurate subsidization or injury determination. Accordingly, the Appellate Body has explained that ‘there has to be a connection between the ‘necessary information’ that is missing and the particular ‘facts available’ on which a determination under Article 12.7 is based.’ Therefore, ‘an investigating authority must use those ‘facts available’ that ‘reasonably replace the information that an interested party failed to provide’, with a view to arriving at an accurate determination.’ The Appellate Body has further explained that ‘the facts available’ refers to those facts that are in the possession of the investigating authority and on its written record. As determinations made under Article 12.7 are to be made on the basis of ‘the facts available’, ‘they cannot be made on the basis of non-factual assumptions or speculation.’ Furthermore, in reasoning and evaluating which facts available can reasonably replace the missing information, ‘all substantiated facts on the record must be taken into account’ by an investigating authority. The Appellate Body has explained that ascertaining the ‘reasonable replacements for the missing ‘necessary information’ involves a process of reasoning and evaluation’ on the part of the investigating authority. Where there are several facts available to an investigating authority that it needs to choose from, ‘it would seem to follow naturally that the process of reasoning and evaluation would involve a degree of comparison’ in order to arrive at an accurate determination. The evaluation of the ‘facts available’ that is required, and the form it may take, depend on the particular circumstances of a given case, including the nature, quality, and amount of evidence on the record and the particular determinations to be made. The nature and extent of the explanation and analysis required will necessarily vary from determination to determination ¹³.

• (37) Accordingly, the Commission used for its analysis all facts available to it, in particular:

• — the request for an expiry review under Article 18 of the basic Regulation concerning anti-subsidy measures on imports of coated fine paper originating in the PRC;

• — the findings of the original investigation ¹⁴ and previous review investigation ¹⁵ carried out by the Commission regarding the same product;

• — the findings of the most recent anti-subsidy investigations carried out by the Commission concerning encouraged industries in the PRC, such as pneumatic tyres ¹⁶ (tyres), electric bicycles ¹⁷ (‘the e-bikes’), organic coated steel products ¹⁸ ('OCS'), optical fibre cables ¹⁹ (‘OFC’), aluminium converter foil ²⁰, glass fibre fabrics ²¹ (GFF) and the expiry review of the countervailing measures on filament glass fibre products ²² (‘GFR’) originating in the PRC where various subsidy schemes relevant for this review investigation were examined.

3.2.   Subsidies and subsidy programmes examined in the current expiry review

• (38) In view of the lack of cooperation from the GOC and Chinese producers the Commission decided to examine under Article 28 of the basic Regulation whether there was continuation of subsidisation as follows. First, the Commission examined whether the subsidies countervailed in the original and previous expiry investigations continued to confer benefit to the CFP industry in the PRC. Second, the Commission analysed whether that industry benefitted from subsidies which were not countervailed in the original or previous expiry review investigations (‘additional subsidies’ or ‘new subsidies’), as alleged in the request.

• (39) The Commission decided that, in view of the findings below confirming the existence of continued subsidisation with respect to most of the subsidies countervailed in the original and previous expiry review investigations, as well as the existence of some new additional subsidies, there was no need to investigate all subsidies alleged to exist by the applicants. Indeed, pursuant to Article 18 of the basic Regulation, the Commission should examine whether there is evidence of continued subsidisation, regardless of its amount.

3.3.   Subsidies countervailed in the original and previous expiry review investigations

3.3.1.   Preferential lending

• (40) In the original investigation ²³ the Commission established that the ad valorem subsidy amount with regard to this measure was 5,37 % for the APP Group ²⁴ and 1,26 % for the Chenming Group ²⁵.

3.3.1.1.   Government intervention in favour of the coated fine paper industry

• (41) In the original and previous review investigations the Commission first examined whether preferential lending forms part of the implementation of the GOC's central planning, which aims to encourage the development of the paper making industry.

• (42) The coated fine paper industry that was subject to the Commission's investigation constitutes part of a wider category of the paper industry, also referred to as the paper making industry. The applicants alleged that the GOC continues to subsidise its paper industry and referred to a number of policy and planning documents as well as legislation, which form the basis for continuation of State support for this industry.

• (43) In the original and previous review investigations the Commission established the existence of specific policy plans with respect to the paper industry. These plans stipulated that the government authorities closely monitor the performance of the paper industry and implement special policies (e.g., implementing decrees) for the fulfilment of the goals of the policy plans. Furthermore, the investigation also established that the specific policy plans provide for preferential lending to the paper making industry.

• (44) In the previous review investigation the Commission also established that the financial market in the PRC continued to be distorted by the interventions of the GOC. The findings of the original investigation based on government plans in force at that time are upheld in the current expiry review investigation. Both the 14th Five-Year Plan ²⁶ applicable during the RIP and the previous 11th, 12th and 13th Five-Year Plan continue to indicate the paper industry as an ‘Encouraged industry’.

• (45) The 13th Five-Year Plan (2016-2020) confirmed the continuation of subsidisation, as it singled out the paper industry as an ‘Encouraged industry’.

• (46) The 14th Five-Year Plan (2021-2025) ²⁷ aims at speeding up the transformation and upgrading of enterprises in key industries such as the chemical industry and papermaking, and improving the green manufacturing system.

• (47) Under the ‘Made in China 2025’ Initiative, the Chinese light industry, to which the paper industry belongs, is eligible for support to finance its technological upgrading, the acquisition of modern production equipment, and the acceleration of its green transformation. Chinese CFP producers such as the Chenming Group make express references in their financial statements ²⁸ to the implementation of the goals set out in the ‘Made in China 2025’ Plan.

• (48) In the original investigation the Commission established, with reference to ‘Decision No 40 of the State Council’ ²⁹ (‘Decision No 40’), that this act is an order from the State Council, i.e. the highest administrative body in the PRC, and remains legally binding on other public bodies and economic operators. It classified the industrial sectors into ‘Encouraged’, ‘Restricted’ and ‘Eliminated’ Projects. This Act represents a binding industrial policy document that shows how the GOC maintains a policy of supporting groups of enterprises or industries, such as the paper industry, classified as an ‘Encouraged industry’. The Commission based on the applicant’s request confirmed that Decision No 40 was still in force during the review investigation period ³⁰.

• (49) With respect to the number of industries listed as ‘Encouraged’, there are 26 in total, representing only a portion of the Chinese economy. Furthermore, only certain activities within these 26 sectors are given ‘Encouraged’ status. Article 17 of Decision No 40 also stipulates that the ‘Encouraged investment projects’ shall benefit from specific privileges and incentives (financial support, import duty exemption, VAT exemption and tax exemption). With reference to the ‘Restricted’ and ‘Eliminated’ Projects, Decision No 40 empowers the State authorities to intervene directly to regulate the market. In fact, Articles 18 and 19 require the relevant authority to stop financial institutions from supplying loans and also order the State price administrative department to raise the electricity price and instruct the electricity supply companies to stop supplying electricity to ‘Restricted’ and ‘Eliminated’ Projects. It is obvious from the above that Decision No 40 provides binding rules and instructions to all economic institutions and entities in the form of directives on the promotion and support of eEcouraged industries, one of which is the papermaking industry ³¹.

• (50) The Commission established in the review investigation that a number of policy documents indicate the paper industry explicitly as an ‘Encouraged’ industry. This concerns in particular the 14th Five-Year Plan for the Paper Industry. This plan is implemented by the 14th Five-Year Industrial Technology Innovation Program issued by the Ministry of Industry and Information Technology. The Program also refers to promotion of ‘industrial restructuring and upgrading (…) of the paper industry and its related industries’. Similarly, the above mentioned Decision No 40 indicates support for the development and modernisation of the paper industry. Thus, rather than general statements of encouragement, these policy plans direct entities to comply with the public policy objective of supporting the development of the coated fine paper industry.

• (51) In addition, Article 34 of the Commercial Banking Law [2015], which applies to all financial institutions operating in China, states that ‘[c]ommercial 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.’ ³² This indicates that decisions are made by the banks as well as by other financial institutions pursuant to government directives and public objectives.

• (52) Finally, the Commission recalled its findings in the original and previous review investigations concerning the role of the National Development and Reform Commission (‘NDRC’). The NDRC is an agency of the State Council coordinating macroeconomic policy and managing Government investments. The State Council, the highest governmental administrative body, issued, inter alia, the 2007 Papermaking Plan, to be followed by the NDRC. The original investigation also established that the NDRC collects, on a permanent basis, detailed information from companies. The existence of a systematic mechanism to collect company-related data to be used in government plans and projects reveals that these plans and projects are considered an important element of the State's industrial policy.

• (53) It follows from the above that decisions made by financial institutions with respect to the paper industry (and thus including the coated fine paper industry) continue to take into consideration the need to fulfil the stated goals of the relevant policy plans.

• (54) Taking into account the above-listed documents and their provisions, on which there was no evidence or indications that they are no longer in place, the Commission reiterated its conclusion from the original and the previous review investigations that the Chinese coated fine paper industry continued to be a key industry during the review investigation period, the development of which continues to be actively pursued and directed by the GOC as a strategic policy objective.

3.3.1.2.   State-owned banks acting as public bodies

• (55) The Commission concluded in the original and review investigations ³³ that the financing market in China was distorted by government intervention and that interest rates charged by non-government banks and other financial institutions were likely to be aligned with government rates. The investigation did not bring to light any element contradicting the above finding, nor did the GOC provide evidence in the course of the current investigation that this situation had changed.

• (56) Additionally, based on information in the review request, several national and regional, general and sector specific plans, encourage government authorities at all levels and State-owned financial institutions to foster the paper industry in general and the CFP industry in particular.

• (57) In addition to the Commercial Banking Law, Article 15 of the General Rules on Loans, which are implemented by the People's Bank of China, provides that [i]n accordance with the State's policy, relevant departments may subsidise interest on loans, with a view to promoting the growth of certain industries and economic development in some areas ³⁴.

• (58) The GOC’s support to its paper industry has been, and continues to be, focused on financing its energy transformation and reducing the negative environmental impact resulting from its production activities. It comes therefore as no surprise that Chinese CFP producers have benefitted from preferential lending by Chinese State-owned banks.

• (59) The Commission, on the basis of the available information as referred to in recital (37), established that most of the major banks continued to be State-owned. The GOC is the majority shareholder in the four largest banks in the PRC: the Industrial and Commercial Bank of China (‘ICBC’), the Bank of China (‘BOC’), the China Construction Bank (‘CCB’) and the Agricultural Bank of China (‘ABC’). In previous investigations ³⁵, the GOC claimed that it held less than 50% shares in the Bank of Communications. However, in the same investigations, the Commission established that the following banks were partially or fully owned by the State itself or by State-held legal persons: Agricultural Bank of China, Bank of Beijing, Bank of China, Bank of Communications, Bank of Jiangsu, Bank of Kunlun, Bank of Nanjing, Bank of Ningbo, Bank of Qingdao, Bank of Shanghai, Bank of Tianjin, Bank of Yantai, CCB, China Bohai Bank, China CITIC Bank, China Construction Bank, China Development Bank, China Everbright Bank, China Guangfa Bank, China Industrial Bank, China Industrial International Trust Limited, China Merchants Bank, China Merchants Bank Financial Leasing Co., Ltd., China Minsheng Bank, Chongqing Rural Commercial Bank, Daye Trust Co., Ltd., Dongying Bank, EverGrowing Bank, Fudian Bank, Guangdong Development Bank, Guosen Securities Co., Hang Fung Bank, Ltd., Hangzhou Bank, Hankou Bank, Hengfeng Bank Co., Ltd., Huaxia Bank, Hubei Bank, Industrial and Commercial Bank of China (ICBC), Minsheng Securities Co.,Ltd., Postal Savings Bank, Qilu Bank, Shanghai Pudong Development Bank, Shanghai Rural Commercial Bank, Shenyang Rural Commercial Bank, Sinotruk Finance Co. Ltd. and Zheshang Bank. The Commission further concluded on the same basis that there was evidence of formal indicia of government control in the State-owned banks. For example, with respect to EXIM, its public policy mandate is established in ‘The Notice of Establishing Export-Import Bank of China’ issued by the State Council and the Articles of Association of EXIM. The State, as 100% shareholder of EXIM, controls EXIM by nominating the Members of its Board of Supervisors. Those Members represent the interest of the State, including policy considerations in the meetings of EXIM. There is no Board of Directors. The State directly nominates the management of EXIM ³⁶. According to its website ³⁷, EXIM is “dedicated to supporting China's foreign trade, investment and international economic cooperation” and “it is committed to reinforcing financial support to key sectors and weak links in the Chinese economy to ensure sustainable and healthy economic and social development”.

• (60) No evidence has been provided in the course of this investigation showing that companies are granted loans according to proper credit rating evaluations. Thus, the Commission has no information contradicting the previous finding that the State-owned banks are supporting encouraged industries and/or implementing national policies, as mentioned above in recitals (58) and (59).

• (61) On the basis of the above, the Commission concluded that the specific public policy objectives, as provided in the legal framework set out above, are being implemented by State-owned banks in the exercise of governmental functions with respect to the paper industry, thereby acting as public bodies in the sense of Article 2(b) of the basic Regulation read in conjunction with Article 3(1)(a)(i) of the basic Regulation.

• (62) In sum, financial institutions in China operate in a general legal environment that directs them to align themselves with the GOC's industrial policy objectives when making financial decisions ³⁸.

• (63) In addition, even if the State-owned banks were not to be considered as public bodies, the Commission found that those banks as well as privately owned banks would also be considered entrusted and directed by the GOC to carry out functions normally vested in the government ³⁹, within the meaning of Article 3(1)(a)(iv) of the basic Regulation in view of the normative framework described before in recitals (51) and (52). Thus, their conduct would be attributed to the GOC in any event. For the same reasons, the loans granted by other financial institutions to companies in the paper sector would be attributed to the GOC.

3.3.1.3.   Benefit

• (64) In the absence of cooperation from the Chinese producers, the Commission had no company-specific information on which the amount of subsidy conferred during the review investigation period could be calculated.

• (65) In the original and review investigations, the Commission established that the paper industry benefited from preferential loans. The Commission established the amount of benefit to be the difference between the amount that the company paid on the government loan and the amount that the company would have paid for a comparable commercial loan obtainable on the market. This amount was then allocated over the total turnover of the cooperating exporting producers. The ad valorem subsidy amount established under this measure was 5,37 % for the APP Group and 1,26 % for the Chenming Group.

• (66) In the current investigation, the Commission, on the basis of available information, found no indication that the preferential lending for producers of coated fine paper in the PRC ceased to continue.

• (67) The Commission notes that the applicants in its request and subsequent submissions provided examples of further loans received by the exporting producers including during the review investigation period, in particular:

• — the APP Group benefitted from support in the form of preferential financing by Chinese Banks. In May 2018, Gold East Paper (Jiangsu) issued the "IFC-Singuang One Belt and One Road Asset Supported Special Plan". The related accounts receivable are used as the basic assets. As of 31 December 2018, monetary funds with a book value of RMB 114 608 963 were deposited into the account of the China National Financial Securities One Belt One Road Assets Special Plan ⁴⁰. At the end of 2019 and 2020, those funds amounted to RMB 2 659 400 562 and RMB 86 455 882, respectively ⁴¹. These funds correspond to 0,01%, 26% and 0,01% of Gold East Paper’s annual turnover of RMB 9,1 billion in 2018, RMB 10 billion in 2019 and RMB 9,1 billion in 2020.

• — Based on its Annual Reports, in 2018, Jiangxi Chenming Paper Co., Ltd., a subsidiary of the Chenming Group, started a market-based and legal debt-to-share business with China Zheshang Bank in order to lower its gearing ratio, optimise its capital structure and promote its comprehensive capital strength. As a result of this, Jinagxi Chenming's capital increased by RMB 500 million ⁴². In 2020, the Chenming Group received a short-term loan from Guangdong Nanyue Bank worth RMB 1 232 million ⁴³.

• — Private banks also provided credit lines to CFP producers during the period under consideration. For instance, in 2018, 2019 and 2020, the Chenming Group received bank credits amounting to RMB 81 750 million, RMB 82 720 million and RMB 83 165 million, respectively ⁴⁴.

• (68) In the absence of cooperation from the GOC and the Chinese exporting producers, the Commission had no company-specific information on the basis of which to establish that the loans identified by the applicants had been provided under normal market conditions. However, on the basis of the information available, the Commission found that the Chinese exporting producers continued benefitting from preferential loans. Indeed, the paper industry continued to be identified as an ‘encouraged industry’. In addition, in recent investigations the Commission established that the preferential loans for encouraged industries had been provided at interest rates well below the ones that would have been charged in the absence of distortions on the financial market, including the absence of valid credit ratings ⁴⁵.

• (69) Therefore, without the need to quantify the exact amount of subsidisation conferred through preferential lending, the Commission concluded that the GOC continued to provide preferential loans at favourable interest rates in line with the policy stipulated in specific plans and directives referring to the paper industry. The direct transfer of funds in the form of preferential loans continued to be available to companies in the paper industry during the review investigation period.

3.3.1.4.   Specificity

• (70) As demonstrated in recitals (66) to (69) above, several legal documents which are specifically targeted at companies in the paper sector direct the financial institutions. On the basis of these documents it is demonstrated that the financial institutions only provide preferential lending to a limited number of industries which comply with the relevant policies of the GOC.

• (71) The Commission therefore concluded that the subsidies in the form of preferential lending are not generally available but are specific within the meaning of Article 4(2)(a) of the basic Regulation. Moreover there was no evidence submitted by any of the interested parties suggesting that the preferential lending is based on objective criteria or conditions under Article 4(2)(b) of the basic Regulation.

3.3.1.5.   Conclusion

• (72) In light of the above, the Commission concluded that the coated fine paper industry continued to benefit from subsidies in the form of preferential loans during the RIP. In view of the existence of financial contributions, a benefit to the exporting producers and specificity, this subsidy scheme continues to be considered countervailable.

3.3.2.   Income tax Programmes

3.3.2.1.   Preferential tax policies for companies that are recognised as high or new technology enterprises

• (73) The Commission in the original investigation established that the ad valorem subsidy amount with regard to this subsidy was 1,22% for the APP Group and 0,58% for the Chenming Group.

• (74) This subsidy allows a company that applies successfully for the Certificate of High and New Technology Enterprise to benefit from a reduced income tax rate of 15%, compared to the ordinary rate of 25%.

3.3.2.1.1.   Legal Basis

• (75) The subsidy is provided as preferential tax treatment in Article 28 of the Enterprise Income Tax Law of the PRC (n. 63 promulgated on 16 March 2007) ⁴⁶, which provides that “the rate of entreprise income tax of high and new technological entreprises needing special support of the State shall be reduced to 15%”. Article 93 of the Implementation Rules for the Enterprise Income Tax Law clarifies that:

“ The important high and new technology enterprises to be supported by the state as referred to in Clause 2 of Article 28 of the Enterprise Income Tax Law refer to the enterprises which own key intellectual property rights and satisfy the following conditions:

• 1. Complying with the scope of the Key State Supported High and New Technology Areas;

• 1. The proportion of the research and development expense in the sales revenue shall be no less than the prescribed proportion;

• 1. The proportion of the income from high-tech technology/product/service in the enterprise’s total revenue shall be no less than the prescribed proportion;

• 1. The proportion of the technical personnel in the enterprise’s total employees shall be no less than the prescribed proportion;

• 1. Other conditions prescribed in the Measures for the Administration of High-Tech Enterprise Identification.

Measures for the Administration of High-Tech Enterprise Identification and Key State Supported High and New Technology Areas shall be jointly formulated by the technology, finance and taxation departments under the State Council and come into effect after approved by State Council ”  ^{47 ,  48}.

3.3.2.1.2.   Eligibility

• (76) Article 10 of the Administrative Measures for the determination of High and New Tech Enterprises lists the eligibility criteria for the companies to benefit from this reduced tax income rate. If the company fulfils all the conditions set out in Article 10, it has to submit an application to the relevant authorities according to the procedure in Article 11 of the same Act.

3.3.2.1.3.   Practical implementation

• (77) Any company that intends to apply for this reduced tax income rate has to proceed to an on-line application to the local Science and Technology Bureau that will make a preliminary examination. Subsequently, the local Science and Technology Bureau will make a recommendation to the provincial Science and Technology department. Before taking any decision on the issuance of the certificate of High and New Tech Enterprise, the latter can also decide to carry out an investigation directly at the premises of the applicants.

3.3.2.1.4.   Findings of the original, previous expiry review and the current investigations.

• (78) As found in the original investigation, the reduced tax income rate should be considered a subsidy within the meaning of Article 3(1)(a)(ii) and Article 3(2) of the basic Regulation in the form of foregone government revenue, which confers a benefit upon the recipient companies. This subsidy remains specific within the meaning of Article 4(2)(a) of the basic Regulation given that the legislation itself, pursuant to which the granting authority operates, limited the access to this reduced tax income rate only to certain enterprises and industries classified as encouraged, such as those belonging to the coated fine paper industry.

• (79) The Commission did not have any indications or evidence suggesting that the coated fine paper industry stopped benefitting from this reduced tax income rate or that the subsidies and subsidy programmes at issue will be terminated in the near future. Therefore, on the basis of information provided by the applicants ⁴⁹ in the request, as well as recent investigations ⁵⁰ and publicly available information ⁵¹, the Commission established that the coated fine paper industry continued to benefit from preferential tax policies for companies that are recognised as high or new technology enterprises (and thus including the coated fine paper industry).

• (80) The expiry review request contained additional evidence that certain Chinese CFP producers continued to benefit from numerous tax exemptions and refunds.

• (81) In 2018, 2020 and the first half of 2021, the Chenming Group reported having received tax rebates amounting to approximately RMB 61 million, RMB 111 million and RMB 1 million, respectively ⁵².

• (82) In 2018, 2019, 2020 and the first half of 2021, the Chenming Group reported under the section "Government grants" tax refunds amounting to RMB 20 million, RMB 80 million, RMB 72 million and RMB 9 million, respectively ⁵³.

• (83) The combined value of these tax rebates / refunds amounts to approximately RMB 81 million, RMB 192 million, RMB 72 million and RMB 10 million, which represent 0,28%, 0,63%, 0,23% and 0,06% of the company's revenue and 3,32%, 11,56%, 4,19% and 0,51% of its net profit for the years 2018, 2019, 2020 and the first half of 2021, respectively ⁵⁴. Similarly, in 2020, Gold East Paper (Jiangsu) reported tax refunds and deductions amounting to RMB 68 million, which represents 0,73% of its revenue and 2,18% of its profit for that year ⁵⁵. Consequently, even though it was impossible to determine based on publicly available data under which specific tax exemption or refund those benefits were provided, it is clear that the benefits in question continued to be provided and were significant.

• (84) In the absence of cooperation from the GOC and the Chinese exporting producers, the Commission had no company-specific information on the basis of which it could calculate the amount of subsidy conferred during the review investigation period. However, in view of the findings of the previous investigations referred to in recital (78) and the information contained in the expiry review request as referred to in recitals (79) to (83), and absent any indication to the contrary, the Commission concluded that CFP producers continued to be subsidised.

3.3.2.1.5.   Conclusion

• (85) In light of the above, the Commission concluded that the coated fine paper industry continued to benefit from subsidies in the form of preferential tax policies for companies recognised as high or new technology enterprises during the RIP. In view of the existence of financial contributions, a benefit to the exporting producers and specificity, this subsidy scheme continues to be considered countervailable.

3.3.2.2.   Preferential tax policies for research & development

• (86) The Commission in the original investigation established the ad valorem subsidy amount with regard to this preferential tax treatment at 0,02 % for the APP Group and 0,05 % for the Chenming Group.

• (87) The tax offset for research and development entitles companies to preferential tax treatment for their R & D activities in certain high technology priority areas determined by the State when certain thresholds for R & D spending are met.

• (88) More specifically, R & D expenditures incurred to develop new technologies, new products and new techniques, which do not form intangible assets and are accounted for in the current term profit and loss, are subject to an additional 75% deduction after being deducted in full in light of the actual situation. Where the above-mentioned R & D expenditures form intangible assets, they are subject to amortization based on 175% of the intangible asset costs. Since January 2021, the additional pre-tax deduction for R & D expenses was increased to 100% ⁵⁶.

3.3.2.2.1.   Legal Basis

• (89) The preferential tax treatment is provided for in Article 30(1) of the Enterprise Income Tax Law of the PRC (n. 63 promulgated on 16 March 2007), Article 95 of the Regulations on the Implementation of Enterprise Income Tax Law of the PRC, as well as the following notices:

• — Notice of the Ministry of Finance, the State Administration of Taxation and the Ministry of Science and Technology on Improving the Policy of Pre-tax Deduction of R & D Expenses (Cai Shui [2015] No 119);

• — Circular on Raising the Proportion of Pre-tax Super Deduction of Research and Development Expenses (Cai Shui [2018] No 99);

• — Announcement [2015] No 97 of the State Administration of Taxation on Relevant Issues concerning Policies of Additional Pre-tax Deduction of Research and Development Expenses of Enterprises;

• — Announcement 2017 No 40 of the State Administration of Taxation on Issues Concerning the Eligible Scope of Calculation of Additional Pre-tax Deduction of Research and Development Expenses; and

• — The 2016 Catalogue of High-tech Fields Supported by the State ⁵⁷.

3.3.2.2.2.   Eligibility

• (90) This preferential tax treatment provides a benefit to companies that are recognised as carrying out R & D projects. Only R & D projects of companies of New and High Tech Sectors Receiving Primary Support from the State and projects listed in the Guide to Key Fields of High Tech Industrialization under the current Development Priority promulgated by the National Development and Reform Commission are eligible for the scheme.

3.3.2.2.3.   Practical implementation

• (91) Any company that intends to apply for this preferential tax treatment needs to file detailed information about the R & D projects with the local Science and Technology Bureau. After examination, the tax bureau will issue the notice of approval. The amount subject to corporate income tax is decreased by 50 % of actual expenses for approved projects.

3.3.2.2.4.   Findings of the original, previous expiry review and current investigation

• (92) As found in the original ⁵⁸ and in the previous review ⁵⁹ investigations, the preferential tax treatment should be considered a subsidy within the meaning of Article 3(1)(a)(ii) and Article 3(2) of the basic Regulation in the form of foregone government revenue which confers a benefit upon the recipient companies. This subsidy remains specific within the meaning of Article 4(2)(a) of the basic Regulation given that the legislation itself, pursuant to which the granting authority operates, limited the access to this scheme only to certain enterprises and industries classified as encouraged, such as those belonging to the coated fine paper industry.

• (93) Neither the GOC nor the exporting producers provided evidence suggesting that the coated fine paper industry stopped benefitting from this preferential tax treatment or that that the subsidies and subsidy programmes at issue will be terminated in the near future. The Commission, on the basis of information provided by the applicants ⁶⁰ in the request, established that the coated fine paper industry continued to benefit from preferential tax policies for R & D during the RIP. Indeed, the preferential tax treatment continues to provide a benefit to companies which are formally recognised as High and New Technology Enterprises.

• (94) In the absence of cooperation from the GOC and the Chinese exporting producers, the Commission had no company-specific information on the basis of which it could calculate the amount of subsidy conferred during the RIP. However, in view of the findings reached in the previous investigations referred to in recital (92), the overall tax benefits found by the applicants referred to in recitals (79) to (83) and absent any information to the contrary, the Commission considered that the CFP producers continued to be subsidised during the review investigation period.

3.3.2.2.5.   Conclusion

• (95) In light of the above, the Commission concluded that the coated fine paper industry continued to benefit from subsidies in the form of preferential tax policies for research and development during the RIP. In view of the existence of financial contributions, a benefit to the exporting producers and specificity, this subsidy scheme continues to be considered countervailable.

3.3.2.3.   Dividend tax exemption between qualified resident entreprises

• (96) In the original investigation, the Commission established the ad valorem subsidy amount with regard to this scheme at 1,34 % for the APP Group and 0,21 % for the Chenming Group.

• (97) The dividend tax exemption concerns resident enterprises in the PRC which are shareholders in other resident enterprises in the PRC. The former are entitled to a tax exemption on income from certain dividends paid by the latter.

3.3.2.3.1.   Legal Basis

• (98) This dividend tax exemption is provided for in Article 25 and Article 26 of the Enterprise Income Tax Law of the PRC and further explained in Article 83 of the Regulations on the Implementation of Enterprise Income Tax Law of the PRC, Decree n. 512 of the State Council of the PRC, promulgated on 6 December 2007.

• (99) The legal basis for the programme is Article 26(2) of the EIT Law, along with the Implementation Rules for the Enterprise Income Tax Law of the PRC.

• (100) Article 25 of the EIT, which stands as a chapeau for Chapter IV ‘Preferential Tax Policies’, provides that ‘The State will offer income tax preferences to Enterprises engaged in industries or projects the development of which is specially supported and encouraged by the State’. Furthermore, Article 26(2) specifies that the tax exemption is applicable to income from equity investments between ‘eligible resident enterprises’, which appears to limit its scope of application to only certain resident enterprises.

3.3.2.3.2.   Eligibility

• (101) This dividend tax exemption provides a benefit to all resident companies which are shareholders in other resident enterprises in China.

• (102) This subsidy is specific within the meaning of Article 4(2)(a) of the basic Regulation as the legislation itself limits the application of this exemption only to qualified resident enterprises which have the major support of, and the development of which is encouraged by the State.

3.3.2.3.3.   Practical implementation

• (103) The companies may make use of this dividend tax exemption directly through their tax return.

3.3.2.3.4.   Findings of the current investigation

• (104) In the original ⁶¹ and previous review ⁶² investigations, the Commission found that this dividend tax exemption should be considered a subsidy within the meaning of Article 3(1)(a)(ii) and Article 3(2) of the basic Regulation in the form of foregone government revenue which confers a benefit upon the recipient companies. This subsidy remains specific within the meaning of the Article 4(2)(a) of the basic Regulation given that the legislation itself, pursuant to which the granting authority operates, limited the access to this scheme only to resident enterprises in the PRC receiving dividend income from other resident enterprises in the PRC, as opposed to those enterprises which invest in foreign enterprises.

• (105) There was no evidence at the Commission’s disposal suggesting that the coated fine paper industry stopped benefitting from this dividend tax exemption or that that the subsidies and subsidy programmes at issue will be terminated in the near future. The Commission, on the basis of information provided by the applicants in the request ⁶³ as well as recent investigations ⁶⁴, established that the coated fine paper industry continues to benefit from the dividend tax exemption.

• (106) In the absence of cooperation from the GOC and the Chinese exporting producers, the Commission had no company-specific information on the basis of which to calculate the amount of subsidy conferred during the RIP. However, in view of the previous findings reached in the previous investigations referred to in recital (104) the overall tax benefits found by the applicants referred to in recitals (79) and (100), and absent any information to the contrary, the Commission considered that the CFP producers continued to be subsidised during the review investigation period.

3.3.2.3.5.   Conclusion

• (107) In light of the above, the Commission concluded that the coated fine paper industry continued to benefit from subsidies in the form of dividend tax exemption between qualified resident enterprises during the RIP. In view of the existence of financial contributions, a benefit to the exporting producers and specificity, this subsidy scheme continues to be considered countervailable.

3.3.3.   Indirect Tax and Import Tariff Programmes

3.3.3.1.   Value-Added Tax (VAT) and tariff exemptions on imported equipment

• (108) In the original investigation, the Commission established the ad valorem subsidy amount with regard to this measure at 1,17% for the APP Group and 0,61% for the Chenming Group.

• (109) This measure provides benefits in the form of VAT exemption and duty-free imports of capital goods to the Foreign Invested Enterprises (‘FIEs’) or domestic companies which are able to obtain the Certificate of State-Encouraged projects issued by the Chinese authorities in line with relevant investment, tax and customs-related legislation.

3.3.3.1.1.   Legal Basis

• (110) The VAT and tariff exemptions are based on a set of legal provisions, i.e. Circular of the State Council on Adjusting Tax Policies on Imported Equipment No 37/1997, Announcement of the Ministry of Finance, the General Administration of Customs and the State Administration of Taxation [2008] No 43, Notice of the NDRC on the relevant issues concerning the Handling of Confirmation letter on Domestic or Foreign-funded Projects encouraged to develop by the State No 316/2006 dated 22 February 2006 and on the Catalogue on non-duty-exemptible Articles of importation for either FIEs or domestic enterprises-2008.

3.3.3.1.2.   Eligibility

• (111) Eligibility is limited to applicants, either FIEs or domestic enterprises, which are able to obtain the Certificate of State-Encouraged projects.

3.3.3.1.3.   Practical implementation

• (112) According to the Notice of the NDRC on the relevant issues concerning the Handling of Confirmation letter on Domestic or Foreign-funded Projects encouraged to develop by the State, No 316/2006, dated 22 February 2006, Article I.1. foreign investment projects complying ‘with encouraged foreign invested projects with technique transfer in ‘Guiding Catalogue of Foreign Investment Industries’ and ‘Industrial Catalogue for Foreign Investment in the Central and Western Regions’ are exempted from custom duties as well as imported value-added taxes, except those listed in the catalogue of ‘Catalogue of Import Commodities Not Enjoying Tax Exemption of the Foreign Invested Projects’. The Projects Confirmation Letter for foreign investment projects of the encouragement category with the total investment of USD 30 million or more shall be issued by the NDRC. The Project Confirmation Letter for foreign investment projects of the encouragement category with the total investment of less than USD 30 million shall be issued by the commissions or economic municipalities at the provincial level. Once they have received the Project Confirmation Letter of the encouragement category, the companies present the certificates and other application documents to their local customs authorities in order to be eligible for customs and VAT exemption on equipment imports.

3.3.3.1.4.   Findings of the original, previous expiry review and current investigation

• (113) In the original ⁶⁵,the previous review ⁶⁶ and in other investigations ⁶⁷, the Commission found that the VAT and tariff exemptions should be considered a subsidy within the meaning of Article 3(1)(a)(ii) and Article 3(2) of the basic Regulation in the form of foregone government revenue which confers a benefit upon the recipient companies. This subsidy remains specific within the meaning of the Article 4(2)(a) of the basic Regulation given that the legislation itself, pursuant to which the granting authority operates, limited the access to this scheme only to enterprises that invest under specific business categories defined exhaustively in law (i.e. catalogue for guidance of industries for foreign investment and catalogue of key industries, products and technologies which the state currently encourages development).

• (114) No evidence was provided suggesting that the coated fine paper industry stopped benefitting from these VAT and tariff exemptions or that that the subsidies and subsidy programmes at issue will be terminated in the near future. The Commission, on the basis of facts available and in particular the Commission's conclusions about this subsidy in past investigations ⁶⁸, established that the coated fine paper industry continues to benefit from a VAT and tariff exemption on imported equipment.

• (115) In the absence of cooperation from the GOC and the Chinese exporting producers, the Commission had no company-specific information on the basis of which it could calculate the amount of subsidy conferred during the RIP. However, in view of the findings reached in the previous investigations referred to in recital (113), the overall tax benefits found by the applicants referred to in recital (112) , and absent any information to the contrary, the Commission considered that the CFP producers continued to be subsidised during the review investigation period.

3.3.3.1.5.   Conclusion

• (116) In light of the above, the Commission concluded that the coated fine paper industry continued to benefit from subsidies in the form of VAT and tariff exemptions on imported equipment during the RIP. In view of the existence of financial contributions, a benefit to the exporting producers and specificity, this subsidy scheme continues to be considered countervailable.

3.3.3.2.   VAT rebates on domestically produced equipment

• (117) In the original investigation, the Commission established the ad valorem subsidy amount with regard to this subsidy at 0,03 % for the APP Group and 0,05 % for the Chenming Group.

• (118) This measure provides benefits in the form of VAT rebates paid for purchase of domestically produced equipment by FIEs.

3.3.3.2.1.   Legal Basis

• (119) VAT rebates are based on a set of legal provisions:

• — Provisional Measures for the Administration of Tax Refunds for Purchases of Domestically manufactured Equipment by FIEs,

• — Trial Measures for Administration of Tax Rebate from the Purchase of Chinese-made Equipment for Foreigninvested Projects, and

• — Notice of the Ministry of Finance and the State Administration of Taxation on the Cancellation of the Rebate Policy for Domestic Equipment Purchased by Foreign-invested Enterprises.

3.3.3.2.2.   Eligibility

• (120) Eligibility is limited to FIEs that purchase domestically-manufactured equipment and fall under the encouraged category.

3.3.3.2.3.   Practical implementation

• (121) The programme is aimed to refund VAT paid for purchase of domestically produced equipment by FIE if the equipment does not fall into the Non-Exemptible Catalogue and if the value of the equipment does not exceed the total investment limit on an FIE according to the ‘trial Administrative measures on Purchase of Domestically Produced Equipment’.

• (122) In the original investigation ⁶⁹, all cooperating producers benefited from this measure.

3.3.3.2.4.   Findings of the original, previous expiry review and current investigation

• (123) In the original and previous review ⁷⁰ investigation, the Commission found that the VAT rebates should be considered a subsidy within the meaning of Article 3(1)(a)(ii) and Article 3(2) of the basic Regulation in the form of foregone government revenue which confers a benefit upon the recipient companies. This subsidy remains specific within the meaning of Article 4(4)(b) of the basic Regulation, given that the subsidy is contingent upon the use of domestic over imported goods.

• (124) In the current investigation, the applicants provided evidence that, according to the Mass Entrepreneurship and Innovation Preferential Subsidies Policy, VAT rebates on FIE purchases of Chinese-made equipment are one of 83 subsidies available to important industries ⁷¹.

• (125) Neither the GOC nor the exporting producers provided evidence suggesting that the coated fine paper industry stopped benefitting from these VAT rebates and tariff exemptions or that that the subsidies and subsidy programmes at issue will be terminated in the near future. The Commission, on the basis of recent investigations ⁷², established that the coated fine paper industry continues to benefit from VAT rebates for the purchase of domestically-produced equipment.

• (126) In the absence of cooperation from the GOC and the Chinese exporting producers, the Commission had no company-specific information on the basis of which it could calculate the amount of subsidy conferred during the RIP. However, in view of the previous findings reached in the previous investigations referred to in recital (123), the overall tax benefits found by the applicants referred to in recital (124) above and absent any information to the contrary, the Commission considered that the CFP producers continued to be subsidised during the review investigation period.

3.3.3.2.5.   Conclusion

• (127) In light of the above, the Commission concluded that the coated fine paper industry continued to benefit from subsidies in the form of VAT rebates on domestically produced equipment during the RIP. In view of the existence of financial contributions, a benefit to the exporting producers and specificity, this subsidy scheme continues to be considered countervailable.

3.3.4.   Grant Programmes

3.3.4.1.   Introduction

• (128) The Commission in the original investigation established that the coated fine paper industry benefited from various grant programmes. In particular, the Commission in the original investigation assessed five programmes reported by the cooperating exporting producers and found all of them countervailable. The Commission also took note of six further programmes reported by the cooperating exporting producers but did not assess them in view of the small amount of benefits involved.

3.3.4.2.   Findings of the original, previous expiry review and current investigation

• (129) In the original ⁷³, the previous review ⁷⁴ and other investigations ⁷⁵, the Commission found that the coated fine paper producers have benefited as part of the GOC’s plans to support the paper industry from several grants which should be considered a subsidy within the meaning of Article 3(1)(a)(i) and Article 3(2) of the basic Regulation in the form of provision of funds which confers a benefit upon the recipient companies. Most recently the US authorities confirmed in the Sunset Review concerning US imports of uncoated fine paper (UFP) (‘UFP from China’) the continued provision of grants ⁷⁶.

• (130) Neither the GOC nor the exporting producers provided evidence suggesting that the coated fine paper industry stopped benefitting from these grants or that that the subsidies and subsidy programmes at issue will be terminated in the near future. The Commission, on the basis of information provided by the applicants ⁷⁷ in the request as well as recent investigations ⁷⁸, established that the coated fine paper industry continues to benefit from grants as an encouraged industry.

• (131) According to the applicants’ request, Chinese CFP producers continue to benefit from grants. For instance, in 2019 and 2020, the Chenming Group received Government awards amounting to RMB 228 million and RMB 800 000, which represent 0,75% and 0,003% of the Group's revenue and 13,76% and 0,05% of its profit for those periods, respectively ⁷⁹.

• (132) On the basis of the above, the Commission concluded that the GOC continues to provide various grants to the coated fine paper industry and that producers of coated fine paper in the PRC continue to benefit from these grants, without the need to quantify precisely the amount of benefits conferred. Those grants are deemed specific within the meaning of Article 4(2) of the basic Regulation and they also appear to have been granted on an ad hoc basis.

3.3.4.3.   Conclusion

• (133) In light of the above, the Commission concluded that the coated fine paper industry continued to benefit from subsidies in the form of grants during the RIP. In view of the existence of financial contributions, a benefit to the exporting producers and specificity, this subsidy scheme continues to be considered countervailable.

3.3.5.   Government Provision of Goods and Services for less than adequate remuneration: provision of land

• (134) In the original investigation the Commission established that the coated fine paper industry in the PRC benefited from provision of land and more specifically the land-use rights (‘LURs’) at less than adequate remuneration.

• (135) The amount of subsidisation found in the original investigation with regard to this measure was established at 2,81% for APP group and 0,69% for the Chenming group.

3.3.5.1.   Legal Basis

• (136) The applicants provided evidence in the request that the GOC continued providing land-use rights to the coated fine paper industry for less than adequate remuneration. The legal basis for this claim are the following documents [^ntr80-L_2023207EN.01000101-E0080]:

• — the Property Law,

• — the Land Administration Law,

• — the Law on Urban Real Estate Administration,

• — the Interim Regulations Concerning the Assignment and Transfer of the Right to the Use of the State-owned Land in the Urban Areas,

• — the Regulation on the Implementation of the Land Administration Law, and

• — the Provisions on the Assignment of State-Owned Construction Land-Use Right through Bid Invitation, Auction and Quotation, No 39, dated 28 September 2007.

3.3.5.2.   Practical implementation