The request contained allegations that the GOC continued to subsidize its PV industry through preferential policy loans.

In its pre-verification letter the Commission envisaged the verification of the four banks which submitted replies to the Appendix A to the questionnaire and provided loans to the sampled exporting producers (EXIM, ICBC, CCB and MEB). It included a detailed non-exhaustive list of subjects that would be addressed during the verification. In the pre-verification letter the Commission had stated that the GOC was ‘requested to make all supporting documents available that were used to prepare [its…] substantive response, including original source documents and applications’.

In its second deficiency letter, the Commission informed the GOC that the reply of EXIM to Appendix A was incomplete and that EXIM failed to submit a document which was specifically requested, i.e. the Chinese and English versions of the Articles of Association. EXIM indicated in its questionnaire reply that the Articles of Association are an internal management document and did not provide them. The reply to the deficiency letter indicated that EXIM was in the process of being reformed and that the revision of the Articles of Association was not yet complete. During the on-the-spot verification, EXIM indicated that the reform started in March/April 2015 and the applicable version of the Articles of Association being revised dated back to 1994 but did not provide the 1994 version. When requested to provide supporting evidence concerning the ongoing reform, EXIM referred to its website. In the absence of any internet connection, such information could however not be verified on-the-spot.

The GOC argued in its comments on the disclosure that the Commission could have checked EXIM's website in Brussels prior to the on-the-spot verification visit in order to obtain evidence on the ongoing reform or should have foreseen own means to connect to the Internet while being on-the-spot. In this context, the Commission reiterates that, despite several requests, EXIM failed to provide any version of its Articles of Association, whether in its original or revised version.

During the verification, the Commission requested to have a copy of the Notice of Establishing EXIM issued by the State Council and of the Measures for the management of Export Sellers's Credit for Hi-Tech products of EXIM. EXIM refused to provide these documents.

The GOC commented after disclosure that details on the establishment of EXIM could also be found on EXIM's website and that the second document mentioned in the above recital had been repealed. The GOC therefore considered that the two documents mentioned in the previous recital could not constitute grounds for the application of facts available. The Commission re-iterates that in its pre-verification letter, the GOC and the financial institutions were asked to make readily available the information that is requested on-the-spot. The Commission recalls that EXIM itself had made reference to the first document in its questionnaire reply. In order to verify the questionnaire response, the Commission thus needed to receive the document. As for the second document, the Commission takes note of GOC's comment as regards its repeal.

As far as the shareholding is concerned and as indicated in its questionnaire reply, the Commission established that EXIM is a 100 % State-owned export credit agency. As far as the Board of Directors and its composition is concerned, EXIM provided contradictory information during the verification visit as it indicated that the Board of Directors had not been formed yet due to the ongoing reform process. However, in its questionnaire reply, EXIM referred in several instances to such Board of Directors. The composition of the Board of Supervisors was not provided and could not be verified either. As a consequence, the Commission was not in a position to verify the existence or the composition of the Board of Directors and composition of the Board of Supervisors.

The GOC explained in the questionnaire reply that the 1994 Articles of Association govern the functioning of EXIM, and described that functioning. However, the GOC failed to provide that document.

Following disclosure, the GOC disagreed with the Commission's assessment in recital 113, noting that in the 2015 annual report of EXIM, it was mentioned that the setting up of the Board of Directors had been accelerated, but that no Board of Directors was otherwise mentioned. The Commission notes that the questionnaire and the second deficiency letter requested details on the composition (not appointment) of the Board of Directors. It was not clarified until the on-spot verification that EXIM allegedly had no Board of Directors during the RIP.

In application of facts available, the Commission comes to the following conclusion: The State, as 100 % owner 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. In the absence of a Board of Directors, the Board of Supervisors or the State directly nominates the management of EXIM.

Based on Articles 3 and 5 of the Interim Regulations on the Boards of Supervisors in Key State-owned Financial Institutions, the Commission established that Members of the Board of Supervisors are dispatched by and accountable to the State Council.

Furthermore, States typically vest export credit agencies with authority to exercise government functions. The government function vested is the promotion of export to countries and for goods for which commercial insurance either does not provide insurance cover, or does so at premium rates that are not accessible to all exporters. Governments typically provide a State guarantee to the export credit agency, in order to lower its borrowing costs on the capital markets. The existence of that State guarantee is justified by and proof for being vested with authority to exercise government functions. The activities of those agencies pursue public policy goals, namely to promote export. More specifically, the title and content (as summarized in the questionnaire reply) of the Notice of Establishing EXIM issued by the State Council indicates that EXIM is carrying out the Chinese export policy. Moreover, as described in section 3.4.1 the PV industry, as strategic/key industry, is benefitting from such export support.

On the basis of those considerations, it is inferred, on the basis of facts available, that the State has exercised its formal control, established by virtue of its ownership, in the daily business activities of EXIM in a meaningful way and that the State has vested EXIM with authority to exercise government functions.

That conclusion is further corroborated by the examination of the lending policy, as established on the basis of the annual reports, which demonstrates that EXIM feels bound to implement State policy when making lending decisions, for the following reasons.

When requested to explain its lending policy, i.e. how government plans and projects are reflected, whether EXIM considers the Catalogue of Chinese High-Tech Products for Export (or other catalogues, lists or plans) in its lending policy, EXIM indicated that it analyses the influence of the plans on loan programs or borrowers and that it supports enterprises that produce products from this catalogue. After analysis of the annual report, it appeared that EXIM's reply purposely devalued the impact of the government plans and projects on its lending policy. Indeed, the 2015 annual report says that EXIM's main mandate is to ‘facilitate the export and import of Chinese mechanical and electronic products, complete sets of equipment and new-and high-tech products’ and more importantly that ‘The Bank fully leveraged its role of policy financing in implementing China's national development strategy’.

The GOC submitted after disclosure that the facilitation of exports does not necessarily imply preferential lending and the national development strategy covers all aspects of the Chinese economy. The point of recital 124 is however to demonstrate that government plans and projects do influence EXIM's lending policy, which is reflected in its mandate. The comment made by the GOC is therefore rejected.

Concerning the statistics on the export of different categories of products already requested in the questionnaire, EXIM did not provide the requested information and called upon confidentiality clauses. During the verification visit EXIM changed its view and indicated that the information was not available. While the Commission fails to understand why EXIM changed its reasoning, it is also unclear to the Commission how providing non-customer specific consolidated data can breach confidentiality clauses. Still EXIM provided overall commercial values for three years but did not submit this information for the RIP neither before nor during the verification visit. Consequently, the Commission was not in a position to verify the overall commercial values of export credit in the RIP, nor the data concerning the proportion of export credits to the PV industry.

The GOC expressed surprise on the, in the Commission's view, contradictory statements made in recital 113. The Commission notes that no statistics on the export of different categories of products were provided by EXIM. What was provided during the verification visit concerned overall commercial values. The first would have allowed the Commission to isolate the figures for the product concerned, which was not possible with the figures eventually provided during the verification visit (overall figures only). The GOC also claims that the Commission could have extrapolated the figures for the review investigation period by using the overall commercial values for the three years provided, which is incorrect as these figures were not provided on a monthly basis (as explained in recital 11, the review investigation period is 1 October 2014 to 30 September 2015).

During the verification, the Commission attempted to verify the creditworthiness assessment for the ten largest exporting producers of the product under review, including the three sampled producers. EXIM stated that access to such information could not be granted for confidentiality reasons. When attempting to verify the creditworthiness assessment system of EXIM by way of even a blank assessment form, EXIM refused access to such a blank document as it claimed it would contain business secret information.

After disclosure, the GOC pointed to the questionnaire reply and the 2015 annual report of EXIM, in which the importance of risk assessment prior to making lending decisions would be evident. Even when accepting that such a notion forms part of the bank's general policy, EXIM had not been providing examples how this was carried out with respect at least to the sampled companies. This comment therefore did not change the findings of the Commission.

The Commission also requested to have a copy of EXIM's 2015 annual report. EXIM first indicated that such document could not be provided or discussed although it had become apparent that the requested document was already publicly available on its web site. The Commission could eventually take a look at the requested document via the internet, but was initially not allowed to take a hard copy of the document or take any notes. The requested document was eventually submitted but only after the EXIM representatives had left the verification premises and the document could not be discussed further.

Following the Commission's sending of the letter regarding the consideration to apply Article 28, the GOC claimed that the application of Article 28 is not warranted even though access to a publicly available document was originally refused by the EXIM bank during the verification process but eventually provided by the GOC after the verification. The GOC noted that whoever provided the document is irrelevant.

The Commission notes that the delay in providing the annual report of 2015 was only part of the reasons for applying Article 28 (see recitals 112 to 118). It needs to be underlined that by refusing access to and refusing to discuss a publicly available document during the time allocated to the corresponding financial institution, the EXIM bank obstructed and delayed the verification process. Also, the fact that the document was submitted after the representatives of the EXIM bank had left did not allow the Commission to discuss and verify the document at stake in a satisfactory manner. The Commission therefore considers that this financial institution significantly impeded the verification process.

As far as documents pertaining to the establishment and management of the operations of the EXIM bank are concerned, i.e. the Notice of Establishing EXIM issued by the State Council and the Articles of Association, the GOC claimed that the requested documents bore no relationship to the subsidy scheme or to the exporting producers, that the request was a fishing expedition and that there were no legal grounds to investigate a scheme which was not countervailed in the original investigation.

In this regard, the Commission notes that the requested documents were needed for the purpose of the investigation, in particular to establish whether EXIM was vested with authority to exercise government functions, and that similar documents were requested and provided by the GOC for other cooperating financial institutions. Further, it is noted that the EXIM bank made several references to these documents in its questionnaire reply as far as its ownership, management, supervision and operations are concerned and thus, these documents needed to be verified. Also, some of the sampled exporting producers indicated that they had financial dealings with this financial institution, which was another aspect that the Commission wished to verify and which shows that the EXIM bank was involved in subsidies related to those countervailed in the original investigation.

The title and content of the Notice of Establishing EXIM issued by the State Council, to the extent that it can be deduced from the questionnaire reply, finally demonstrate that EXIM is a vehicle for the GOC to pursue public policy objectives and therefore vested with authority to exercise government functions.

For those reasons, applying facts available, the Commission concludes that EXIM is a public body.

The Commission established, on the basis of the ICBC questionnaire reply as confirmed by its 2015 Annual report that the State owns more than 50 % of the shares. ICBC is therefore formally controlled by the State.

The Commission could also determine, on the basis of the Articles of Association and more specifically Chapter 8 to 10 thereof and ICBC's questionnaire reply, that the GOC, through its shareholding and via the Central Committee of the Communist Party of China, has the power to appoint the most important positions within the management of the bank such as the Chairman of the Board of Directors, Vice chairman of the Board of Directors, Executive Director, Chairman of the Board of Supervisors, President and Vice President. Moreover, according to ICBC's Articles of Association, the Board of Directors, inter alia, convenes shareholder's meetings, decides on the business strategy and budget of the bank, take investment (and merger) decisions, decides on the dismissals of senior management, formulates the risk management system, decides on the establishments of departments and branches, etc. This non-exhaustive list of responsibilities illustrates the meaningful control of the State on ICBC's daily business.

Article 34 of the Bank law which applies to all banks operating in China and which provides that ‘Commercial banks shall conduct their business of lending in accordance with the needs of the national economic and social development and under the guidance of the industrial policies of the State’. The needs of the national economic and social development and the guidance of the industrial policies of the State are established through central planning, as set out above in section 3.2. The promotion of the PV industry forms part of them.

Article 34 of the Bank law hence vests all banks with authority to exercise government function. In the case of ICBC, the formal control by the shareholding and the powers conferred upon the GOC through the shareholding in view of the Articles of Association have enabled the GOC to exercise that government function.

Finally, the Commission has sought to establish that control has been exercised in a meaningful way by examining the de facto lending policy of ICBC.

The Commission requested relevant information from the GOC in order to assess how the banks in the PRC are performing credit risk assessment of PV companies before deciding whether to grant them loans (and/or credit lines) or not and deciding on the conditions of the loans which are granted. In the Appendix A to the questionnaire the Commission requested information on how the banks take account of risk, how the creditworthiness of the borrower is assessed, what the risk premiums charged for different companies/industries in the PRC are, and which factors banks take into account when assessing loan or credit line applications. The Commission also requested a description of a loan application and its approval process. While ICBC provided a narrative reply to the questions raised above, neither the GOC nor ICBC provided satisfactory supporting evidence in this respect. During the verification visit, the Commission requested supporting evidence for the narrative reply. However, the GOC provided only replies of a general nature not supported by any evidence whatsoever that any kind of credit risk assessment actually takes place.

The Commission also requested similar information from the sampled exporting producers and attempted to verify it during the on-the-spot verification visits of sampled exporting producers. Most of the exporting producers replied that banks request certain documents (such as the financial statements) and perform some kind of credit risk analysis before the loans are granted. However, they could not support their claims with any evidence for example of the documents they had provided. During the on-the-spot verification, the Commission asked for evidence (such as correspondence etc.) that the banks had indeed requested such documents or that such documents were provided to the banks by the companies, or any kind of report issued by the banks proving that such credit risk analysis was indeed performed. The sampled groups of exporting producers were however not able to provide such evidence, neither were they able to provide any other evidence supporting their claims.

The first obstacle in that regard was that the GOC refused to provide the information set out above in Section 3.1. The second obstacle was that the GOC refused any access to the creditworthiness assessment carried out by ICBC.

In its deficiency letter of 14 March 2016 the Commission informed the GOC that the reply of the ICBC to the Appendix A was incomplete as it did not include the following required information: loans provided to the ten largest exporting producers of the product under review; a complete reply concerning creditworthiness assessment; support by the bank for implementation of the government plans and projects.

As far as loans and/or credit lines provided to the ten largest exporting producers of the product under review are concerned, ICBC did not provide any information and referred to legal and contractual obligations with regard to confidentiality whereby it cannot disclose company-specific loan information without their consent. However, the Commission could ultimately, for the purpose of establishing the benefit for the three cooperating sampled producers, rely on the verified submissions in their questionnaire replies.

During the verification, the Commission attempted to verify the creditworthiness assessment of the sampled exporting producers, of the ten largest exporting producers and of the PV sector as a whole. ICBC did not provide any information in this regard and referred to confidentiality issues. It also indicated that it does not keep reports pertaining to producers in the PV sector at its headquarters. While ICBC allowed the Commission to briefly look at an assessment report that it had selected, it is noted that this document did not relate to any of the cooperating companies or to the PV sector. In addition, in view of the timing of its submission (in Chinese), the Commission was not in a position to comprehend the content in the timespan available during the verification visit. Furthermore, the Commission was not allowed to take a copy of the document. In its replies to the questionnaire and deficiency letter, ICBC had claimed that ‘it did not take government industrial policy, plans or projects, or other laws into account when assessing a loan/credit line’. However, the annual report of the bank seemed to demonstrate the contrary as it stated that ICBC ‘adjusted and improved industrial credit policy to provide financing support to the real economy in accordance with the macroeconomic policy, the prevailing trends of industry policy and the characteristics of the operation of the industry as well as the important strategic initiatives of the country’ and that ICBC ‘supported energy saving and environmental protection enterprises and ‘Going Global’ of prominent product facilities’.

The GOC commented after disclosure that the Commission had interpreted the quotes, and in particular the term ‘support’ in those quotes, as provided in recital 148 wrongly. The GOC also provided a number of quotes of annual reports of two Belgian banks (namely KBC and Belfius) and a German bank (namely Deutsche Bank), where the term ‘support’ was also used. While the wording ‘support’ can indeed have many meanings in different contexts, the quoted phrase in the ICBC annual report refers to ‘financial support’. This in tandem with the other quotes in recital 139 and other findings, such as the fact that ICBC had provided preferential loans and credit lines to some of the sampled exporting producers during the review investigation period, has led to the conclusion that the ICBC does take government industrial policy, plans or projects, or other laws into account when assessing a loan/credit line. The Commission therefore maintains its findings in recitals 139 to 148.

The assessment of all facts available on the file leads the Commission to the conclusion that ICBC has lent to the three sampled producers, which are representative for the PV industry, without carrying out a creditworthiness assessment, as the bank has been unable to prove the existence of such an assessment. This allows drawing the inference that the ICBC has been vested with government authority and exercised such authority by providing lending in line with the requirements of central planning, thus it performed governmental functions. That conclusion is further confirmed by the extracts from the annual reports.

In conclusion, the Commission found that ICBC is a public body.

The Commission has established on the basis of the 2015 Annual reports of CCB that the State owns more than 50 % of the shares. CCB is therefore formally controlled by the State.

As confirmed by CCB during the administrative procedure and mentioned in Chapter 11 and 12 of the Articles of Association, the GOC, in its capacity of main shareholder, has the power to appoint a majority of the members on the Board of Directors, which is the executive agency of the shareholders' General Meeting carrying out the management of CCB and shall be responsible to it. The same applies for the Board of Supervisors; i.e. the supervisory body of the Bank as provided by Chapter 16 of the Articles of Association. Moreover, according to CCB's Articles of Association and minutes of a Board of Directors' meeting, the Board of Directors, inter alia, decides on the budget of the bank, takes investment decisions, decides on the dismissals of the chief executive auditor and the secretary of the Board of the Directors. The 10 non-executive members of the Board of Directors out of a total of 15 members, represent the management of CCB. This non-exhaustive list of responsibilities illustrates the meaningful control of the State on CCB's daily business.

During the verification the Commission attempted to verify the creditworthiness assessment of the sampled exporting producers and the PV sector as a whole. CCB did not provide any information in this regard and referred to confidentiality issues. Further to the Commission's insistence, creditworthiness documents could be briefly viewed. In this regard, it should be noted that, in view of the practical arrangements, i.e. the fact that the documents, which were in Chinese, could only be briefly viewed and not taken as an exhibit, the Commission was not in a position to satisfactorily verify the information contained in the questionnaire reply. Furthermore, it is also noted that the documents did not relate either to the sector concerned or to the RIP. Upon the Commission's suggestion to make available an anonymised version of the documents requested for the Commission to take as exhibits, the financial entity in question refused. Therefore, it cannot be stated, as the GOC claimed, that this financial entity acted to the best of its ability.

The GOC stated in its reply to the Commission's letter regarding the consideration of applying Article 28 that the Commission cannot expect bank officials to allow it to take copies of all sorts of documents and have unrestricted access to such information as they are bound by confidentiality rules. Furthermore, it argued that the Commission was imposing an unreasonable burden of proof on the exporting country and on allegedly independent banks.

The Commission did not request ‘all sorts of documents’ or request to have ‘unrestricted access’ to such documents. Therefore, the comment that the Commission imposed an unreasonable burden of proof on the GOC or the financial institutions has to be rejected.

Following disclosure, the GOC submitted a general remark for the four banks visited on-the-spot by the Commission that the Commission's analysis is manifestly biased, as the annual reports of the concerned banks would contain evidence that those banks are not granting preferential loans to encouraged industries.

The GOC added to this comment that in the general disclosure document, the Commission pointed to Decision 40 which lists the encouraged industries, as established in recital 191 of the original Regulation. The GOC found contradiction to this finding in the annual reports of two of the four verified banks, which mention stricter entry standards or the reduction of loans granted to sectors that are listed as encouraged in Decision 40.

The Commission would like to underline that the investigation found that the four banks the Commission verified in fact provided preferential loans and/or credit lines to the three sampled exporting producers. These findings, which are in contradiction to GOC's comments in the two recitals above, are based on the information provided by the sampled exporting producers. None of the banks provided figures on loans and/or credit lines granted to the three sampled companies or the PV industry in general during the review investigation period. There was thus a discrepancy between the verified information from the sampled companies and the annual reports of the two cited banks. The Commission gave preference to the information received on spot from the sampled companies and thus rejected the GOCs comment. In its replies to the questionnaire and deficiency letter, CCB had indicated that government industry policy may be considered by the bank for reference, but that this does not bind the bank's decision with regard to its lending policy. However, the annual report of the bank confirmed that CCB implements government plans as evidenced by the following extracts: ‘Group proactively responded to the State's structural reform on the supply side, and aptly reacted to the development strategies…. We provided support to … strategic emerging industries.’; ‘In 2015, in line with the national industry policies and changes in external operation environment, the Group duly optimized credit policies…’.

In its comments to the disclosure, the GOC noted that the following quote ‘In 2015, in line with the national industry policies and changes in external operation environment, the Group duly optimized credit policies…’ does not reflect that the bank gave preferential loans to certain industries. The Commission rejects this comment as the quoted sentence needs to be read in conjunction with the other quotes in the previous recital. In any case, the point made by the GOC is not clear, as it refers to MEB, while the quoted sentence was taken from the annual report of the CCB. The Commission assumes for the sake of the argument that ‘MEB’ was a typographical error.

The GOC also took issue with the quote ‘Group proactively responded to the State's structural reform on the supply side, and aptly reacted to the development strategies….’ stating it was taken out of context and it has nothing to do with the encouraged, strategic or emerging industries or sectors and that the Commission has in any case misinterpreted the use of the word ‘emerging’ in CCB's annual report. The Commission notes that the full quote including the sentence that follows immediately reads as following (italics added): ‘We vigorously boosted the development of real economy. The Group proactively responded to the state's structural reform on the supply side, and aptly reacted to the development strategies including ‘One Belt and One Road’, free trade zones, coordinated development of the Beijing-Tianjin-Hebei region and the Yangtze River Economic Belt. We provided support to the national key construction projects, new-type urbanisation, new countryside construction and strategic emerging industries’. Therefore, as these quotes also need to be read in conjunction with each other, the Commission saw no reason to change its findings in recital 159.

The GOC also noted that the credit risk analysis and management system of the bank are described at length in the annual report of CCB. However, no new elements have been put forward by the GOC in this respect. In any event, those are abstract, and do not allow the assessment of individual cases, nor do they constitute proof that such assessment actually takes place. Therefore, the Commission did not see any reason to change its findings in recitals 152 to 159.

In its reply to the Commission's letter regarding the consideration to apply Article 28, the GOC claimed that the documents requested were in any case not relevant in the framework of the verification and that the Commission should have relied on the information that it could collect or that was already contained in the questionnaire reply. It also argued that the documents that were not provided by the CCB (or the GOC) were no grounds to apply Article 28.

In this regard, it is noted that the requested documents were necessary to verify the claims made in the questionnaire reply and that the Commission could not be satisfied with the provided documents as they did not relate to the claims made or could only partially support them. In the absence of any verified document showing that the bank carried out a proper risk assessment, the Commission maintained its conclusion the CCB was not carrying out creditworthiness assessments. Rather, its lending was guided by the objective of implementing government policy by giving the sampled companies preferential loans.

The assessment of all facts available on the file leads the Commission to the conclusion that CCB has lent to two sampled producers, which are representative for the PV industry, without carrying out a creditworthiness assessment, as the bank has been unable to prove the existence of such an assessment. This allows drawing the inference that CCB has been vested with government authority and exercised such authority by providing lending in line with the requirements of central planning. Thus, it performed governmental functions. That conclusion is further confirmed by the extracts from the annual reports.

The Commission therefore concludes that CCB is a public body.

As provided by Chapters 10 and 13 of the Articles of Association, the State, as a majority shareholder, has the power to appoint a majority of the members of Board of Directors and Board of Supervisors. According to MEB's Articles of Association, the Board of Directors, inter alia, convenes shareholder's meetings, formulates the bank's business and investment plans, sets up the capital management strategy and the budget plan, decides on profit distribution, and approves or dismisses senior management. This non-exhaustive list of responsibilities illustrates the meaningful control of the State on MEB's daily business.

During the verification the Commission attempted to verify the creditworthiness assessment of the sampled exporting producers and the PV sector as a whole. MEB did not provide any information in this regard and referred to confidentiality issues. Further to the Commission insistence, creditworthiness documents could be briefly viewed. While these documents related to the sector concerned, they did not relate to the RIP. In particular, MEB did not provide its credit policy documents for the years 2014 and 2015, when the Commission so requested and only allowed the Commission to briefly view the credit policy document for 2016 (which is not in the RIP). However, the Commission was not allowed to take the document as an exhibit. While MEB allowed the Commission to take a look at a document related to the assessment of the creditworthiness of a company (in Chinese), it is noted that the Commission was not allowed to take any notes relating to the aforementioned document or to take a copy of the document. This made it impossible to adequately comprehend the content in the limited timespan available during the verification visit.

Following disclosure, the GOC claimed that, in view of the fact that the Commission had relied on the existence of a credit report, it acknowledged that banks undertake credit risk assessments.

In this regard and as mentioned in sections 3.1 and 3.4.1 above, it is recalled that neither the GOC nor the individual banks provided satisfactory supporting evidence with regard to the credit assessment that they allegedly performed and more specifically how the banks take account of risk, how the creditworthiness of the borrower is assessed, what the risk premiums charged for different companies/industries in the PRC are, and which factors banks take into account when assessing loan or credit line applications. The mere existence of a credit approval report in Chinese language, which the Commission could briefly view during the verification visit at one of the banks, cannot be regarded as sufficient evidence to demonstrate that banks (and not only one bank which made a credit approval report available as referred above) conduct credit assessments. In any event, that report explicitly referred to government support as one of the reasons for granting the loan, and therefore confirms that the credit assessment is not market-based.

The GOC also commented that a comparison between the level of interest rate for the loan granted to the sampled cooperating producers and the PBOC was contrary to a conclusion of a lack of credit risk assessment.

In this regard, it should be noted that the above comparison does not hold as there is no link between the level of the PBOC benchmark and the fact that banks do not perform credit risk assessments. The Commission does not dispute that there is a top-up on the PBOC benchmark; the Commission's view is that the top-up is not in line with market terms, but reflects the objective of the banks to implement GOC policy to promote the PV sector.

In its replies to the questionnaire and deficiency letter, MEB indicated that it did not take account of government policy when making decisions with regard to its lending policy. However, the annual report of the bank confirms that MEB implements government plans as evidenced by the following extracts: ‘MEB is guided by national industrial policies’; ‘The Board of Directors, the Board of Supervisors and the special committees earnestly implemented the national policies’.

Following disclosure, the GOC referred back to the Commission's letter of 23 September 2016, which contained a similar quote from MEB's Annual Report of 2015 as the first quote in recital 174. The GOC noted that the quote ‘guided by national industrial policies’ does not refer to MEB, but to CMB Financial Leasing. The Commission notes that CMB Financial Leasing is wholly owned by MEB.

The GOC also noted that the credit risk assessment processes are described at length in the annual report of MEB and that the PV sector is not amongst the top ten borrower sectors of the bank. Therefore, the GOC does not see any contradiction between statements made by MEB in its replies to the questionnaire and deficiency letter and the contents of the annual report. Apart from pointing out that one of the quotes relates to a 100 % MEB owned entity, nothing new has been put forward by the GOC. In the absence of any verified document showing that the bank carried out a proper risk assessment instead of industrial policy to support the PV industry, the Commission maintained its conclusion that MEB was not carrying out creditworthiness assessments. Rather, its lending was guided by the objective of implementing government policy by giving the sampled companies preferential loans.

As far as lending decisions are concerned and whether financial institutions take government industrial policy and plans into account, the GOC argued that the questionnaire reply of the various banks constitute the most direct and essential facts and evidence on the basis of which the Commission should base its analysis.

As can be seen from the questionnaire replies described in recitals 137 to 185, those replies diverged, but overall tended either to deny or at least to minimize the existence of exercise of government authority.

Yet in the annual reports of each of the banks clear references to such government policies, plans or strategic emerging industries as guidance for their financial services were made. The GOC finds such statements not irreconcilable because the questionnaire replies do not tally with the contents of the annual reports of the banks. The Commission however considers that the statements in the banks' annual reports as referred to above clearly contradict and undermine the statements of the same banks, in their questionnaire replies.

Following the disclosure, the GOC expressed its disagreement on the statement that the Commission was not in a position to verify the credit assessment and decision-making process. The GOC thereby referred to documents that the CCB, MEB and ICBC provided to the Commission during the on-the-spot verification. The Commission recalls that these documents had the deficiencies set out above at recitals 148 and 169.

The GOC also referred to the annual reports of the financial institutions and the corresponding questionnaire replies, which in GOC's view were sufficient for verifying the credit assessment and decision-making processes. The Commission rejects this comment, as also the descriptive contents of the annual reports and the questionnaire replies needed to be verified by relevant evidence (i.e. for the review investigation period and the PV industry) on-the-spot. As the Commission also explained during the on-the-spot visit to the GOC and the banks it attempted to verify, the Commission also needed to be able to verify evidence supporting the statement that the credit risk assessment and decision-making processes, as described in the questionnaire replies and the annual reports, were also put into practice in the actual business operations.

The GOC also addressed the fact that a series of documents could not be provided in view of their confidential nature, the bank secrecy law and relevant contractual clauses. The GOC indicated that the Commission should recognize that the banks acted to the best of their abilities in view of the existing legal and contractual framework. The GOC also commented that Article 28 of the basic Regulation only allows the Commission to disregard information that is false or misleading and therefore implied that information that is not disregarded and provided to the best of the practical ability of the interested party is justified.

This argument has been rebutted above at recital 48. In addition, the Commission notes that Article 29 of the basic Regulation (which mirrors Article 12.4 of the WTO SCM agreement) foresees that ‘any information which is by nature confidential or which is provided on a confidential basis by parties to an investigation shall, if good cause is shown, be treated as such by the authorities’. In this context, the Commission considers that the legal framework of this investigation provides for ample guarantees with regard to the treatment of confidential information. On the basis of the above, the Commission considers that the authorities of the country concerned did not act to the best of their abilities in order to ensure access to information susceptible to support the claims that had been made in its questionnaire reply.

The assessment of all facts available on the file leads the Commission to the conclusion that MEB has lent to one of the sampled producers, which is representative for the PV industry, in pursuit of public policy goals. This allows drawing the inference that MEB has been vested with government authority and exercised such authority by providing lending in line with the requirements of central planning. Thus, it performed government functions. That conclusion is further confirmed by the extracts from the annual reports.

The Commission therefore concludes that MEB is a public body.

Next to these four verified banks, the Commission established that the majority of other banks that lent to the sampled producers were also publicly owned (see recital 106). Finally, the Commission was informed by at least one of the sampled companies that it had received significant loans from the China Development Bank, which had not been mentioned by the GOC at all. Using publicly available information about this bank, the Commission concluded that it is for more than 50 % State-owned through direct and indirect shareholding as well. For the purpose of this investigation, the Commission hence concluded that the ten banks ICBC, Agricultural Bank, Bank of China, CCB, MEB, China Development Bank, Bank of Communications, China Everbright Bank, Industrial Bank and Shanghai Pudong Development Bank were publicly owned. ICBC, Agricultural Bank, Bank of China and CCB accounted for [40-50 %] of the loans to the sampled producers in the RIP. Bank of Communications, China Everbright Bank, Industrial Bank and Shanghai Pudong Development Bank accounted for [10-20 %] of the loans to the sampled producers in the RIP. MEB accounted for [0-10 %] and China Development Bank for [20-30 %]. The information on the file did not allow establishing the ownership structure of the remaining six banks, for which the GOC had not provided any information.

Due to the lack of cooperation from the GOC concerning the six banks other than the four banks verified, the Commission had to apply facts available in order to assess whether those six banks are public bodies.

First, the Commission established that those banks are publicly owned (see previous recital and recital 106 above).

The Commission, second, found that the four sampled banks accounted for a substantial part [15-25 %] of the loans that the three sampled companies had obtained during the RIP. Therefore, findings for them could be considered representative.

The Commission, third, observed that the majority of loan contracts of all ten banks, which the Commission had obtained from the three sampled cooperating producers, followed the same or similar patterns, and that the lending rate had been agreed in the majority of cases by all banks was based on PBOC benchmark rate plus mark-up of below market rate.

The Commission considered therefore that the findings for the four banks for which verifications had taken place constituted the best facts available for assessing the other banks in public ownership, due to those similarities and the representativeness of the four banks that were verified.

On that basis, the Commission concludes that the six banks other than the four banks verified also are public bodies.

Accordingly, the Commission calculated benefits for those ten publicly owned banks.

The GOC claimed that the Commission's finding in the original investigation that Chinese State-owned banks are public bodies was no longer valid as the People's Bank of China (‘PBOC’) no longer sets the floor lending rates so that the GOC no longer intervenes in the financial market. The GOC argued that the PBOC had removed control over interest rates on loans offered by financial institutions on 20 July 2013 by removing the floor of lending rates. The PBOC had also decided to remove the deposit interest rate floating ceiling in a notice published on 27 October 2015.

The Commission considers that this claim is ineffective, as the findings set out in the preceding section suffice, taken on their own, to establish that Chinese publicly-owned banks are public bodies.

In any event, it is first noted that the Commission's finding (made in the original investigation) that Chinese State-owned banks are public bodies was not solely based on the fact that the PBOC sets the lending rates and the deposit interest rate floating ceiling, but resulted from the analysis of a series of elements as described in recitals 158 to 168 of the original Regulation. For the ease of reference, these elements related to (i) the government intervention linked to government ownership in major banks, (ii) the fact that state owned banks in the PRC hold a very high market share, leaving only very little room to privately owned banks, and are predominant players in the Chinese financial market, (iii) government control by means of ownership, administrative control of the banks' commercial behaviour or even statutory documents, (iv) role of the PBOC in setting limits on the way interest rates are set and fluctuate and (v) legal rules which require banks to reflect national policies/sectorial preferences into their credit policies. In the current expiry review, the only change that the GOC referred relates to point (iv). Points (i) to (iii) and (v) have been confirmed in the assessment carried out in the immediately preceding recitals.

Second, the decisions mentioned above at recital 194 allegedly removed the ceiling and floor interest rates. The wording of the relevant published PBOC decisions however only encouraged –not required– financial institutions to adapt to market-based pricing of lending interest rates. That means Chinese State-owned banks are still allowed to lend at preferential rates, and actually are obliged to do so on the basis of Article 34 of the Banking law, which takes precedence over a mere encouragement in a decision of the PBOC.

Third, while the PBOC published a decision on the removal of the floor rate, it is also noted that Article 38 of the Bank law still provides that ‘Commercial banks shall determine loan interest rate in accordance with the upper and lower limits for loan interest rates prescribed by the People's Bank of China’. The Bank law was amended only for other aspects at a later stage. This demonstrates the absence of any change in the legislative framework by which banks need to abide, because the PBOC decisions are only executive regulatory acts. Furthermore, the PBOC keeps the legal basis so that it could any day reintroduce upper and lower limits.

In addition, while the verified banks alleged that the share of short term loans whose interest rate was based on the LPR had increased significantly and were representing a large share of their short term loan portfolio, these allegations could neither be backed by supporting evidence provided by the banks nor confirmed during the verification visits at the premises of the exporting producers. That does not support the claim that the banks mentioned above would independently set their interest rates or follow a market rate and that the interest rate market has been liberalised.

Therefore, it is concluded that in spite of the alleged removal of the floor of lending rates and ceiling of deposit rates, the liberalization of the interest market rate alleged by the GOC has not materialized in practice. The conclusions drawn in the original investigation, i.e. Chinese State-owned banks are public bodies because they possess, are vested with, and exercise governmental authority, remain valid in the RIP and are therefore confirmed.

Following disclosure, the GOC claimed that the Commission incorrectly put the burden of the proof on the GOC as far as its claims (i) that the financial market had been liberalised, (ii) that the GOC policy with regard to the solar sector had been terminated and (iii) the alleged distortions of the Chinese financial market had disappeared are concerned. Additionally, the GOC also claimed that the Commission could not rely on a country-wide assessment of ‘public body’ and should have established such finding for each financial entity concerned.

As demonstrated in recitals 195 to 201, the Commission made a thorough analysis of the evidence at hand including whether the situation established in the original investigation had changed to such extent that its findings would no longer be valid. Such alleged changes included those raised by the GOC and were all analysed and addressed above. The Commission also notes that the new evidence submitted in this proceeding on the financial institutions was rather limited. It is also noted, that the GOC confirmed during the verification visit that apart from the changes referred to above, no other changes had taken place.

As far as the burden of the proof is concerned and in compliance with Article 18(3) of the basic Regulation, it is recalled that evidence presented in relation to the question as to whether the expiry of measures would be likely to lead to the continuation or recurrence of subsidisation shall be duly documented. The Commission has thoroughly analysed all the relevant elements and evidence submitted by the GOC in this respect and concluded that they were insufficient to prove that the situation had substantially changed as compared to the original investigation. In this context and in view of the alleged changes that the GOC referred to, it is considered that it was the GOC's responsibility to demonstrate that such changes had indeed taken place and that the Commission did not unduly put such burden on the GOC.

As far as the country-wide assessment is concerned, the Commission notes that it has carried out a specific analysis of public body for each of the financial institutions for which the GOC has submitted the relevant information requested. Unfortunately, the GOC has failed to submit information for all the other financial institutions that extended loans to the sampled cooperating exporting producers, as explained in section 3.1. The Commission was therefore in the impossibility to carry out a public body analysis for all these other financial institutions, and thus the argument of the GOC is moot. As a result, the Commission had to resort to the facts available on file and carried out a thorough analysis of public body for the financial sector in the PRC. Among the relevant elements, the Commission thoroughly considered all the new evidence submitted by the GOC in the context of this proceeding, together with the findings established in the original investigation.

Furthermore, the GOC also claimed that the Commission had relied in its determination on ‘public bodies’ on the de facto absence of abolition of the floor lending rates. It further claimed that the Commission had misinterpreted the alleged abolition of the floor lending rate as such abolition implied that banks could now allegedly provide loans at rates below 30 % of the benchmark rate. By denying the abolition of such floor rate, the GOC further claimed that banks would thus not be able to grant preferential loans. The GOC also claimed that requiring banks to adapt to market-based pricing of lending interest rates would be equivalent to controlling these banks and run counter to the spirit of liberalisation. The GOC further claimed that Article 38 of the Bank law is permissive and that although the upper limits were abolished several years before the lower limits, the Bank law was not amended. The GOC also claimed that the theory of correlation between the PBOC rates and the LPR was erroneous and reverted to interest rate statistics for the sampled cooperating exporting producers. The GOC also claimed that there have never been benchmarks or limits for loans denominated in USD or EUR.

As far as the determination of public bodies is concerned, it is first recalled that the GOC itself raised the issue of the abolition of the floor lending rates in support of its claim that the Chinese government no longer intervenes in the financial market and that Chinese State-owned banks cannot be considered public bodies. The Commission analysed the claim on the abolition of the floor rates and rejected it on the grounds mentioned in recitals 194 to 201. In the absence of other significant changes raised by the GOC, the Commission relied on the conclusions drawn in the original investigation, which were confirmed by fresh evidence for the RIP, and on new elements such as the existence of a new lending rate (LPR) to draw its conclusion in this regard.

As far as the alleged misinterpretation of the abolition is concerned, the Commission fails to see how the fact that a floor lending rate is abolished could prevent banks from providing preferential lending if the floor lending rate was in any case down to 30 % below the benchmark rate.

As far as the absence of requirement for banks to offer market-based lending interest rates, the Commission fails to see how forcing banks to operate according to free market principles can be considered as imposing specific policies on banks. Such practices do not stem from a specific policy but rather from creating a financial framework where market-based principles apply.

As far as Article 38 of the Bank law is concerned and as indicated by the GOC in its questionnaire reply, the Commission understands that all financial entities in the PRC shall strictly follow the Bank law and fails to see how any alleged permissiveness can be compatible with such legal principle. In any case, the fact that the floor lending rate would be abolished is not incompatible with the fact that PV companies would benefit preferential lending.

As far as the theory of correlation between the PBOC rates and the LPR is concerned, the Commission notes that the presented statistics were not supported by underlying calculations and that they can therefore not be taken into account. Should such statistics be accurate, the Commission fails to see the relevance of such statistics to demonstrate that the correlation analysis between the PBOC and the LPR is (allegedly) erroneous. As for loans denominated in USD or EUR, the Commission considers that the alleged absence of benchmark or limits does not imply that such loans cannot be granted at preferential rates.

Additionally, the GOC also claimed that the Commission's analysis and conclusion that Chinese State-owned banks are public bodies lacked the most basic legal standards and also referred to the relevant legal and evidentiary standards as stipulated in the AB ruling in US — Carbon Steel India and should go further than a determination of government ownership and meaningful control over an entity by a government; i.e. the determination should include an analysis of the ‘core characteristics and functions of the relevant entity, its relationship with the government, and the legal and economic environment prevailing in the country in which the investigated entity operates’. The GOC also referred to the findings on government interference on account of PBOC influencing lending rates and policies and the reliance upon Article 38 of the Bank law. Eventually it referred to the incorrectness and inadequacy of the Commission's determination in the original investigation as noted in recitals 163 to 167 of the original Regulation.

In this regard, the Commission refined its analysis on this issue. In recitals 100 to 106 the Commission sets out in greater detail the facts on which it came to the conclusion of public ownership of most of the banks which have provided loans to the sampled companies.

As far as the legal and economic environment is concerned, the Commission hereby refers to conclusions drawn above at recital 139 on the basis of Article 34 of the Banking law.

The fact that banks exercise government authority is also confirmed by way of Articles 7 and 15 of the General Rules on Loans (implemented by the PBOC), which regulate Self-made loans, commissioned loans and special-purpose loans (Article 7) and Interest subsidization on loans (Article 15) and Decision 40. There is also a great deal of evidence, supported by independent studies and reports, that a large amount of government intervention is still present in the Chinese financial system as already explained in recitals 172 and 178 of the original Regulation.

Following disclosure, the GOC indicated that special loans referred to in Article 7 of the General Rules on Loans mentioned above were eliminated in 1999 based on a Circular on Improving the Administration of Special Loans (YINFA [1999] No. 228) and that Article 15 had become irrelevant as the PBOC no longer sets the upper and lower limits of loans. The GOC also alleged that the Commission had misinterpreted Article 34 of the Bank law which allegedly bears no relation to the national policies, encouraged industries, strategic industries, emerging industries to address preferred industries and sectors. It also referred to Articles 4, 5, 7 and 35 of the Bank law relating allegedly to the bank's autonomy, the lack of interference by entities or individuals, governments and the examination of the credibility of the borrowers. The GOC further commented that Article 34 should not be read in isolation. Eventually, the GOC also indicated that the Commission did not explain how Decision 40 demonstrates that banks exercise government authority and referred to the preamble and to Article 17 of such Decision. It also added that this Decision basically covers the whole Chinese economy and pertained to the 11^th Five-Year period.

The Commission acknowledges that special loans were eliminated in 1999. This does not reverse the conclusions drawn, partially on the basis of the other facts available.

As for Article 15 of the General Rules on Loans, the Commission disagrees with the GOC's view. That Article says: ‘In accordance with the State's policy, relevant departments may subsidize interests on loans, with a view to promoting the growth of certain industries and economic development in some areas.’ It remains relevant even after the end of floor and ceiling rates. In any event, Article 38 of the Bank law still refers to limits and may at any point in time be re-activated, as explained in recital 199.

As far as the Bank law is concerned, it should first be noted that Articles 4, 5 and 7 belong to ‘Chapter I General provisions’ while Articles 34 and 35 belong to ‘Chapter IV Basic Rules for Loans and Other Business Operations’. As far as Article 4 is concerned, the Commission does not consider that a provision for banks to carry out ‘business free from any interference by entities or individuals’ is incompatible with the fact that State-owned banks are public bodies or, in the alternative, are entrusted and directed to exercise government authority. Indeed, the Commission verified the business operations and decision-making processes for financial services at four State-owned banks. As no relevant information could be obtained for other banks, the findings for those banks have to be extended, on the basis of facts available, to all other State-owned banks. Furthermore, as essential information requested by the Commission from those four banks was not provided, in particular details on credit risk assessment, the Commission had to apply facts available also when making findings based on the questionnaire replies and the verification visits at those four banks.

The GOC also referred to Article 4 of the Bank law whereby ‘The business operations of commercial banks shall be governed by the principles of safety, liquidity and efficiency. Commercial banks shall make their own decisions regarding their business operations, take responsibility for their own risks, assume sole responsibility for their profits and losses and exercise self-restriction. Commercial banks shall, pursuant to law, conduct business operations without interference from any unit or individual. Commercial banks shall independently assume civil liability with their entire legal person property’.

In the present case, during the on-the-spot verification, the Commission, not only legally, but also de facto, was not in a position to confirm the accuracy of the claim that banks do not take government policy and plans into account while making lending decisions. Indeed, the Commission was not provided a single creditworthiness assessment for the PV industry and for the RIP. The Commission does not consider that Article 4 of the Bank law prevents commercial banks from taking government industrial policy and plans into account as this article relates to the principles governing business operations. This is also confirmed by Article 34 of the Bank law. Contrary to the claim by the GOC that the Commission ‘brushed away the legal framework within which banks are operating’, the Commission rather made a careful analysis of that legal framework and could also establish a clear link between this legal framework and the operations of these financial institutions as evidenced by their annual reports.

The GOC also referred to Article 5 of the Bank law, deriving from it that there would be ‘no interference by local governments and government departments at various levels, public organizations or individuals in the business operations of the banks.’ However, the actual text of Article 5 of the Bank law reads as follows: ‘Commercial banks shall adhere to the principles of equality, voluntariness, fairness and good faith in business dealings with their clients’. For the Commission, this formulation does not shield banks from their duty to apply policy considerations as set out in Article 34.

Articles 7 and 35 of the Bank law relate to the examination of the creditworthiness, purpose of the loan and credit approval chain. As far as these matters are concerned and as indicated in recitals 128, 143, 155 and 171, the cooperating banks did not provide documents in support of their claims such as those relating to creditworthiness or the approval process. On the basis of facts available, such Articles can therefore not be considered to contradict the interpretation of Article 34 established by the Commission.

As far as Decision 40 is concerned and as indicated in recital 102 of the original investigation, it is first noted that this Decision suggests that the GOC will actively support the development of new energy industry and expedite the development of solar energy, instructs all financial institutions to provide credit support only to encouraged projects (the category in which the PV projects belong) and promises the implementation of ‘other preferential policies on the encouraged projects’. On the basis of the above and especially the fact that banks are instructed to provide credit support to the PV sector, it is considered that Decision 40 demonstrates that banks exercise government authority. As far as Article 17 of such Decision is concerned and the fact that credit principles should be respected, the Commission does not consider such condition as incompatible with the fact that banks exercise government authority. As far as the claim that Decision 40 covers the whole Chinese economy, the Commission notes that this Decision refers to the Guiding Catalogue of the Industrial Restructuring which itself makes a distinction between three types of industries; i.e. encouraged, limited and eliminated projects. Furthermore, the ‘encouragement content’ is also defined in this Decision. As far as the reference to the ‘11^th Five-Year plan’ is concerned, it is noted that such plan has been replaced by the 12^th and more recently by the 13^th Five-Year plans. It is also noted that Decision 40 has not been repealed and is therefore still valid. Nothing in Chinese law indicates that reading the reference to the 11^th Five-Year plan as dynamic reference would be inappropriate.

Except for the alleged interest rate reform that has been addressed in (197) to (201), the GOC did not provide any evidence in the course of this investigation that the situation has changed. The investigation did not either bring to light any element contradicting the above findings. The conclusions drawn in the original investigation remain valid also in the RIP and are therefore confirmed.

These conclusions make it clear that the financial sector is encouraged to contribute to the strategies designed by the Government authorities. As far as the interference of the GOC to influence rates is concerned, this issue has already been dealt with in recitals 197, 198, 206 and 207. As far the findings established in the original investigation are concerned, it is noted that the comments raised by the GOC in the original investigation were analysed and addressed in the original Regulation and that the conclusions drawn in the original investigation in this respect were not challenged in court. Furthermore, the GOC did not submit any evidence that could overturn the conclusion reached in the original investigation, neither did the investigation bring to light any elements of such nature. In this context, the Commission fails to see on which grounds such findings cannot form part of the basis on which the Commission relied to draw its conclusions in the current investigation.

The request contained allegations that the Chinese banks extended disproportionate credit lines to the Chinese exporters of the product under review. The investigation confirmed that indeed all investigated companies received considerable credit lines from Chinese banks which were in most cases provided without any charge.

The investigation showed that all (groups of) sampled exporting producers benefited from credit lines provided free of charge or at below-market rates in the RIP.

Accordingly, the extension of such credit lines to the PV industry should be considered a subsidy.

In view of the existence of a financial contribution, a benefit to the exporting producers and specificity, this subsidy should be considered countervailable.

The provision of credit lines free of charge or for below-market fees is considered a provision of financial services (Article 3(1)(a)(iii) of the basic Regulation) for less than adequate remuneration. The amount of countervailable subsidy is calculated in terms of the benefit conferred on the recipients, which is found to exist during the RIP. Because of the market distortions described in recitals 225 and 226 above the adequacy of the remuneration for the financial services (in this case provision of credit lines) could not be determined in relation to prevailing market conditions in the PRC. Therefore in accordance with Article 6(d)(ii) of the basic Regulation the benefit conferred on the recipients is considered to be the difference between the amount that the company pays for the provision of credit lines by Chinese banks and the amount that the company would pay for a comparable commercial credit line obtainable on the market. Credit lines could also be considered as a potential transfer of funds under Article under Article 3(1)(a)(i) of the basic Regulation.

In the original investigation, one of the sampled exporting producers had obtained a credit line from a bank whose headquarters was established in a financial jurisdiction other than the PRC and this credit line was subject to commitment and arrangement fees as is the usual practice on world financial markets. Although the credit line was extended by the Chinese subsidiary of the bank in question, it was considered to be a reasonable proxy for a benchmark. Also for the calculation of the subsidy amount for this scheme in the current expiry review, it was considered appropriate to use the fees applied to this credit line as a benchmark in accordance with the Article 6(d)(ii) of the basic Regulation. As set out in recital 267, no better benchmark could be identified.

The level of the fees used as a benchmark was applied pro-rata to the amount of each credit line in question to obtain the amount of subsidy (minus any fees actually paid). In cases where the duration of the credit line was more than one year, the total amount of subsidy was allocated over the duration of the credit line and an appropriate amount attributed to the RIP.

The request contained allegations that Sinosure continued to provide export credit insurance on preferential terms to producers of the product under review. According to the complaint, Sinosure's export credit insurance is not even adequate to cover the long-term operations and Sinosure operates in a situation of long term losses.

As mentioned in recital 279 to 283 below, the Commission requested information in the questionnaire, in the deficiency letters and during the on-the-spot verification visit to the GOC and Sinosure, of which a substantial number of elements was not provided by the GOC and/or Sinosure, due to which the Commission was unable to verify all essential elements and information with a clear objective link with the scheme, such as the documents and data referred to below.

As far as shareholding and the internal decision making process are concerned, the new/revised Articles of Association were not provided. Following disclosure, the GOC underlined that the Commission did not state which specific information element from the Articles of Association was not available and how it affected the Commission's analysis and that it relied on the obsolete version of the Articles of Association. In this respect, the Commission notes that it based its findings on the version of the Articles of Association that was available and undisputed.

As far as internal rules governing the operations and the risk assessment process are concerned, Sinosure did not provide the requested ‘Basic Rules for Comprehensive Risk Management China Export & Credit Insurance Corporation’ and the ‘Scheme for Specific Authorization of Policy-Based Export Credit Insurance Programs of China Export & Credit Insurance Corporation’ referred to in the minutes of the Board of Directors that had been provided in the questionnaire reply. Following disclosure the GOC said that mentioning that the second document was not provided is illogical because as noted by the Commission in its own document list made during the verification, according to Sinosure, this document does not exist. The Commission is nevertheless surprised that the minutes of the Board of Directors refer to an inexistent document. Furthermore, the matter of fact is that the document was not provided and therefore appeared on the list, which the GOC approved and signed at the end of the verification visit. The reasons noted for not providing the documents were the reasons given by the GOC and were noted for the record.

While Sinosure allowed the Commission to take a brief look at the figure on the profits/losses achieved only for short term credit insurances under the export credit insurance programme, it is noted that the Commission was not allowed to examine or take a copy of the document and that the calculated profitability could not be supported by evidence.

Following disclosure, the GOC considers that the Commission admits reviewing the profit and loss figures in recital 280. However, the GOC should also take account of the rest of recital in question, which leads to the conclusion that the Commission was not satisfied with the information provided. The GOC also stated that Sinosure did give detailed information in its questionnaire response on the short-term export credit insurance given for solar products' exports to the Union. In this respect the Commission notes that with the figures presented during the verification visit, it was impossible to verify these figures on-the-spot.

Information on export credit insurance by sector, by the 10 largest exporting producers or by the three sampled exporting producers, was not provided either. Claims following disclosure regarding the 10 largest exporting producers are addressed in recital 67 above. As to the GOC's claim that the information for the three sampled exporting producers was in any case available to the Commission via the exporting producers themselves, the Commission notes that the information requested from Sinosure should have been provided by Sinosure itself. Sinosure could not assume that information on export credit insurance would be provided by the three sampled exporting producers and even if so, Sinosure could not simply assume that such information would be complete or correct. It is part of the investigation authority's responsibility to gather information from various sources, a task which has been impeded by non-cooperation.

Furthermore, Sinosure claimed that none of the three sampled exporting producers had taken insurance from Sinosure during the RIP. This claim was found to be incorrect and in contradiction with the information provided by the three sampled exporting producers.

The legal bases are identical to those in the original investigation; i.e.: the Notice on the Implementation of the Strategy of Promoting Trade through Science and Technology by Utilising Export Credit Insurance (Shang Ji Fa[2004] No. 368), issued jointly by MOFCOM and Sinosure; the Export Directory of Chinese High and New Technology Products of 2006; the so-called 840 plan included in the Notice by the State Council of 27 May 2009; the so-called the so-called 421 plan included in the Notice on the issues to implement special arrangements for financing of insurance on the export of large complete sets of equipment, issued jointly by the Ministry of Commerce and the Ministry of Finance on 22 June 2009; Notice on Cultivation and development of the State Council on Accelerating Emerging industries of strategic decision (Guo Fa [2010] No. 32 of 18 October 2010), issued by the State Council and its Implementing Guidelines (Guo Fa [2011] No. 310 of 21 October 2011).

As Sinosure is a public body vested with government authority and executes governmental laws and plans, the provision of export credit insurance to producers of the product under review constitutes a financial contribution in the form of potential direct transfer of funds from the government within the meaning of Article 3(1)(a)(i) of the basic Regulation.

Some local authorities granted a rebate of part of the premium paid by the exporting producers to Sinosure. This rebate of part of the premium paid also constitutes a direct transfer of funds in the form of a grant according to Article 3(1)(a)(i) of the basic Regulation.

A benefit within the meaning of Articles 3(2) and 6(c) of the basic Regulation exists to the extent that Sinosure provides export credit insurance on terms more favourable than the recipient could normally obtain on the market, or that it provides insurance cover that would otherwise not be available at all on the market. An additional benefit within the meaning of Article 3(2) received by the exporting producer is the cash rebate of part of the insurance premium paid to Sinosure by some of the local authorities where some exporting producers were established.

With regard to the existence of a benefit, the Commission examined to what extent Sinosure's premiums covered the cost of short-term export credit insurance. As explained in recital 280, Sinosure provided a profitability analysis covering the period 2011-2015 showing that Sinosure was allegedly profitable over this period on an accumulated basis but that it incurred losses in 2015. First, the Commission notes that this document, allegedly coming from the financial department, could only be briefly viewed and not be copied/printed and taken as an exhibit. Second, the information contained in this report could only be verified very partially as the presented evidence did not allow a proper reconciliation of the information with the 2014 annual report of Sinosure. The Commission is therefore not satisfied with the provided information.

Furthermore Sinosure made the argument based on Item (j) of Annex 1 to the WTO Agreement on Subsidies and Countervailing Measures (‘SCM’), which considers as a ‘prohibited’ export subsidy under Article 3(1)(a) of that agreement the provision of export credit insurance programmes at premium rates which are inadequate to cover the long-term operating costs and losses of the programmes. In its questionnaire reply, Sinosure simply referred to the profit accumulated over the last five years and concluded that since overall it made a profit during this period, the provision of export credit insurance to the exporting producers did not constitute a subsidy under the WTO SCM Agreement. In this regard, it is noted that, on the basis of the submitted information, i.e. a cumulated figure related to profitability over a period of 5 years, the Commission is not in a position to draw any meaningful conclusion.

In the absence of reliable and verifiable information to carry out the analysis of the ‘programme’ under Item (j) of Annex 1 to the WTO SCM Agreement, the Commission had to base its findings on the evidence available on record. In this regard, the Commission relied on the 2014 annual report collected during the verification visit. The examination of this document revealed that the overall export credit insurance activity of Sinosure would have been loss-making in 2013 and 2014 if certain non-operational income had not been recorded. Such non-operating incomes do not relate to the normal activity of Sinosure and should thus be excluded from the profitability analysis of this institution. This situation remains similar to that in the original investigation.

Following disclosure, the GOC contested the Commission's assessment that the overall export credit insurance activity of Sinosure would be loss-making and the calculation methodology used by the Commission by referring to the GOC's comments of 27 September 2013. The latter comments were already addressed and dismissed in section 3.5.3 of the original Regulation.

Further to the explanations in the recitals 280, 289 and 290, and as established in the original investigation, Article 11 of the allegedly obsolete version of the Articles of Association that have been submitted in the questionnaire reply provides that the company shall operate at breakeven. In other words, by statute Sinosure does not aim to maximize its profits, but has to aim merely at breakeven according to its function as the sole official export credit insurer in the PRC. As explained above, the records on file have shown that the legal and policy environment in which Sinosure operates requires the company to execute the government policies and plans in fulfilment of its public policy mandate. Among the selected industries and enterprises specifically supported by the State, the exporting producers have had full access to export credit insurance provided by Sinosure at preferential rates. Therefore, Sinosure provides unlimited availability of insurance cover for the PV sector and the low insurance premiums it offers do not reflect the actual risks incurred in insuring the exports in this sector. Based on all these elements on the record, it can already be concluded that the premium rates charged by Sinosure remain inadequate to cover its long-term operations.

On the basis of the above, given that Sinosure remains loss-making on its export credit insurance programme, the existence of a benefit is determined by comparing the premiums paid by the exporting producers to those available on the market.

Sinosure alleged that four other companies are providing such services on the Chinese market. No information concerning their market shares could however be provided in this regard. In any case, Sinosure is the sole official export credit insurer and it has a dominant position on the Chinese market. Consequently, there is no commercial benchmark in the PRC for such instruments and given that the financial market in the PRC remains distorted by government intervention, it is reasonable to use a benchmark outside the PRC.

The subsidies are contingent upon export performance within the meaning of Article 4(4)(a) of the basic Regulation because they cannot be obtained without exporting. In addition, they are also specific under Article 4(2)(a) of the basic Regulation because access is limited to certain enterprises. In the absence of changes in this regard, reference is made to recitals 246 and 247 of the original Regulation where it was concluded that the benefits granted by Sinosure and/or by the local authorities to the producers of the product under review are specific in the meaning of Article 4(2)(a) of the basic Regulation. Furthermore, as there was no evidence suggesting that the subsidy is based on objective criteria or conditions under Article 4(2)(b) of the basic Regulation, the benefit is specific also in this respect.

Contrary to what the GOC and one exporting producer claimed following disclosure, the information submitted by the companies on premiums paid was not rejected. However, ultimately, it was not used in the calculation described in recitals 302 and 303 below, because the Commission resorted to facts available.

The investigation showed that the three groups of sampled exporting producers benefited from the export credit insurance provided by Sinosure in the RIP.

The provision of export credit insurance by Sinosure to the PV industry is to be considered a subsidy, to the extent that premiums are at below-market rates.

In view of the existence of a financial contribution, a benefit to the exporting producers and specificity, this subsidy should be considered countervailable.

The amount of countervailable subsidy is calculated in terms of the benefit conferred on the recipients, which is found to exist during the RIP. The calculation of the benefit is akin to the situation involving loan guarantees. According to Article 6(c) of the basic Regulation the benefit conferred on the recipients is considered to be the difference between the amount of the premium that the company pays on the short-term insurance provided by Sinosure and the amount of the premium that the company would pay for comparable export-credit insurance obtainable on the market.

As mentioned in recitals 277 to 283, the Commission was unable to verify a number of elements concerning the provision of export credit insurance cover by Sinosure to the sampled exporting producers, to the largest exporting producers or the sector concerned. Given the lack of cooperation by the GOC and Sinosure, the Commission resorted to facts available in order to calculate the benefit conferred to the recipients. In this regard, it was considered reasonable to rely on the benefit rates found in the original investigation. The sampled companies in this review that were sampled in the original investigation get the benefit rate established in the original investigation. As to the group that was not sampled in the original investigation, its rate is the weighted average of the co-operating companies in the original investigation.

In the original investigation, it was established that producers in the PV sector received subsidies under the Golden Sun Demonstration Programme (‘Golden Sun’).

The Commission had requested the GOC to provide a number of documents, most of which related to the budgetary targets in the Golden Sun programme. In its questionnaire reply, the GOC claimed that it was unable to identify the documents requested due to a lack of information in the question as formulated by the Commission. However, during the verification visit, after the Commission posed the same question (containing the same level of information as in the questionnaire, i.e. the names of the requested documents), the GOC claimed that these documents were confidential and stated it would need to be checked whether they could be submitted to the Commission. In this regard, the Commission fails to see why the missing documents should be regarded as confidential and could not be provided in the framework of an anti-subsidy investigation where the investigating authority is bound by strict confidentiality rules. In any event, like in the original investigation, the GOC did not come back on the matter despite several reminders during the on-the-spot visit and the documents were never provided to the Commission.

In addition, the GOC had stated in its questionnaire reply that none of the sampled exporting producers had benefitted from this programme during the RIP as the programme is not for producers of the product under review. This however contradicted the information received from the sampled exporting producers. During the verification visit, the GOC nuanced its questionnaire reply and acknowledged the possibility of payments even though the programme was allegedly terminated and had been changed into a feed-in tariff programme. The GOC provided the 2013 Opinion of the State Council to support this latter statement. The Commission notes that the GOC did not mention in its questionnaire reply that this programme had been amended, nor had the GOC provided any supporting evidence in this regard. The Commission also notes that the document provided in the course of the verification does not refer to this programme or its alleged replacement by another programme.

Given this lack of cooperation by the GOC, the Commission was unable to verify all aspects of the Golden Sun programme and in particular the actual benefits conferred to the producers of the product under review and the PV industry as a whole. This was in addition to the failure by the GOC to submit all the relevant documents requested, notably the budgetary documents on the Golden Sun appropriations issued by the Ministry of Finance (MOF).

Further, as far as the benefits are concerned, the Commission notes that the GOC had been requested to provide information on the benefits received to producers but, while the information was available to the GOC, it merely replied that no benefits were received.

As established in the original investigation, the main legal basis is the Notice concerning the Implementation of the Golden Sun Demonstration Programme of 16 July 2009 and the annexed Golden Sun Demonstration programme Interim Measures for Financial Assistance Fund Management, File CaiJian No. 397 [2009] issued by the Ministry of Finance, the Ministry of Science, and the National Energy Board; Circular regarding the Successful implementation to Assignments to The Golden Sun Demonstration Programme, File No. 718 [2009]; Circular regarding the Successful Fulfilment of the Golden Sun Demonstration Programme 2010, File No. 622 [2010]; Circular on Instructions on Finance Subsidy Budget Indexes for Construction Costs to The Golden Sun Demonstration Programmes 2010, File No. 965 [2010] of 2 December 2010 issued by of the Ministry of Finance; Circular with respect to Distribution of the Budgetary Target for the Fiscal Subsidy Appropriated for The Golden Sun Programmes 2011, JCJ File No. 336 of 1 September 2011 issued by the Hebei Department of Finance; the Circular with respect to Distribution of the Budgetary Target for the Fiscal Subsidy Appropriated for The Golden Sun Programmes 2011, HCJ File No. 135 of 8 November 2011 issued by the Hengshui Municipal Finance Bureau.

As in the original investigation, the GOC repeated that this grant programme is not intended for the producers of the product under review, but targets PV power generation projects. The GOC also claimed that the applicant had not provided evidence to demonstrate the existence of any benefit distributed to producers of the products concerned during the RIP.

In the current investigation, nothing on the file can change the findings of the Commission in the original investigation in recital 271 to 282, in which it was concluded that grants under this programme are directly linked to the product under review because the eligible ‘distributed solar PV systems’ specifically include the supply of modules and cells as a significant part of the projects and therefore the nexus between the benefit conferred by the government and the product under review is direct and inextricable.

As established in the original investigation, the Golden Sun programme confers a subsidy within the meaning of Article 3(1)(a)(i) and Article 3(2) of the basic Regulation in the form of a transfer of funds from the GOC in the form of grants to the producers of the product under review.

The Commission also determined that this subsidy scheme is specific within the meaning of Article 4(2)(a) of the basic Regulation.

The Golden Sun programme remains a specific subsidy in the form of grant. The investigation has established that the sampled exporters have benefitted from this subsidy.

In its reply to the disclosure the GOC made comments on the Golden Sun Demonstration Programme reiterating certain issues it had already raised. As these issues are already discussed above no further comment is necessary. In addition, the GOC claimed that the Commission had not established specificity in respect of this scheme.

However, from the fact that the Golden Sun grants were only granted to Chinese producers in the renewable energy sector it follows that their specificity is clearly established in accordance with WTO standards.

Further, the GOC claimed that it had provided evidence of the termination of this scheme. However, as these grants were booked to the deferred income account of the sampled exporting producers they will confer benefit for many years to come. This means that in subsidy terms it is misleading to claim that the scheme has been terminated. In reality, no new beneficiaries are admitted anymore into the programme, but due to the long life time of the installations that have been included, benefits still accrue. These claims were also therefore rejected.

In its request, the applicant provided evidence, which showed that encouraged industries in the PRC may receive various one-off or recurring grants from different levels of government authorities, i.e. local, regional and national.

In this investigation, it was indeed found that the three sampled companies also received significant one-off or recurring grants from various government levels resulting in the receipt of benefits during the RIP. Some of these had already been reported by the sampled companies in their respective questionnaire replies, while many others were found on-the-spot during the verification. None of them were disclosed in the questionnaire reply of the GOC, as requested.

These grants were given to the companies by national, provincial, city, county or district government authorities, and all appeared to be specific to the sampled companies, or specific in terms of location or type of industry. The level of legal detail for the exact law under which these benefits were granted, if there was any legal basis for them at all, was not disclosed although the Commission was sometimes given a copy of a document issued by a government authority which accompanied the grant of funds (referred to as ‘the notice’).

Given the large amount of grants contained in the request and/or found in the books of the sampled companies, only a summary of the key findings is presented in this Regulation. Evidence of the existence of numerous grants and the fact that they had been granted by various levels of the GOC were initially supplied by the three sampled companies. Several other grants were not reported by the sampled companies but were identified at on-spot verifications.

One of the sampled companies received more than 130 of these grants during the RIP. Many of these were granted by government authorities at city, district or provincial level. The largest grant was more than 7 Mio CNY and was given under the ‘Trinity’ scheme, a municipal fund to promote the transformation and upgrading of industrial enterprises. Other grants were, for example, patent funds, science and technology funds and awards, business development funds, funds for the upgrading and transformation of industrial enterprises, grants for basic infrastructure, support funds provided at district level, funds for the development of new and clean energy and land tax rebates. Furthermore, this company also received grants for export credit insurance provided by the government at district level.

Another sampled company also received substantial grants in the RIP from the government, some of which related to the development zone in which the company was located (over 13 Mio CNY). Others were grants that were related to science and technology expenditure, renewable energy and/or industry and information development (e.g. the ‘3 Famous’ grants). Rebates related to the acquisition of land use rights were also found on-spot.

One of the sampled companies received, as a group, various grants worth in total over 29 Mio CNY. Examples of such grants are funds for new energy development, key technological reform projects or funds related to the development zone in which the recipient is located.

On the basis of the evidence collected with regard to the receipt of these grants by the sampled companies and in the absence of any other information, the Commission considered these grants to be a subsidy within the meaning of Article 3(1)(a)(i) and (2) of the basic Regulation as a transfer of funds from the GOC in the form of grants to the producers of the product under review took place and a benefit was thereby conferred.

These grants are also specific within the meaning of Articles 4(2)(a) and 4(3) of the basic Regulation given that they appear to be limited to certain companies or specific projects in specific regions and/or the PV industry. These grants do not meet the non-specificity requirements of Article 4(2)(b) of the basic Regulation, given that the eligibility conditions and the actual selection criteria for enterprises to be eligible are not transparent, not objective and do not apply automatically. Further, there is no evidence that the grants belong to an overarching subsidy programme.

In all cases the companies provided information as to the amount of the grant, and from whom the grant was received. The companies concerned also mostly booked this income under the heading ‘subsidy income’ in their accounts and had had these accounts independently audited. This has been taken as positive evidence of a subsidy that conferred a countervailable benefit.

In its reply to the disclosure the GOC and an exporting producer made comments on ‘other grants’. The point being made was that not enough detail was provided by the Commission in order to justify the existence of countervailable schemes.

It should be pointed out, however, that very little detail was supplied to the Commission relating to these schemes in questionnaire replies. Also the sampled exporting producers do not challenge the amounts calculated by the Commission and disclosed to the relevant party. They also do not challenge the fact that these grants were received from the GOC.

Faced with the facts of the lack of co-operation of the GOC, the Commission decided that it was reasonable to try to identify the existence of such grants during the on-the-spot verification. The findings of the verifications were radically different to the number and total value of grants reported in the questionnaire responses of the GOC. It was decided that the on-the-spot findings represented a reasonable indicator of the level of subsidisation in this respect. The Commission does not accept that this approach demonstrates any failing to justify the existence of countervailable schemes. As those grants share common features, they are awarded by a government body and are not part of a subsidy scheme, but individual grants, the Commission can assess them together as described in recitals 324 to 327. The claim that the Commission did not justify the existence of countervailable schemes or provide positive evidence of such schemes is therefore rejected.

In the original investigation, it was established that the tax offset for research and development by FIEs entitled FIEs to preferential tax policies for their R&D activities by way of a 150 percent tax offset of their expenses, when certain thresholds for R&D spending were met. It was also found that this preferential R&D cost offset programme for FIEs has been replaced by a specific programme in 2008, which is here referred to as Tax offset for research and development (i.e. ‘by FIEs’ omitted).

The GOC contested that the tax offset for research and development by FIEs had been replaced in 2008 as the two programmes would have different eligibility criteria. The GOC also claimed that the Tax offset for research and development programme is not specific and therefore not countervailable.

In light of the original investigation, it was initially established that the legal basis for the replacement programme (Tax offset for research and development) is Article 30(1) of the EIT Law, Article 93 and 95 of the Regulations on the Implementation of Enterprise Income Tax Law of the PRC (‘EIT Implementing Regulations’), Administrative Measures for the Determination of High and New Technology Enterprises (Guo Ke Fa Huo [2008] No. 172),the Notice of the State Administration of Taxation on the issues concerning Enterprises Income Tax Payment of High and New Technology Enterprises (Guo Shui Han [2008] No. 985). Following disclosure, the GOC stated that these legal bases were irrelevant, except for Article 30(1) of the EIT Law and Article 95 of EIT Implementing Regulations.

In this investigation, the following additional documents were identified as also part of the legal basis: the Administrative measures of R&D expenses tax reduction for enterprises (Guo Shui Fa [2008] No.116), the Jointly issued Circular by Ministry of Finance and the State Administration of Taxation on Relevant Policies related to R&D expenses super deduction (2013/70). Following disclosure, the GOC stated that the Administrative measures of R&D expenses tax reduction for enterprises (Guo Shui Fa [2008] No.116) had allegedly expired on 1 January 2016, i.e after the RIP.

Article 95 states that an additional 50 % deduction of R&D expenditures mentioned in Item 1 of Article 30 shall be granted for such expenditures for high and new technology products so that they are subject to an amortization based on 150 % of the intangible assets costs.

These companies have to incur R&D expenses for the purpose of developing new technologies, new products and new crafts. Eligible enterprises can offset an additional 50 % of their R&D expenses against their income tax liability. Also expenses from intangible R&D assets entitle eligible companies to a 150 % deduction of the actual costs borne by these companies.

Companies benefiting from this scheme have to file their Income Tax Return and relevant Annexes. The actual amount of the benefit is included in the tax return.

The three sampled exporting producers Chint, Jinko and Trina availed benefits under this scheme.

Following disclosure, the GOC and one exporting producer contested specificity on the grounds that all companies in PRC are eligible for the 150 % additional deduction. The GOC added that the Canadian authorities found no specificity for this scheme in unitized wall modules from PRC and then quoted the Panel ruling in US — Aircraft. The GOC highlights that in that case, according to the Panel, limiting funding to R&D into ‘high risk, high pay-off, emerging and enabling technologies’ did not constitute a sufficiently limited group of enterprises or industries within the meaning of Article 2 of the SCM Agreement. The GOC said that the Commission had wrongly stated that an eligibility criterion for this program is based on a company being a High and New Technology enterprise and that, in any case in Case T-586/14 Xinyi PV products v Commission, the General Court held that if a company qualifies as a High and New Technology enterprise it satisfies an objective condition for the grant of the tax benefit.

The claims above are rejected. The fact that other enterprises may receive comparable subsidies under another legal basis does not mean that this scheme is not de jure specific to only a limited group of enterprises. Even admitting that in the abstract all companies would be eligible for the 150 % additional deduction, in this case the sampled companies benefited from the deduction to the extent that they could tick a specific box in their tax return that was linked to their certification of High and New Tech Enterprise, which is much less burdensome than the alternative procedure. As to the judgement in Case T-586/14 Xinyi PV products v Commission, it concerns market economy treatment and not specificity of a subsidy. As regards the claim that the Canadian authorities found no specificity for this scheme, no party submitted a copy of such findings.

This scheme constitutes a subsidy within the meaning of Article 3(1)(a)(ii) and Article 3(2) of the basic Regulation in the form of revenue foregone by the government which confers a benefit upon the recipient companies.

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 scheme only to enterprises that incur certain R&D expenses.

Accordingly and as established in the original investigation, this subsidy should be considered countervailable.

The amount of countervailable subsidy is calculated in terms of the benefit conferred on the recipients, which is found to exist during the RIP. The benefit conferred on the recipients is considered to be the amount of total tax payable according to the normal tax rate, after the subtraction of what was paid with the additional 50 % deduction of the actual expenses on R&D for the approved projects. The amounts countervailed are based on the figures in the companies' tax return for the year 2015. One exporting producer claimed that the tax data for the RIP should have been used instead. This claim was rejected. In light of recital 459 of the original Regulation, the Commission restates the importance that the calculation of benefit be based on final audited tax returns for a certain tax year. The Commission adds that the final settlement of the 2015 tax return during the RIP makes any benefit claimed on the return final, further underlying the correctness of its approach. The Commission cannot base its calculation on quarterly tax returns, because these returns reflect the on-going provisional situation at the time of filing and by definition do not take into account the final consolidated situation of the annual tax year. The objective of these returns is to ensure liquidity to the government in case taxes are provisionally due, but they reflect only the partial situation at the time of filing. Furthermore, the 2015 tax returns cover three quarters of the RIP and are therefore the most relevant annual tax return available.

In accordance with Article 7(2) of the basic Regulation, this subsidy amount (numerator) has been allocated over the total sales turnover of the sampled exporting producers during the RIP, because the subsidy is not contingent upon export performance and was not granted by reference to the quantities manufactured, produced, exported or transported.

The original investigation established that this programme allows an enterprise that is recognised as High and New Technology Enterprise to benefit from a reduced income tax rate of 15 % as compared to the ordinary rate of 25 %. No changes have been identified during this expiry review investigation.

The legal basis of this programme comprises Article 28 (2) of the EIT Law along with the Administrative Measures for the Determination of High and New Technology Enterprises (Guo Ke Fa Huo [2008] No. 172), and Article 93 of the EIT Implementing Regulation, along with the Notice of the State Administration of Taxation on the issues concerning Enterprises Income Tax Payment of High and New Technology Enterprises (Guo Shui Han [2008] No. 985), the Notice of the Ministry of Science and Technology, the Ministry of Finance and the State Administration of Taxation on Issuing the Guidelines on Administration of Recognition of Hi-tech Enterprises (Guo Ke Fa Huo [2008] No.362), the Notice of the State Administration of Taxation on Issues Concerning Implementation of Preferential Treatment for the Enterprise Income Tax of High-tech Enterprises (Guo Shui Han [2009] No. 203), the Announcement of the State Administration of Taxation on the Pre-payment of Enterprise Income Tax by High-tech Enterprise during the Qualification Review Period ([2011] No. 4), the Notice of the Ministry of Finance and the State Administration of Taxation on Issues Concerning the Applicable Tax Rate and Tax Credit for the Overseas Income Obtained by the High-Tech Enterprise ([2011] No. 47).

In the original investigation, it was found that this scheme applies to recognised High and New Technology Enterprises that need key support from the State. These enterprises should have core independent intellectual property rights and must meet a number of requirements: (i) their producers are included in the scope of the products in the High-Tech Fields with Key State Support; (ii) the total expenses for R&D shall account for certain proportion of total sales income; (iii) income from high and new technology products shall account for certain proportion of the total sales income; (iv) the personnel engaged in R&D shall account for a certain proportion of the total staff; (v) the other requirements set by the 2008 Administrative Measures for High and New Tech Enterprises are met.

Following disclosure the GOC contested specificity on the grounds that 1) the criteria in the recital above are objective in light of the General Court's statements in Case T-586/14 Xinyi PV products v Commission, 2) that any company meeting the criteria is automatically subject to the 15 % tax rate and 3) that the Commission's findings are inconsistent with the elements of the US — Aircraft ruling pinpointed in recital 346. These claims are rejected on the grounds that the scheme is de jure specific to the extent only a limited group of enterprises can avail of the benefit in question as described in recital 355 above. Moreover, the judgement in Case T-586/14 Xinyi PV products v Commission concerns market economy treatment and not specificity of a subsidy.

Companies benefiting from this scheme must file their Income Tax Return and relevant Annexes. The actual amount of the benefit is included in the tax return.

No changes to the findings summarised in recitals 356 and 357 were identified in this investigation.

The three sampled exporting producers Chint, Jinko and Trina availed benefits under this scheme.

The scheme should be considered a subsidy within the meaning of Article 3(1)(a)(ii) and Article 3(2) of the basic Regulation because there is a financial contribution in the form of foregone government revenue which confers a benefit upon the recipient companies. The benefit for the recipient is equal to the tax saving enjoyed through this programme according to Article 3(2) of the basic Regulation.

This subsidy is specific within the meaning of Article 4(2)(a) of the basic Regulation since it is limited to the enterprises receiving the certification of High and New Tech Enterprises and complying with all the requirements of the 2008 administrative measures. Furthermore, there are no objective criteria established by the legislation or the granting authority on the eligibility of the scheme and this is not automatic pursuant to Article 4(2)(b) of the basic Regulation.

Accordingly and as established in the original investigation, this subsidy should be considered countervailable.

The amount of countervailable subsidy is calculated in terms of the benefit conferred on the recipients, which is found to exist during the RIP. The benefit conferred on the recipients is considered to be the amount of total tax payable according to the normal tax rate, after the deduction of what was paid with the reduced preferential tax rate. The amounts countervailed are based on the figures in the companies' tax return for the year 2015.

Jinko's claim that when calculating the benefit under corporate income tax schemes the Commission should have deducted that alleged benefits obtained under other subsidy schemes in order not to count some benefits twice is dismissed. It is not up to the investigating authority to carry out such an artificial exercise.

The original investigation established that this programme provides an exemption from VAT and import tariffs in favour of foreign investment enterprises (‘FIEs’) or domestic enterprises for imports of capital equipment used in their production. To benefit from the exemption, the equipment must not fall in a list of non-eligible equipment and the claiming enterprise has to obtain a Certificate of State-Encouraged project issued by the Chinese authorities or by the National Development and Reform Commission (NDRC) in accordance with the relevant investment, tax and customs legislation. No changes have been identified during this expiry review investigation.

The legal bases of this programme are the Circular of the State Council on Adjusting Tax Policies on Imported Equipment, Guo Fa No. 37/1997, Notice of the Ministry of Finance, the General Administration of Customs and the State Administration of Taxation on the Adjustment of Certain Preferential Import Duty Policies, 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, [2006] No. 316 and Catalogue on Non-duty-exemptible Articles of importation for either FIEs or domestic enterprises, 2008.

As established in the original investigation and confirmed in the current expiry review, equipment imported in order to develop a domestic or foreign investment projects in line with the policy of encouraging foreign or domestic investment projects may be exempted from payment of the VAT and/or import duty, unless the equipment category is listed in the catalogue of non-duty exemptible article. To benefit from this scheme, the company needs to obtain a confirmation letter from the local authority responsible for the project, which needs to be submitted to local customs authority.

The GOC claimed that with effect from 1 January 2009, only the import duty is exempted and VAT on importation of equipment for self-use is collected.

However and contrary to the claims from the GOC, for the three sampled exporting producers, exemptions of both VAT and import duty during the RIP were identified. These included equipment, for which the benefit was amortized over the lifespan of that equipment and was partially allocated to the RIP. While the Commission saw no evidence that this scheme was operating during the RIP, the Commission established on the basis of the evidence on the file that the sampled producers still availed benefits under this scheme.

This programme is considered to provide a financial contribution in the form of revenue forgone by the GOC within the meaning of Article 3(1)(a)(ii) as FIEs and other eligible domestic enterprises are relieved from payment of VAT and/or tariffs which would be otherwise due. It therefore confers a benefit on the recipient companies in the sense of Article 3(2) of the basic Regulation.

The programme is specific within the meaning of Article 4(2)(a) of the basic Regulation since the legislation pursuant to which the granting authority operates limits its access to enterprises that invest under specific business categories defined exhaustively by law and belonging either to the encouraged category or the restricted category B under the Catalogue for the guidance of industries for foreign investment and technology transfer or those which are in line with the Catalogue of key industries, products and technologies the development of which is encouraged by the State. In addition, there are no objective criteria to limit eligibility for this programme and no conclusive evidence to conclude that eligibility is automatic under Article 4(2)(b) of the basic Regulation.

Following disclosure, the GOC requested the Commission to put on record the industries and sectors covered by the categories above and claims that the breath of the industries covered by them makes the program eligible to companies across all sectors of the economy. The Commission notes however that the GOC never submitted relevant evidence that industries and sectors covered by these categories are not in an encouraged or restricted category. The Commission deems that the eligible companies are a sufficient limited group in this case. The verification visit to sampled companies did not suggest that the program was eligible to companies across all sectors of the economy.

According to one exporting producer, to receive this benefit, the products produced using the imported machinery had to be listed in the Guiding Catalogue on Foreign Investment in Industry referred to in recital 386.

Initially, the GOC stated that only Trina had benefited from this scheme. Based on the information received from the sampled exporting producers, it was found however that all three of them benefited from this scheme. The GOC explained that it had understood that only equipment imported during the RIP was to be reported. The Commission noted that the benefit follows the amortisation of imported equipment, some of which were allocated to the RIP.

The amount of countervailable subsidy is calculated in terms of the benefit conferred on the recipients, which is found to exist during the RIP. The benefit conferred on the recipients is considered to be the amount of VAT and duties exempted on imported equipment. In order to ensure that the countervailable amount only covered the RIP period the benefit received was amortized over the life of the equipment according the company's normal accounting procedures.

The original investigation established that this programme provides for an exemption from VAT for the purchase of domestically-produced equipment by FIEs. To benefit from the exemption, the equipment shall not be listed as non-eligible equipment and the value of the equipment must not exceed a certain threshold. No changes have been identified during this expiry review investigation.

As determined in the original investigation, the legal bases are the Provisional Measures for the Administration of Tax Refunds for Purchases of Domestically manufactured Equipment by FIEs issued by State Administration of Taxation, the Trial Measures for Administration of Tax Rebate from the Purchase of Chinese-made Equipment for Foreign-invested Projects and the 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.

The VAT refund scheme applies to the domestically produced equipment purchased for foreign-funded projects, provided that such projects fall within the scope of encouraged projects in the Guiding Catalogue of foreign invested industries or the Catalogue of advantageous foreign-invested industries in the Central and Western regions in China.

As in the original investigation, the GOC claimed in its reply to the questionnaire that this program had been discontinued starting 1 January 2009. This claim was already dismissed in the original investigation. Moreover, in the current expiry review investigation two of the sampled exporters submitted detailed information concerning this scheme, including the amount of benefit received during the RIP. Taking this into account, it was concluded that the GOC omitted relevant information, such as the list of relevant recipients and the amount of benefit received by them.

This programme is considered to provide a financial contribution in the form of revenue forgone by the GOC within the meaning of Article 3(1)(a)(ii) of the basic Regulation as FIEs are relieved from payment of VAT which would be otherwise due. It therefore confers a benefit on the recipient companies in the sense of Article 3(2) of the basic Regulation.

The programme is specific within the meaning of Article 4(2)(a) of the basic Regulation since the legislation pursuant to which the granting authority operates, limits its access to foreign invested enterprises that purchase domestically-manufactured equipment and fall under the encouraged category and the restricted B Category of the Catalogue of Foreign-funded Industries and equipment purchased in the domestic market listed in the Catalogue of key industries, products and technologies the development of which is encouraged by the State. Further, the Trial Measures for Administration of Tax Rebate from the Purchase of Chinese-made Equipment for Foreign-invested Projects and the Notice of the Ministry of Finance limit the benefit to the FIEs that belong to the encouraged category in the Guiding Catalogue of foreign invested industries or the Catalogue of advantageous foreign-invested industries in the Central and Western regions in China. In addition, there are no objective criteria to limit eligibility for this programme and no conclusive evidence to conclude that eligibility is automatic under Article 4(2)(b) of the basic Regulation. The programme is also specific under Article 4(4)(b) of the basic Regulation because it is contingent upon the use of domestic over imported goods.

Following disclosure, the GOC contested specificity on grounds similar to those described in recital 379. This claim is dismissed in the same recital.

The amount of countervailable subsidy is calculated in terms of the benefit conferred on the recipients, which is found to exist during the RIP. The benefit conferred on the recipients is considered to be the amount of VAT exempted on domestic equipment. In order to ensure that the countervailable amount only covered the RIP, the benefit received was amortized over the life of the equipment according the usual industry practice.

As established in the original investigation, land is government-owned since land belongs collectively to the People of China. Land cannot be sold but land-use rights may be assigned according to the law. The GOC claimed that the land-use rights in China are assigned through bidding, auction and competition and that this is also provided for in the Article 137 of the Real Right Law of the People's Republic of China.

As established in the original investigation, the land-use right provision in China falls under Land Administration Law of the People's Republic of China.

In addition, the following documents also are part of the legal basis: Law of the People's Republic of China on Urban Real Estate Administration; the Interim Regulations of the People's Republic of China 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 of the People's Republic of China; and the Provision on Assignment of State-owned Construction Land Use Right through Bid Invitation, Auction and Quotation.

The sampled exporting producers reported information regarding the land they hold as well as most of the relevant land-use rights contracts/certificates, though not all notices were provided by the sampled exporting producers. Furthermore, only very limited information was provided by the GOC about pricing of land-use rights.

The GOC did not provide information concerning the conditions under which the land use rights were received nor was information provided for the ten largest exporting producers (in terms of exports of the product under review to the Union during the RIP). None of the notices and/or starting prices requested were provided, which were needed to the land use right transactions as reported by the three sampled exporting producers. The GOC referred the Commission to the website of the land market dynamic monitoring system, but added that for transactions dating before 2007, these may not appear on the aforementioned website. In addition, the GOC did not provide any information as regards the number of bidders either for the reported land use right transactions.

As for the missing starting prices, the GOC referred to lower (government) levels, which set the starting prices and threshold prices and which would have information on the number of participants for each bidding and auction. The Commission could not accept this line of reasoning as the GOC represents the government of the PRC at all levels in an anti-subsidy proceeding.

Due to the above, some of the findings as regards the provision of land and LUR had to be based on facts available.

As established in the original investigation, the authorities set land prices according to the urban land evaluation system. In the current expiry review investigation, the GOC referred to the urban land price dynamic monitoring system, which is constructed by the Ministry of Land and Resources and publishes on a quarterly basis the land prices for 105 Chinese cities.

It was found that these prices are higher than the minimum benchmark prices set by the urban land evaluation system and used by local governments, because the benchmark prices set by the urban land evaluation system are updated only every three years, while the dynamic monitoring prices are updated quarterly. However, there was no indication of land prices being based on the dynamic monitoring prices. In fact, the GOC confirmed during the on-the-spot visit that urban land price dynamic monitoring system monitors the fluctuations of the price levels of land in certain areas (i.e. 105 cities) in the PRC and is designed to assess the evolution of land prices. However, the starting prices in biddings and auctions are based on the benchmarks established by the land evaluation system.

The GOC also confirmed at the verification visit that it is practice to select only a number of bidders or participants (in case of auctions), instead of having all parties that registered participate.

In the original investigation, it was established that the prices paid for LUR in the PRC are not representative of a market price determined by free market supply and demand. It was also found that LUR transfers were affected by restrictions in the announcement of transfer through tendering, auction and quotation. No changes to such findings were identified in this expiry review investigation.

In the framework of this investigation, the Commission also found that certain sampled exporting producers received refunds from local authorities to compensate for the (already low) prices which they paid for the LURs, for example for works done by the company itself as regards basic infrastructure on the land.

The notices that were provided by one of the sampled exporting producers showed clearly that all of the industrial land acquired by this company was earmarked for the PV sector. The actual purchase prices paid were nearly the same as the starting prices in the notices. For the same sampled exporting producer, evidence collected showed that the LUR prices it obtained were not based on ‘market prices’, but were negotiated with the Land Bureau.

The above evidence contradicts the claims of the GOC that the prices paid for LUR in the PRC are representative of a market price which is determined by free market supply and demand. The Commission established in addition that LUR transfer did include restrictions in the tendering, auction and quotation procedures, which affect fair competition and found that certain sampled exporting producers received refunds from local authorities to compensate for the (already low) prices which they paid for the LURs.

The findings of the investigation confirm that the situation concerning land provision and acquisition in the PRC is unclear and non-transparent and the prices are often arbitrarily set by the authorities. The authorities set the prices according to the Urban Land Evaluation System, which is updated only every three years.

Accordingly, the provision of land-use rights by the GOC should be considered a subsidy within the meaning of Article 3(1)(a)(iii) and Article 3(2) of the basic Regulation in the form of provision of goods which confers a benefit upon the recipient companies. As explained in recitals 427 to 430 above, there is no functioning market for land in the PRC and the use of an external benchmark (see recitals 435 to 437 below) demonstrates that the amount paid for land-use rights by the sampled exporting producers is well below the normal market rate.

In addition, the refunds from local authorities are direct transfers of funds which confer a benefit because they are non-repayable grants not available on the market. The subsidy is specific under Article 4(2)(a) and 4(2)(c) of the basic Regulation because the preferential access to industrial land is limited only to companies belonging to certain industries, in this case the photovoltaic industry, only certain transactions were subject to a bidding process, prices are often being set by the authorities and government practices in this area are unclear and non-transparent.

Consequently, this subsidy is considered countervailable.

As in the original investigation and in accordance with Article 6(d)(ii) of the basic Regulation, land prices from the Separate Customs Territory of Taiwan were used as an external bench mark.

The amount of countervailable subsidy is calculated in terms of the benefit conferred on the recipients, which is found to exist during the RIP. The benefit conferred on the recipients is calculated by taking into consideration the difference between the amount actually paid by each of the sampled exporting producers (reduced by the amount of local government refunds/grants, where applicable) for land use rights and the amount that should normally have been paid on the basis of the Taiwanese benchmark.

Following the methodology applied in the original investigation, the Commission used the average land price per square meter established in Taiwan corrected for currency depreciation and GDP evolution as from the dates of the respective land use right contracts. The information concerning industrial land prices was retrieved from the website of the Industrial Bureau of the Ministry of Economic Affairs of Taiwan. The currency depreciation and GDP evolution for Taiwan were calculated on the basis of inflation rates and evolution of GDP per capita at current prices in USD for Taiwan as published by the IMF for 2015. In accordance with Article 7(3) of the basic Regulation this subsidy amount (numerator) has been allocated to the RIP using the normal life time of the land use right for industrial use land, i.e. 50 years. This amount has then been allocated over the total sales turnover of the sampled exporting producers during the RIP, because the subsidy is not contingent upon export performance and was not granted by reference to the quantities manufactured, produced, exported or transported.

In its reply to the disclosure the GOC made various claims that the Commission had not met the substantive legal and evidentiary standards as regards the determination of a financial contribution and benefit in respect of this LUR scheme.

The GOC restated its belief that the LUR system in the PRC results in the granting of LURs representative of market prices which are determined by free market supply and demand. However, as demonstrated in the original investigation in recitals 357 to 359 and confirmed in this investigation the GOC failed to supply key information in order to allow a proper analysis by the Commission. Secondly, based on the information available in the current investigation it is still clear that the existence of the ‘dynamic land monitoring system’ and the ‘urban land evaluation system’ did not ensure that market prices operated according to market supply and demand principles. Due to the lack of data supplied by the GOC it was not possible to identify the true nature of the system which was operating.

In fact, in accordance with Article 28 the facts available to the Commission clearly suggested that a benchmark was required for the reasons indicated above. In addition from the information available it was clear, whether LURs had been allocated prior to the original investigation or subsequent to it, that for the sampled companies there was no evidence of a proper functioning auction (or other) system which operated on market principles. On the contrary, the evidence described above pointed to a system which provided the PV sector with preferential rates which were non-transparently allocated to them. As the Commission had indicated in the general disclosure document, the few land notices obtained during the investigation clearly indicated that land was only offered to targeted industries through a system of ‘sector orientation’. Also the prices had been pre-set before the auction and did not change as only one pre-known bidder came forward in the auction.

The transactions examined of the sampled producers also indicated the existence of refunds and other deductions made in respect of LURs as well as evidence that some rates had been negotiated with the land bureau. The GOC commented in its response to the disclosure that such matters did not indicate that the LUR system did not operate on market principles. However, the individual subsidy margin calculated for each sampled company (including deductions etcetera where appropriate) was disclosed to the party concerned and no comments were received that calculations were not accurate in this respect. The comments made by the GOC could not therefore be accepted.

The GOC also claimed that the Commission considered all LURs acquired below the benchmark as receiving a benefit and that this was not sufficient to meet specificity requirements. However, it should be pointed out that the Commission's view on specificity is that it is the existence of a distorted and non-transparent LUR system, taken together with clear evidence of preferential transactions being granted to the PV sector, which demonstrates specificity in this investigation. This claim was therefore also rejected.

One exporting producer raised the issue that LURs acquired from entities it claimed to be private parties should not have been included in the calculation of benefits. Firstly it should be noted that most land obtained by the sampled producers had been acquired directly from a land bureau of the Chinese Government. Secondly, even for the limited number of occasions where the LURs had been obtained from, allegedly, private parties the issue has no substance since in a system which has clearly been identified as not functioning on the basis of market principles and favouring certain sectors, the exporting producer concerned acquired the relevant LURs at rates which were also well below the benchmark established. This claim was therefore rejected.

The GOC provided no information on this program. Hence, the Commission was unable to verify all aspects of the scheme and in particular the actual benefits conferred to exporting producers of the product under review and the PV sector as a whole. Therefore, certain findings of the investigation had to be based on the facts available in accordance with Article 28 of the basic Regulation.

The main legal basis is the Measure of administration of Foreign Trade Development Fund (Caiqi (2010) No.114) of the Ministry of Finance. For a sampled exporting producer, the implementation of the scheme during the RIP was done via the Circular of Jiangxi Financial Department on Issuing Jiangxi Foreign Economy and Trade Department Development and Support Funds (the Third Around) of the Year 2013 GanCaiQiZhi [2014] No. 31 and the Circular of Jiangxi Financial Department on Issuing Jiangxi Foreign Economy and Trade Department Development and Support Funds (the Third Around) of the Year 2014 GanCaiQiZhi [2015] No. 25.

Jinko submitted the reference to the main legal basis and copies of the two circulars referred to in the recital above. Jinko declared having received grants under this program also in 2012.

Changzhou Trina Solar Energy Co. Ltd and related companies (‘Trina’) reported grants received under this scheme in the RIP.

On the basis of the available information, these programmes do not appear to be generally available to all enterprises in China.

The Foreign Trade Development fund programmes confer subsidies within the meaning of Article 3(1)(a)(i) and Article 3(2) of the basic Regulation in the form of a transfer of funds from the GOC in the form of grants to the producers of the product under review.

The Commission also determined that this subsidy scheme is specific within the meaning of Article 4(2)(a) of the basic Regulation.

The Foreign Trade Development fund programmes are specific subsidies in the form of grants. The investigation has established that one of the sampled exporters has benefitted from this subsidy.

The 863 programme is a National High Technology Research and Development Programme focusing on key technologies for the industrialization of high-efficiency solar cells, such as MW-class thin-film silicon or crystalline silicon heterojunction solar cells and silica-based nanowire solar cells. Grants under this programme are provided by the Ministry of Science and Technology.

Guidelines for key technologies that may benefit from grants under the 863 and 973 programmes are published on a yearly basis.

In its deficiency letter, the Commission requested the GOC to provide certain government plans covering the two programmes. The GOC, while referring to all other documents already provided to the Commission (most of which were not even related to the two programmes in question), asked the Commission to clarify why the Commission needed such information and then continued by stating that such plans did not exist. On the other hand, a number of provisional and administrative measures on the management of such plans (of which the GOC contested the existence) were provided.

When the Commission requested during the on-the-spot verification the documents that constitute the legal basis for the two programmes (as the GOC did not reply to this question in its questionnaire reply), the GOC provided, in Chinese, the administrative measures for three government plans related to High Technology Research and Development, Basic Research and Development and Science and Technology support. However, due to the timing of the information provision and the fact that the documents were not accompanied by an English translation, the Commission could not verify these documents on-spot.

The Commission also requested the GOC to provide the statistics on the funding provided under these two projects. The GOC refused to provide such statistics as, according the GOC, the funding is not related to production of the photovoltaic products.

The GOC also claimed that none of the sampled exporting producers benefitted from either of the two programmes (or any of the programmes listed under ‘various grants’ for that matter), which contradicted with the information supplied by one of the sampled exporting producers.

Hence, the Commission was unable to verify all aspects of the 863 and 973 programmes and in particular the actual benefits conferred to producers of the product under review and the PV sector as a whole. Therefore, certain findings of the investigation had to be based on the facts available in accordance with Article 28 of the basic Regulation.

The legal basis for the two programmes constitutes of the Administrative measures for National High Technology Research and Development Plan (863 Plan) as revised in 2011, the Administrative Measures for National Science and Technology Support Plan as revised in 2011 and the Administrative measures for National Key Basic Research and Development Program (973) as revised in 2011.

The GOC stated that grants provided under the umbrella of programmes 863 and 973 relate only to research and development and not to the production of the product under review. Furthermore, according to the GOC the two programmes are not countervailable as they are not specific.

These arguments are rejected. The fact that the grants were provided for the research and development of the product under review means a direct transfer of funds from the GOC, reducing significantly the research and development costs that the recipient would have had otherwise.

The grants are considered to be specific as only companies operating in key technologies as listed in the guidelines that are published on a yearly basis are eligible to receive them. The guidelines stipulate the key technologies that may benefit from the two programmes. The GOC provided upon request of the Commission the guidelines for the years 2011, 2013 and 2014. The 2014 guidelines on key technologies mention research on solar cells explicitly. The guidance documents of the years prior to 2014 also explicitly mentioned either solar cells and/or solar energy.

The 863 and 973 programmes confer subsidies within the meaning of Article 3(1)(a)(i) and Article 3(2) of the basic Regulation in the form of a transfer of funds from the GOC in the form of grants to the producers of the product under review.

The Commission also determined that this subsidy scheme is specific within the meaning of Article 4(2)(a) of the basic Regulation.

The 863 and 973 programmes are specific subsidies in the form of grants. The investigation has established that one of the sampled exporters has benefitted from this subsidy.