Anti-Dumping System in China

After having suffered hardship in oversea discriminatory anti-dumping investigation on Chinese exports, China began to realize the importance of establishing its own anti-dumping and anti-subsidy system to protect certain unfledged and vulnerable home industries. As revealed by unauthorized statistics, Chinese exporters were involved in at least 340 foreign anti-dumping investigations, and 73% of which happened in 1990ís.  In 1996 alone, there were 30 reports on anti-dumping investigation by foreign countries on the imports from China, accounting for one sixth of the world total in the year. It is beyond any doubt that Chinese manufacturers suffered heavy losses as a result of those discriminatory actions.

Nevertheless, keeping in mind the saying by the late Chairman Mao Zedong Ė Learning A War From A War, the Chinese authority set up anti-dumping and anti-subsidy mechanism in March 1997.  There were 4 investigations on foreign imports having been reported since then. The exporters under the investigations are from USA, Canada, South Korea, Russia, Japan, etc. and the products involved includes news prints, silicon steel slices, polyester films, cold-rolled stainless steel plates, etc. The first anti-dumping investigation happened in late 1997, which involved news prints exporters from Canada, USA and South Korea. After going through all the statutory proceedings, the investing authorities held on June 3, 1999 that the dumping price margins of the investigated products ranged from 9% to 78% and anti-dumping duties were imposed upon the new prints from the three countries in accordance with different margins.

The initiation of anti-dumping practice in China suggests that it be imperative for foreign exporters to understand the Chinese anti-dumping system. The following are the highlights of the system.

The authority for deciding on an application for anti-dumping investigation is PRC Ministry of Foreign Trade and Economic Cooperation. In addition, the State Economic and Trade Commission plays an important role in a positive decision on whether to conduct investigations applied. In case of a decision on the investigation, PRC General Administration of Customs Offices and relevant ministries under the State Council may be involved. The other parties in anti-dumping investigation proceedings are the home producers who think that imports have caused or threatens to cause substantive damage to, or form substantive obstacles to the establishment of, relevant home industries and initiate the proceedings, and the foreign governments and exporters and the Chinese importers concerned. Under unusual circumstances, the authorities may initiate by itself without applications by domestic producers the investigating proceeding, if it deems the evidences proving the existence of dumping are sound and the consequence of damage is clear.

After preliminary survey, the authorities may make an ad interim decision on the existence of dumping damage and the rough margin of the dumping.  Provisional measures may be taken under the ad interim decision, e.g. levy of preliminary anti-dumping duty, order for the provision of warranty in cash or in other accepted forms. The period for the levy of preliminary anti-dumping duty is 4 months from the date of the proclamation on the duty.  The term may be extended to 9 months in particular cases.

Further investigation will lead to the final decision, which comes out normally within 12 months from the announcing date of anti-dumping investigation. But the term may extend to 18 months under special circumstances. If the final rate is lower than the preliminary rate, the duty payer will be refunded in accordance with the gap. On the other side, however, if vice versa, the gap will not be filled by the duty payer.  In case of no anti-dumping duty in a final decision, the duty paid under preliminary decision will not be refunded, but warranty shall be returned in the form as that when it was made.

What is a dumping under the Chinese law?  If the export price is lower than the normal value of the imported product, it is dumping.  Here two factors are essential.  One is the so-called Normal Value, and the other is so-termed Export Price. By the former, it means either the comparable price of the same or similar product in the exporterís home market, or the comparable price of the same or similar product exported to a third country. Lacking of the two, the production and management costs plus reasonable profit of the same or similar product may be taken as the normal value of the imported product. By the latter, it means either the contractual price or the price with which the relevant product was first sold to an independent purchaser. If neither is available, the constructive price by PRC Ministry of Foreign Trade and Economic Cooperation in consultation with PCR General Administration of Customs Offices shall be used as the export price. The gap between the export price and the normal value is the dumping margin for the imported dumping product.

In holding the dumping damage to domestic industry, the following issues shall be made clear.
(1)  Quantity of the dumping product, including the total quantity or the increased quantity in comparison with the same or similar domestic product and the potentiality of the rapid increase of the imported product.
(2) Price of the dumping product, including price reduction of the dumping product or the impact on the price of the same or similar home product.
(3) Impact on domestic industry by the dumping product.
(4) Production and export capacities and the relative inventories of the country from which the dumping product is exported.

Last but far from the least, as stipulated under Article 46 of

PRC Anti-Dumping and Anti-Subsidy Regulations, China will make retaliation upon any country or region which conducts discriminatory anti-dumping or anti-subsidy investigation upon Chinese exports, as cases may be.