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

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	2024/1915	12.7.2024

THE EUROPEAN COMMISSION,

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

Having regard to Regulation (EU) 2016/1036 of the European Parliament and of the Council of 8 June 2016 on protection against dumped imports from countries not members of the European Union ¹ (‘the basic Regulation’), and in particular Article 7 thereof,

After consulting the Member States

Whereas:

1. PROCEDURE

1.1.   Initiation

• (1) On 13 November 2023, the European Commission (‘the Commission’) initiated an anti-dumping 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 5 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 29 September 2023 by the ‘Coalition to Restore a Level Playing Field in the EU Mobile Access Equipment Sector’ (‘CMAE’) (‘the complainant’). The complaint was made on behalf of the Union industry of MAE in the sense of Article 5(4) of the basic Regulation. The complaint contained evidence of dumping and of resulting injury that was sufficient to justify the initiation of the investigation.

1.2.   Registration of imports

• (3) On 15 January 2024 and on 12 March 2024, the complainant submitted a request for registration of imports of MAE originating in the PRC pursuant to Article 14(5) of the basic Regulation.

• (4) In its submission of 22 January 2024 and of 21 May 2024, the Chinese Chamber of Commerce for import and export of Machinery and Electrical products (CCCME), empowered to represent eight exporting producers ³ in this investigation, submitted comments on the requests by the complainant to register the imports. It considered that the requests did not contain sufficient evidence justifying the imports registration. It mainly considered that the imports statistics were not reliable since CN codes contained other products, that in any event the increase was not substantial, and influenced by the seasonality of demand. It also considered that the demand-driven MAE market does not permit unexpected additional imports or stock piling.

• (5) The Commission rejected these comments of the CCCME since the second registration request submitted by the complainant on 12 March 2024 contained sufficient evidence regarding the increase of imports post initiation, including when taking into account the seasonality of demand.

• (6) The Commission considered the CCCME’s comments unsubstantiated. The analysis of the volumes of the imports after the initiation took into account the product concerned only and the effect of the seasonality was addressed by comparing the same periods of the year before and after the initiation. Based on the information in the requests and analysis of the import statistics before and after the initiation, the Commission concluded that there was sufficient evidence to justify registration of imports.

• (7) In accordance with Article 14(5) of the basic Regulation, by Commission Implementing Regulation (EU) 2024/1450 ⁴, the Commission therefore decided that imports of the product concerned should be made subject to registration for the purpose of ensuring that, should the investigation result in findings leading to the imposition of anti-dumping duties, those duties can, if the necessary conditions are fulfilled, be levied retroactively on the registered imports in accordance with the applicable legal provisions.

1.3.   Interested parties

• (8) 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.

• (9) 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. The Commission received comments that were addressed in the respective sections.

1.4.   Comments by parties after the initiation

• (10) Comments were submitted by CCCME and by the complainant.

1.4.1.   Comments by the CCCME

• (11) On 22 January 2024, the CCCME made a submission on different aspects of the investigation. The comments on specific aspects of the investigation were addressed where appropriate in the specific sections of this Regulation.

• (12) The CCCME also submitted comments regarding the complaint (including matters pertaining to injury and causation). These comments relating to the preliminary evidence in the complaint, arrived more than one month after the deadline of 37 days set in Section 5.2 of the Notice of Initiation and could not be thus considered. The Commission however recalled that the requirements for initiation of the investigation were met, i.e., that the adequacy and accuracy of the evidence presented by the complainant were considered to be sufficient. It also recalled that the legal standard of evidence required for a complaint (‘sufficient evidence’) makes it clear that the quantity and quality of information in the complaint is not the same as the one available at the end of an investigation. Parties have in any event the opportunity to comment on the preliminary findings including matters pertaining to injury and causality after the disclosure of the provisional findings.

• (13) The CCCME also argued that it could not fully exercise its right of defence because the evidence made available in the complaint was heavily redacted and contained only rough estimates, without sufficiently indicating the cause for it. It requested thus the Commission to ask the complainant to provide a sufficiently detailed open version.

• (14) The Commission first noted that CCCME in its own name had no rights of defence as, not being a representative association within the meaning of the basic Regulation, it could not be considered as an interested party within the meaning of that Regulation. As far as rights of defence of the exporting producers it represented were concerned, the Commission considered that the version open for inspection by interested parties of the complaint contained all the essential evidence and non-confidential summaries of data provided under confidential cover in order for interested parties to exercise their right of defence throughout the proceeding. It also noted that the request of the CCCME arrived more than two months after the proceeding was initiated, and only contained mere statements but no substantiated claim on a concrete piece of evidence that was missing. The Commission thus rejected the claim.

1.4.2.   Comments by the complainant

• (15) The complainant provided comments on the submission of the CCCME. It considered that the different comments should not be considered since they arrived after the procedural deadlines set up in the Notice of Initiation. It provided additional comments on the product scope, significant distortions and injury aspects of the investigation that were addressed where appropriate in the respective sections below.

1.5.   Sampling

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

1.5.1.   Sampling of Union producers

• (17) 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.

• (18) 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 17(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.

1.5.2.   Sampling of importers

• (19) To decide whether sampling was necessary and, if so, to select a sample, the Commission asked unrelated importers to provide the information specified in the Annex 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.

1.5.3.   Sampling of exporting producers in the PRC

• (20) To decide whether sampling is 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.

• (21) Eighteen exporting producers in the country concerned provided the requested information and agreed to be included in the sample. In accordance with Article 17(1) of the basic Regulation, the Commission selected a sample of four on the basis of the largest representative volume of exports to the Union which could reasonably be investigated within the time available. In accordance with Article 17(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.

• (22) The Coalition to Restore a Level Playing Field in the EU Mobile Access Equipment Sector (CMAE) argued that the Commission should ensure the representativeness of the sample by considering factors beyond the volume of exports like the ownership of the exporters, domestic sales and production capacity. The Commission in its analysis followed the provisions of Article 17(1) and focussed on the most relevant criteria to select the sample and, therefore, rejected these arguments.

• (23) In view of the above, the Commission maintained the original sample accounting for 68,91 % of the estimated total export volume of MAE to the Union from the People’s Republic of China in the investigation period.

• (24) On 15 May 2024, JLG was informed that the Commission intended to apply Article 18 of the basic Regulation because during the verification of the questionnaire reply it appeared that a part of the reply was based on a system whose data could not be accessed in real time. The Commission could not ascertain whether the information used to prepare the questionnaire was downloaded before the initiation of the investigation or not. As a result, the Commission was unable to ascertain that the submitted information in the questionnaire reply derived from the accounting system of the company, and that the information accurately reflected in particular the consumption rates of the input materials.

• (25) On 23 May 2024, Sinoboom was informed that the Commission intended to apply Article 18 of the basic Regulation to the data that could not be verified in its questionnaire reply. During the verification visit an issue relating to the reporting of the factors of production, with regard to self-produced and purchased structural parts emerged. The Commission provisionally concluded that the data related to costs submitted by Sinoboom was not an accurate reflection of the costs actually incurred, in particular with regard to the self-produced parts.

• (26) Both JLG and Sinoboom submitted comments on the intended application of Article 18 of the basic Regulation. JLG disagreed with the application of best facts available on the basis of Article 18 and requested a hearing with the Hearing Officer. On 6 June 2024, in a meeting with the case team some clarifications were provided by JLG and, provisionally, it was decided to partially apply best facts available to the construction of the normal value of JLG. Their export prices could still be used for the calculation of the dumping margin as these were not affected by the issue described above. A final decision will be taken at definitive stage after further investigation, taking also into account the views of the Hearing Officer.

• (27) On 31 May 2024, Sinoboom submitted comments regarding the application of Article 18 but these did not change the provisional conclusion to apply best facts available as regards certain factors of production. Their export prices could still be used for the calculation of the dumping margin. A final decision about the scope of the application of facts available will be taken at definitive stage.

1.5.4.   Questionnaire replies and verification visits

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

• (29) Furthermore, the complainant provided in the complaint sufficient evidence of raw material distortions in the PRC regarding the product concerned. Therefore, as announced in the Notice of Initiation, the investigation covered those raw material distortions to determine whether to apply the provisions of Article 7(2a) and 7(2b) of the basic Regulation with regard to the PRC. For this reason, the Commission sent additional questionnaires in this regard to the Government of the People’s Republic of China.

• (30) The Commission sent questionnaires to the three sampled Union producers, the complainant, the sampled exporting producers, the known importers and to users. The same questionnaires were made available online on the day of initiation.

• (31) The Commission sought and verified all the information deemed necessary for a provisional determination of dumping, resulting injury and Union interest. Verification visits pursuant to Article 16 of the basic Regulation were carried out at the premises of the following parties:

• (a) Union producers and its association:

• — Haulotte Arges (Romania)

• — Haulotte Group (France)

• — Manitou (France)

• — Coalition to Restore a Level Playing Field in the EU Mobile Access Equipment Sector

• (b) Exporting producers in the PRC:

• — Hunan Sinoboom Intelligent Equipment Co., Ltd. (‘Sinoboom’)

• — Oshkosh JLG (Tianjin) Equipment Technology Co., Ltd. (‘JLG’)

• — Terex (Changzhou) Machinery Co., Ltd. (‘Terex’)

• — Zhejiang Dingli Machinery Co., Ltd. (‘Dingli’)

1.6.   Investigation period and period considered

• (32) The investigation of dumping 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’).

2. PRODUCT UNDER INVESTIGATION

2.1.   Product under investigation

• (33) The product under investigation is mobile access equipment (‘MAE’) designed for the lifting of persons, self-propelled, with a maximum working height of 6 meters 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: 8427101010, 8427201910, 8428909020, 8431200060 and 8431390010).

• (34) 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.

2.2.   Product concerned

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

2.3.   Like product

• (36) The investigation showed that the following products have the same basic physical and technical characteristics as well as the same basic uses:

• — the product concerned;

• — the product produced and sold on the domestic market of the PRC;

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

• (37) The Commission decided at this stage that those products are therefore like products within the meaning of Article 1(4) of the basic Regulation.

2.4.   Claims regarding the product scope

2.4.1.   Electrical and hybrid MAE

• (38) After initiation, the CCCME submitted that the product scope included a too broad variety of products such as booms or scissors, electrical and hybrid MAE or MAE with other type of propulsion (internal combustion engine (ICE), such as diesel, LPG, propane etc.) and that these products were not all alike.

• (39) The CCCME mainly argued that there were differences in physical and technical characteristics between the conventional ICE MAE and electric or hybrid MAE – because of the different propulsion, the two categories had different mechanical components and the electric or hybrid MAE did not have any of the technical functions of the conventional ICE MAE which was very different in terms of power and capacity. There were in CCCME’s view differences with regards to the weight distributions and design, and in addition, conventional and electrical MAE also had different technical specificities such a different autonomy, lifting capacity and mobility. Furthermore, the production process was different as well as the main uses: conventional MAE are used outdoor while the electrical or hybrid MAE indoor.

• (40) For these reasons, the CCCME argued that the electrical and hybrid MAE and conventional MAE did not share the same technical and physical characteristics and should not be treated as similar products. It was of the opinion that the electrical and hybrid MAE should be thus excluded from the product scope.

• (41) The complainant, on the other hand, considered that the Commission had a wide discretion in defining the product scope of an investigation. It also noted that all the MAE are a safer, more convenient alternative for ladders, scaffolding or towers and they are essentially a tool ensuring the safety and security of workers and that there were no differences justifying modification of the product scope. It argued that the fact that the conventional ICE MAE and electric or hybrid MAE had a different power source did not alter its basic characteristics, and that the differences between for instance an electrical and diesel lifts would not be visible from the outside of the product.

• (42) The CCCME considered that if the Commission did not decide to exclude from the product scope the electrical and hybrid MAE, alternatively should consider the exclusion of the products with regards to which the Union industry did not have capacity to meet the market demand such as:

• — Electric/hybrid MAE without a hydraulic system (oil-free MAE);

• — Electric/hybrid scissors with a working height above 19 m;

• — Electric/hybrid booms with a working height above 24 m.

• (43) As according to the CCCME the Union did not have the capacity to produce these types of MAE, the CCCME was of the view that the imports of these MAE models from China could not have affected this market segment and could not have caused any injury to the Union producers. Moreover, imposing duties on these categories of MAE would not be in its view in the Union’s interest, as there were no domestically produced models capable to replace the imports of these types. Hence, adopting trade defence measures against these types of MAE would only result in an increase in costs for downstream users, without adducing any benefit to the EU domestic industry, as the Union domestic industry cannot supply them and meet the market demand.

• (44) The complainant submitted that one of the models (electric/hybrid booms with a working height above 24 m) that allegedly was not produced by the Union producers, was produced by the producer Dynolift Oy and it considered that the MAE models were in any case interchangeable.

• (45) The Commission disagreed that the different power source, and the fact that electrical or hybrid MAE were generally used inside and conventional ICE MAE outside, the different components and different production/assembly line justified an exclusion of the electrical or hybrid MAE from the product scope. To the contrary, these MAE were to a large extent interchangeable, both categories fell under the product definition, and it was justified that both categories were part of the product scope.

• (46) The Commission also recalled that the description of the product scope entailed the main physical and technical characteristics of the product to include self-propelled MAE designed for the lifting of people, and it defined the minimum height of the platform. Both the conventional ICE MAE and electric or hybrid MAE complied with the description and had thus according to the Commission the same basic use and main physical characteristics.

• (47) The Commission considered the request of the CCCME to exclude certain product types. It concluded that there was not enough evidence that these product types were not produced in the Union, nor that the Union producers would not start production in the near future. There was also no evidence that they were not replaceable by machines with a different propulsion system. As the claim was not supported by evidence, the Commission provisionally rejected it.

2.4.2.   Sections

• (48) The CCCME further submitted that the sections should be excluded from the scope of the investigation. It argued that sections of MAE included a big variety of products, such as chassis, turntable, lifting mechanism (consisting of scissor or boom), platform etc. These were in its view unfinished goods which did not share the same essential characteristics with the finished MAE. A platform with lifting mechanism was not comparable to an assembled MAE as it lacked a power train and wheels which confers mobility to the platform. Also, an elevating platform could also be mounted to a truck which was explicitly excluded from this investigation. Similarly, sections that lack the lifting component, which is one of the indispensable features of MAE, could not be considered as acquiring this essential characteristic.

• (49) Moreover, the CCCME argued that the additional processing costs (i.e. turning sections into finished MAE) were substantial and the added value of the producer lied in the welding and/or assembly of parts, testing, painting, and customizing of the end-product machines (and of course in the R & D and investments that preceded production). These involved complex operations requiring the use of special tools. The unassembled sections were also not competing in any way with the finished product, thus not causing injury to the Union industry, as no downstream user would ever consider acquiring such sections and using them as such. For these reasons, the CCCME considered that sections and finished MAE should not be part of the same product concerned.

• (50) The CCCME also submitted that it was not clear from the product definition if isolated components or sub-assemblies were excluded or not. If sections or sub-assemblies were included, it argued that the Union industry was not appropriately defined, and that the 25 % threshold set out by Article 5(4) of the basic Regulation was not met. Particularly, producers of sections and sub-assemblies were completely omitted and did not take part of the investigation.

• (51) The complainant disagreed with these claims of the CCCME. It considered that including sections felt under the discretion of the Commission and that it was in line with Commission practice. It considered that further processing of putting together a finished section in a specialised factory was limited, and that assembling 3 or 4 finished sections into final product was the very last step of the assembly process. It also considered that any MAE section was made exclusively for a particular model of machine, and always for a particular producer. It argued that the product scope did not include individual components but finished sections, only produced by the MAE industry.

• (52) The Commission considered the arguments made, but maintained the product scope as defined in the Notice of Initiation and in recital (27) above. The sections, when pre-assembled or ready-to-assemble as required, can only be used to assemble a MAE unit and, hence, are intrinsically linked to the finished MAE unit. Therefore, the Commission considered it appropriate to keep the sections, which are the chassis, turning table, lifting mechanism and the platform, in the definition of the product scope. The Commission also confirmed that individual components, when presented separately, did not fall within the product scope. Since these sections were only produced by the MAE industry, it considered that the Union industry was well defined. The Commission thus rejected the claim that the 25 % threshold set out by Article 5(4) of the basic Regulation was not met.

3. DUMPING

3.1.   Procedure for the determination of the normal value under Article 2(6a) of the basic Regulation

• (53) In view of the sufficient evidence available at the initiation of the investigation pointing to the existence of significant distortions within the meaning of point (b) of Article 2(6a) of the basic Regulation with regard to the PRC, the Commission considered it appropriate to initiate the investigation with regard to the exporting producers from this country having regard to Article 2(6a) of the basic Regulation.

• (54) Consequently, in order to collect the necessary data in case of eventual application of Article 2(6a) of the basic Regulation, in the Notice of Initiation the Commission invited all exporting producers in the PRC to provide information regarding the inputs used for producing MAE. Eighteen exporting producers submitted the relevant information.

• (55) In order to obtain information, it deemed necessary for its investigation with regard to the alleged significant distortions, the Commission sent a questionnaire to the GOC. In addition, in point 5.3.2 of the Notice of Initiation, the Commission invited all interested parties to make their views known, submit information and provide supporting evidence regarding the application of Article 2(6a) of the basic Regulation within 37 days of the date of publication of the Notice of Initiation in the Official Journal of the European Union. No questionnaire reply was received from the GOC and no submission on the application of Article 2(6a) of the basic Regulation was received.

• (56) In point 5.3.2 of the Notice of Initiation, the Commission also specified that, in view of the information available, Brazil is a possible appropriate representative country pursuant to Article 2(6a)(a) of the basic Regulation for the purpose of determining the normal value based on undistorted prices or benchmarks. The Commission further stated that it would examine other possible appropriate representative countries in accordance with the criteria set out in 2(6a)(a) first indent of the basic Regulation.

• (57) On 21 December 2023, the Commission informed by a note (‘the First Note’) interested parties on the relevant sources it intended to use for the determination of the normal value. In that note, the Commission provided a list of all factors of production such as raw materials, labour and energy used in the production of MAE. In addition, based on the criteria guiding the choice of undistorted prices or benchmarks, the Commission identified Brazil, Mexico and Türkiye as potential appropriate representative countries.

• (58) On 17 May 2024, the Commission issued a second note on the factors of production (‘the Second Note’). All the comments on the First Note were addressed in this Second Note and the relevant sources the Commission intended to use for the determination of the normal value were confirmed. The Second Note informed the interested parties about the choice of Brazil as the representative country. It also informed interested parties that it would establish amounts for selling, general and administrative costs (‘SG&A’) and for profits based on readily available information for the company Madal Palfinger S.A., a producer of the product in the same general category as MAE in the representative country.

• (59) Dingli proposed the use of Malaysia as the representative country, submitting the financial data of Favelle Favco Cranes Sdn. Bhd (‘Favelle Favco’) a producer of heavy lifting equipment including offshore, tower, wharf, and crawler cranes.

• (60) The Commission dismissed this proposal as Favelle Favco is not a producer of the PUI, nor of truck mounted mobile platforms, the product selected to replace MAE, that is more appropriate than the machines produced by Favelle Favco (see recital (189)). Truck mounted mobile platforms share their main components with several categories of MAEs but are built on the tailgate of a truck. Truck mounted mobile access equipment are close in terms of production process and input material to be considered a product in the same general category as the product under investigation. In addition, these truck mounted platforms are intended to lift persons instead of material, contrary to cranes, which do not share the main components with MAE either.

3.2.   Normal value

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

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

• (63) As further explained below, the Commission concluded in the present investigation that, based on the evidence available, the application of Article 2(6a) of the basic Regulation was appropriate.

3.3.   Existence of significant distortions

• (64) Article 2(6a)(b) of the basic Regulation states that ‘significant distortions are those distortions which occur when reported prices or costs, including the costs of raw materials and energy, are not the result of free market forces as they are affected by substantial government intervention. In assessing the existence of significant distortions regard shall be had, inter alia, to the potential impact of one or more of the following elements:

• — the market in question being served to a significant extent by enterprises which operate under the ownership, control or policy supervision or guidance of the authorities of the exporting country;

• — state presence in firms allowing the state to interfere with respect to prices or costs;

• — public policies or measures discriminating in favour of domestic suppliers or otherwise influencing free market forces;

• — the lack, discriminatory application or inadequate enforcement of bankruptcy, corporate or property laws;

• — wage costs being distorted;

• — access to finance granted by institutions which implement public policy objectives or otherwise not acting independently of the state’.

• (65) As the list in Article 2(6a)(b) of the basic Regulation is non-cumulative, not all the elements need to be given for a finding of significant distortions. Moreover, the same factual circumstances may be used to demonstrate the existence of one or more of the elements of the list.

• (66) However, any conclusion on significant distortions within the meaning of Article 2(6a)(a) of the basic Regulation must be made on the basis of all the evidence at hand. The overall assessment on the existence of distortions may also take into account the general context and situation in the exporting country, in particular where the fundamental elements of the exporting country’s economic and administrative set-up provide the government with substantial powers to intervene in the economy in such a way that prices and costs are not the result of the free development of market forces.

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

• (68) Pursuant to this provision, the Commission issued a country report concerning China (‘the Report’) ⁵, which contains evidence of the existence of substantial government intervention at many levels of the economy, including specific distortions in many key factors of production (such as land, energy, capital, raw materials and labour) as well as selected sectors (such as the steel sector). Interested parties were invited to rebut, comment or supplement the evidence contained in the investigation file at the time of initiation. The Report concerning China was placed in the investigation file at the initiation stage.

• (69) The complainant referred to the evidence contained in the Report to point out numerous distortions in the Chinese economy. The complaint also complemented the Report with additional relevant evidence, such as reports by international organisations, academic papers or findings by trade defence authorities in other jurisdictions. Moreover, the complainant also referred to Commission findings in recent investigations which have established that the Chinese economy is fundamentally affected by interventions by the GOC.

• (70) More specifically, the complainant submitted that the MAE market in China is disconnected from normal market forces in view of a wide range of reasons, such as the fact that China is a communist State based on the ‘socialist market economy’ doctrine; the Chinese Communist Party (‘CCP’) exercises a strong influence over the country’s economy, including the private sector; the MAE sector is subject to state planning policies.

• (71) Furthermore, the complaint recalled additional details with respect to the following elements resulting in significant distortions.

• (72) First, the MAE sector is being served to a significant extent by enterprises that operate under the ownership, control or policy supervision or guidance of state authorities. Enterprises under the ownership, control, policy supervision or guidance of the Chinese authorities form a substantial part of the Chinese economy and of the MAE industry.

• (73) The complainant provided examples of a regional SASAC appointing the board of directors of the exporting producer Guangxi LiuGong Machinery Co., Ltd (Liugong), as well as of the National Development and Reform Commission (NDRC) announcing the ‘high-end transformation’ of the ‘big four’ in Chinese construction machinery: Sany Heavy Industry Co., Ltd. (Sany), Zoomlion Intelligent Access Machinery Co., Ltd. (Zoomlion), Liugong and XCMG Fire Fighting Safety Equipment Co., Ltd. (XCMG), all of which are key players on the MAE market.

• (74) Moreover, the complainant submitted that China considers the MAE industry ‘one of the important pillar industries’. Accordingly, SOEs and the state play an important role in the sector and China has since long planned a consolidation of its construction industry through giant mergers and acquisitions, in efforts to concentrate its enormous capacity in the hands of a few players. The complainant illustrated the consolidation process and state presence by recalling the corporate history of XCMG, as well as the role played by the sectoral industry association CCMA.

• (75) Second, state presence in firms allows the state to interfere with respect to prices or costs. The state exercises control over the SOE through its voting rights as an owner of the SOE and the CCP monitors the SOEs’ compliance with government policies, the nomination of management or members of the board, and is involved in key decisions. The complaint pointed out that XCMG is a SOE and was 100 % owned by the city of Xuzhou, until it underwent partial privatisation in 2020, following which the government control nevertheless remained at 80 %. Moreover, Liugong is also an SOE, and was selected as a ‘key SOE’ in the country by the SASAC in 2021. The complaint further provided references to formal (shareholding) and informal (personal overalps) ties between the state and the exporting producer Zoomlion.

• (76) In addition, the complaint pointed out that state’s direct influence over companies goes beyond SOEs in view of the compulsory presence of CCP committee in private companies and the CCP’s increasing influence over companies’ business decisions. The complaint provided a concrete example of the Sany group the chairman of which is not only CCP member but was also a representative of the 2022 National People’s Congress. The Sany group, as well as other companies, such as Sinoboom, Dingli or Sunward Intelligent Equipment Co. Ltd. (Sunward), also closely align themselves with the GoC’s policies.

• (77) The complaint further emphasized state influence also in the upstream sectors, notably with respect to steel production and supply, li-ion batteries, off-the-road tires, diesel engine and electricity.

• (78) Third, the complained referred to public policies or measures discriminating in favour of domestic suppliers or otherwise influencing free market forces. According to the complaint, the system of binding plans, setting out priorities and goals for the central and local government, determines the direction of the Chinese economy. Chinese industries, whether state-owned or private, have a strong incentive to align their activities with the priorities in the relevant plans.

• (79) The 14th Five Year Plan (‘FYP’) ⁶ designates high-end equipment, as well as new energy vehicles, as strategic emerging industries and it also holds that China will ‘promote the innovative development of […] engineering machinery’. The complainant submitted that, as a result of the public policies, the MAE sector is affected by structural overcapacities. Moreover, the complainant emphasized that FYPs also set out government policy and involvement in the upstream sector, which is crucial for the distortion of the prices downstream. The complaint referred to the relevant provisions – in particular concerning steel and the construction machinery sector – of the 14th FYP, as well as the Made in China 2025 strategy.

• (80) In addition, the complaint pointed out that by artificially modifying the level of raw materials supply, or by centrally setting the prices, the GOC manipulates the prices of inputs and intermediate products for the MAE sector. The complaint lists in this respect such factors as export quotas for coke, coking coal, and metal waste; export duties for iron ore, coke, coking coal, and steel scrap; export licensing requirements for coke and coking coal; and price-setting for electricity.

• (81) Moreover, public policies, such as the Belt and Road Initiative, result, according to the complaint in artificial creation of external outlets for the Chinese MAE industry. At the same time, different sets of policies, notably massive state-financed construction projects significantly increased demand for construction machinery on the Chinese domestic market which created artificial internal outlets for the MAE producers.

• (82) Fourth, the complaint pointed to the lack, discriminatory application or inadequate enforcement of Chinese bankruptcy, corporate and property laws. The complaint stressed in particular the artificial propping up of unviable companies in the construction sector impacting the downstream industry of construction machinery, as well as the lack of private land ownership and the related untransparent and politically motivated land provision.

• (83) Fifth, submitting that wage costs are distorted, the complaint referred to the fact that only one legally recognised trade union, the ACFTU, operates in China. This union is also subject to the leadership of the CCP. Moreover, China has also still not ratified several of the most important international conventions on labour. In addition, the Chinese workforce is impacted by the household registration system which was adopted to steer the allocation of labour resources towards the developing heavy industries in urban areas and which, given the discriminatory treatment of migrant workers, effectively creates a distortion of wages costs in China.

• (84) Sixth, MAE producers benefit from access to finance granted by institutions which implement public policy objectives or otherwise are not acting independently from the state. Not only are the major banks in China state-owned, private banks also must take national policy into account when conducting their business which translates into the fact that, among other things, investments are preferentially channelled to ‘encouraged’ industries. The complaint illustrate these benefits to the Chinese MAE manufacturers by listing loans obtained in the past by Liugong, the Sany group, as well as XCMG, Zoomlion, Sonoboom and Dingli, complementing these references with reports which indicate policy motivation of the financial institutions providing those loans.

• (85) The complainant further indicated that bond and credit ratings in China are often distorted and systematically correspond to lower international ratings underlying the existing debt-ridden state-owned sector situation. This is due to the ‘implicit government guarantees’ provided to ‘encouraged’ or other designated industries excluding bond defaults.

• (86) Overall, the complainant submitted that the entire Chinese market is governed by systemic distortions that apply to the MAE sector and to the entire economy. The GOC intervenes at all levels of the supply chain of MAE, creating the situation where the input, the input of that input and so on, are all affected in one way or another by government distortions.

• (87) In conclusion, the complainant argued that because of significant distortions pursuant to Article 2(6a) of the basic Regulation are present in the MAE sector, the normal value must then be calculated exclusively on the basis of the costs of production and sales reflecting undistorted prices or benchmarks in a representative country with a similar level of development and an adequate level of social and environmental protection.

• (88) The Commission examined whether it was appropriate or not to use domestic prices and costs in China, due to the existence of significant distortions within the meaning of point (b) of Article 2(6a) of the basic Regulation. The Commission did so on the basis of the evidence available on the file. The evidence on the file included the evidence contained in the Report, as well as in its updated version (‘updated Report’) ⁷, which relies on publicly available sources.

• (89) That analysis covered the examination of the substantial government interventions in China’s economy in general, but also the specific market situation in the relevant sector including the product concerned. The Commission further supplemented these evidentiary elements with its own research on the various criteria relevant to confirm the existence of significant distortions in China.

3.3.1.   Significant distortions affecting the domestic prices and costs in China

• (90) The Chinese economic system is based on the concept of a ‘socialist market economy’. That concept is enshrined in the Chinese Constitution and determines the economic governance of China. The core principle is the ‘socialist public ownership of the means of production, namely, ownership by the whole people and collective ownership by the working people’ ⁸.

• (91) The state-owned economy is the ‘leading force in the national economy’ and the state has the mandate to ensure its ‘consolidation and growth’ ⁹. Consequently, the overall setup of the Chinese economy not only allows for substantial government interventions into the economy, but such interventions are expressly mandated. The notion of supremacy of public ownership over the private one permeates the entire legal system and is emphasised as a general principle in all central pieces of legislation.

• (92) The Chinese property law is a prime example: it refers to the primary stage of socialism and entrusts the state with upholding the basic economic system under which the public ownership plays a dominant role. Other forms of ownership are tolerated, with the law permitting them to develop side by side with the state ownership ¹⁰.

• (93) In addition, under Chinese law, the socialist market economy is developed under the leadership of the CCP. The structures of the Chinese state and of the CCP are intertwined at every level (legal, institutional, personal), forming a superstructure in which the roles of CCP and the state are indistinguishable.

• (94) Following an amendment of the Chinese Constitution in March 2018, the leading role of the CCP was given an even greater prominence by being reaffirmed in the text of Article 1 of the Constitution.

• (95) Following the already existing first sentence of the provision: ‘[t]he socialist system is the basic system of the People’s Republic of China’ a new second sentence was inserted which reads: ‘[t]he defining feature of socialism with Chinese characteristics is the leadership of the Communist Party of China’ ¹¹. This illustrates the unquestioned and ever growing control of the CCP over the economic system of China.

• (96) This leadership and control is inherent to the Chinese system and goes well beyond the situation customary in other countries where the governments exercise general macroeconomic control within the boundaries of which free market forces are at play.

• (97) The Chinese state engages in an interventionist economic policy in pursuance of goals, which coincide with the political agenda set by the CCP rather than reflecting the prevailing economic conditions in a free market ¹². The interventionist economic tools deployed by the Chinese authorities are manifold, including the system of industrial planning, the financial system, as well as the level of the regulatory environment.

• (98) First, on the level of overall administrative control, the direction of the Chinese economy is governed by a complex system of industrial planning which affects all economic activities within the country. The totality of these plans covers a comprehensive and complex matrix of sectors and crosscutting policies and is present on all levels of government.

• (99) Plans at provincial level are detailed while national plans set broader targets. Plans also specify the means in order to support the relevant industries/sectors as well as the timeframes in which the objectives need to be achieved. Some plans still contain explicit output targets.

• (100) Under the plans, individual industrial sectors and/or projects are being singled out as (positive or negative) priorities in line with the government priorities and specific development goals are attributed to them (industrial upgrade, international expansion etc.).

• (101) The economic operators, private and state-owned alike, must effectively adjust their business activities according to the realities imposed by the planning system. This is not only because of the binding nature of the plans, but also because the relevant Chinese authorities at all levels of government adhere to the system of plans and use their vested powers accordingly, thereby inducing the economic operators to comply with the priorities set out in the plans ¹³.

• (102) Second, on the level of allocation of financial resources, the financial system of China is dominated by the state-owned commercial and policy banks. Those banks, when setting up and implementing their lending policy need to align themselves with the government’s industrial policy objectives rather than primarily assessing the economic merits of a given project ¹⁴.

• (103) The same applies to the other components of the Chinese financial system, such as the stock markets, bond markets, private equity markets etc. Also, these parts of the financial sector are institutionally and operationally set up in a manner not geared towards maximising the efficient functioning of the financial markets but towards ensuring control and allowing intervention by the state and the CCP ¹⁵.

• (104) Third, on the level of regulatory environment, the interventions by the state into the economy take a number of forms. For instance, the public procurement rules are regularly used in pursuit of policy goals other than economic efficiency, thereby undermining market-based principles in the area. The applicable legislation specifically provides that public procurement shall be conducted in order to facilitate the achievement of goals designed by state policies. However, the nature of these goals remains undefined, thereby leaving broad margin of appreciation to the decision-making bodies ¹⁶.

• (105) Similarly, in the area of investment, the GOC maintains significant control and influence over destination and magnitude of both state and private investment. Investment screening as well as various incentives, restrictions, and prohibitions related to investment are used by authorities as an important tool for supporting industrial policy goals, such as maintaining state control over key sectors or bolstering domestic industry ¹⁷.

• (106) In sum, the Chinese economic model is based on certain basic axioms, which provide for and encourage manifold government interventions. Such substantial government interventions are at odds with the free play of market forces, resulting in distorting the effective allocation of resources in line with market principles ¹⁸.

3.3.2.   Significant distortions according to Article 2(6a)(b), first indent of the basic Regulation: the market in question being served to a significant extent by enterprises which operate under the ownership, control or policy supervision or guidance of the authorities of the exporting country

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

• (108) Among the main economic operators in the sector of the product concerned features a number of companies with significant shareholding by State-affiliated entities. For example, XCMG is 28,24 % state-owned ¹⁹, with State shareholding in Liugong amounting to 31,24 % ²⁰ and in Zoomlion to 17,17 % ²¹.

• (109) However, in China, the government control goes well beyond direct ownership. Not only is the sector of the product concerned is subject to several government policies (described in more detail in Section 3.3.4 below), the State’s influence by means of CCP structures within companies (described in more detail in Section 3.3.3 below) effectively results in economic operators being under the government’s control and policy supervision. Moreover, government control and policy supervision can be also observed at the level of the relevant industry associations ²², in particular the China Construction Machinery Association (‘CCMA’) ²³ which also has a Decoration and Aerial Work Machinery Branch ²⁴.

• (110) For instance, CCMA states in Article 3 of its Articles of Association that the organisation ‘adheres to the overall leadership of the Communist Party of China and, in accordance with the provisions of the Constitution of the Communist Party of China, establishes organizations of the Communist Party of China to carry out party activities and provide necessary conditions for the activities of party organizations. The entity in charge of registration and management of this association is the Ministry of Civil Affairs of the People’s Republic of China, and the entity in charge of Party building is the Party Committee of SASAC’ and that it ‘accepts business guidance and supervision from entities in charge of registration and management, entities in charge of Party building, and industry management departments’ ²⁵. Moreover, according to Article 36 of the Articles of Association, the persons in charge of the association need to ‘[a]dhere to the leadership of the Communist Party of China, support socialism with Chinese characteristics, resolutely implement the Party’s line, principles, and policies, and have good political qualities’ ²⁶.

• (111) XCMG, Sinoboom, Liugong, as well as Zoomlion are among the CCMA’s members, XCMG and Zoomlion being also vice-presidents of the Association ²⁷.

• (112) In view of the above, state- and privately-owned producers alike in the sector of the product concerned are prevented from operating under market conditions. Indeed, both public and privately owned enterprises in the sector are subject to policy supervision and guidance.

3.3.3.   Significant distortions according to Article 2(6a)(b), second indent of the basic Regulation: State presence in firms allowing the state to interfere with respect to prices or costs

• (113) The GOC is in position to interfere with prices and costs through state presence in firms. Indeed, CCP cells in enterprises, state-owned and private alike, represent an important channel through which the state can interfere with business decisions. CCP interventions into operational decision making have become the norm not only in State owned enterprises (‘SOEs’), but also in private companies ²⁸, with CCP claiming leadership over virtually every aspect of the country’s economy, given how far the state and Party structures have grown together in China.

• (114) According to China’s company law, a CCP organisation is to be established in every company (with at least three CCP members as specified in the CCP Constitution ²⁹) and the company shall provide the necessary conditions for the activities of the Party organisation.

• (115) In the past, this requirement appeared not to have always been followed or strictly enforced. However, since at least 2016 the CCP has been reinforcing its claims to control business decisions in companies as a matter of political principle ³⁰, including exercising pressure on private companies to put ‘patriotism’ first and to follow Party discipline ³¹.

• (116) Already in 2017, it was reported that party cells existed in 70 % of some 1,86 million privately owned companies, with growing pressure for the CCP organisations to have a final say over the business decisions within their respective companies ³². These rules are of general application throughout the Chinese economy, across all sectors, including to the producers of the product concerned and the suppliers of their inputs.

• (117) In addition, on 15 September 2020 a document titled General Office of CCP Central Committee’s Guidelines on stepping up the United Front work in the private sector for the new era (‘the Guidelines’) ³³ was released, which further expanded the role of the Party committees in private enterprises.

• (118) Section II.4 of the Guidelines states: ‘[w]e must raise the Party’s overall capacity to lead private-sector United Front work and effectively step up the work in this area’; and section III.6 states: ‘[w]e must further step up Party building in private enterprises and enable the Party cells to play their role effectively as a fortress and enable Party members to play their parts as vanguards and pioneers’. The Guidelines thus emphasise and seek to increase the role of the CCP in companies and other private sector entities ³⁴.

• (119) The investigation confirmed that overlaps between managerial positions and CCP membership/Party functions exist also in the MAE sector.

• (120) To provide some examples, in the case of XCMG, the chairman of the XCMG Group and of XCMG Machinery serves also as the Party Secretary. Moreover, the general manager of the XCMG Group and director of XCMG Machinery is not only the Deputy Secretary of the XCMG Group’s Party Committee, he also previously served as member of the Party Leadership Group of the Xuzhou Municipal Government Office, as well as Deputy secretary-general of the Xuzhou Municipal CCP Committee ³⁵.

• (121) XCMG is also very explicit about its unconditional loyalty to the CCP and its willingness to accept Party’s leading role. According to XCMG’s own statements: ‘[t]he “Red XCMG” Party Building Ecological System takes the glorious historical tradition of XCMG Group as the “red gene”, the organizational strength construction of grassroots party organizations as the “red cell”, and the role of high-quality party building work as the “red engine”’. Moreover, ‘[i]n the 80 years since its establishment, XCMG has always integrated the leadership of the party into all levels of the company’s operations, making the party the most reliable core force when storms come, ensuring the correct direction of the company’s business development’. Apparently, XCMG intends to continue its allegiance to the CCP also in future since the company ‘will be guided by Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, fully implement the spirit of the 20th CPC National Congress and the two important speeches of General Secretary Xi Jinping, resolutely shoulder the important mission of state-owned enterprises as the “pillars” of the socialist economy with Chinese characteristics, […] lead the company’s high-quality development with the strong leadership of the Party, and make new and greater contributions to the realization of the Chinese dream of the great rejuvenation of the Chinese nation!’ ³⁶. Incidentally, this statement also suggests that XCMG, irrespective of formal shareholding distribution considers itself an SOE.

• (122) As for Liugong, the chairman and CEO of the company is a CCP member and he served as deputy to the 13th NPC and deputy to the 13th People’s Congress of the Guangxi Zhuang Autonomous Region. Moreover, the company’s vice-chairman serves as secretary of the company’s Party Committee and, besides numerous other political functions, representative of the 14th People’s Congress of Guangxi Zhuang Autonomous Region ³⁷.

• (123) In addition, according to Article 31 of Liugong’s Articles of Association ³⁸, the CCP committee within the company:

‘shall perform the following duties in accordance with the Constitution of the Communist Party of China and other party regulations:

• (i) Implement the main responsibility, give full play to the leadership role of the party committee, and carry out work around the production and operation of the enterprise;

• (ii) Ensure and supervise the implementation of the party and state policies in the company;

[…]

• (viii) Participate in the decision-making of major issues of the company, study and decide on major personnel appointments and removals of the company, study and discuss the company’s reform, development and stability, major business management matters and major issues involving the vital interests of employees.’

• (124) Moreover, according to Article 32 of the Articles of Association: ‘[t]he Party Committee of the company shall […] form a system and mechanism for the Party organization to participate in the decision-making of major issues, and support the board of directors, the board of supervisors, and the management level to exercise their powers in accordance with the law’. Article 33 stipulates that ‘[t]he main procedures for the Party Committee to participate in the decision-making of major issues of the company are: the Party Committee shall hold meetings to discuss and study major issues that the board of directors and the management level intends to decide and put forward opinions and suggestions’ ³⁹.

• (125) Similar observations can be made with respect to Zoomlion, the chairman of which holds numerous public offices including being a representative of the 16th, 17th and 19th CCP National Congresses, representative of the 10th and 12th NPC, representative of the 8th, 9th and 10th CCP Congresses in Hunan Province and member of the 10th Committee of the Communist Party of China in Hunan Province. In addition, Zoomlion’s chairman also serves as CCMA’s vice-president ⁴⁰.

• (126) Moreover, since years, Zoomlion has been zealous when it comes to subjecting business decisions to CCP leadership, as is apparent from its statements originating already in 2021: ‘In the whole process of Zoomlion’s reform and innovation, party building has always been the ballast stone of all work, playing a major role in political guidance and escort for high-quality development, ensuring that the company is steady and far-reaching on the road of sustained high-quality development. […] Adhering to the leadership of the party and strengthening party building are the root and soul of enterprise reform. Zoomlion has always insisted on leading the reform and development of enterprises with party building, giving full play to the role of party organizations in taking overall charge and coordinating all parties, and using the advantages of party building to ensure the standardization and stability of enterprise reform. Take “adhering to the leadership of the party” as the mainstay of enterprise reform and development. Over the past 20 years, Zoomlion has experienced two major battles, namely, the reform of the science and technology system and the reform of state-owned enterprises […]. The reform and restructuring lasted for more than 10 years, and the party committee at the upper level has always insisted on guiding the direction and managing the overall situation, and pre-approving major matters; […] party’s leadership is integrated into all aspects of the reform and embedded in all levels of corporate governance, ensuring the correct direction of the reform and effective measures. […] Zoomlion has experienced rapid development in the first 20 years, experienced a 5-year industry downturn, and returned to a continuous upward development since 2017. Zoomlion has always insisted on party building to lead development and transformed the unique advantages of party building in enterprises into productivity, competitiveness and cohesion’ ⁴¹.

• (127) Also, in the case of Sinoboom, overlaps between managerial CCP functions exist as the company’s chairman is not only a CCP member but also a representative of the 14th People’s Congress of Hunan Province ⁴².

• (128) Moreover, publicly available information shows the close cooperation between Sinoboom and the government authorities, as well as financial institutions which pursue industrial policies mandated by the State: ‘a ceremony to celebrate [Sinoboom]’s advancement into the top 50 global engineering machinery companies and the completion and commissioning of the first phase of SINOBOOM International Intelligent Manufacturing City was held at the SINOBOOM Intelligent International Intelligent Manufacturing City project base. […], chief engineer and first-level inspector of the Hunan Provincial Department of Industry and Information Technology, […], deputy mayor of Changsha Municipal People’s Government, […], secretary of the Ningxiang Municipal Party Committee, […], deputy secretary of the Ningxiang Municipal Party Committee and mayor, and other provincial and municipal government leaders, […], deputy secretary of the Party Committee, vice chairman and general manager of Caixin Financial Holdings, […], secretary-general of the China Construction Machinery Industry Association, Xu Hongxia, general manager of [Sinoboom], and representatives of partners such as financial institutions attended and witnessed another historic moment on the road to high-quality development of SINOBOOM Intelligent. […] As an important partner of [Sinoboom], HUNAN CHASING Financial Holdings has organized its subsidiaries to provide [Sinoboom] with innovative comprehensive financial services covering the entire industrial chain, helping [Sinoboom] to move towards the capital market, and has been highly recognized by [Sinoboom]. […] In the future, HUNAN CHASING Financial Holdings will unswervingly implement the strategic positioning and mission of our province’s “three highs and four new”, […] provide innovative comprehensive financial services covering the entire life cycle and the entire industrial chain for enterprises in our province, and continuously contribute its wisdom and strength to the high-quality economic development of our province’ ⁴³.

• (129) The state’s presence and intervention in the financial markets as well as in the provision of raw materials and inputs further have an additional distorting effect on the market ⁴⁴. Thus, the state presence in firms, in the MAE and other sectors (such as the financial and input sectors) allows the GOC to interfere with respect to prices and costs.

3.3.4.   Significant distortions according to Article 2(6a)(b), third indent of the basic Regulation: public policies or measures discriminating in favour of domestic suppliers or otherwise influencing free market forces

• (130) 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, provincial and local governments must focus on. Relevant plans exist at all levels of government and cover virtually all economic sectors. The objectives set by the planning instruments are of a binding nature and the authorities at each administrative level monitor the implementation of the plans by the corresponding lower level of government.

• (131) Overall, the system of planning in China results in resources being driven to sectors designated as strategic or otherwise politically important by the government, rather than being allocated in line with market forces ⁴⁵.

• (132) The Chinese authorities have enacted a number of policies guiding the functioning of the sector of the product concerned.

• (133) The 14th FYP aims to ‘[p]romote optimization and upgrading of manufacturing industry […], [c]ultivate advanced manufacturing clusters and promote the innovative development of industries such as […], construction machinery’ as well as to ensure the ‘in-depth implementation of special projects to enhance the core competitiveness and technological transformation of the manufacturing industry, encourage enterprises to apply advanced and applicable technologies, strengthen equipment updates and large-scale application of new products’ ⁴⁶.