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

Two exporting producers provided the information requested in Annex I to the Notice of Initiation for the purpose of sampling but neither of them produced organic coated steel products as defined in the Notice of Initiation. A third exporting producer made itself known six weeks after the deadline for replies to the sampling form. This exporting producer was given interested party status, but was considered non-cooperating since it never replied to the sampling form or attempted to reply to the exporting producer's questionnaire.

Consequently, the Commission informed the authorities of the PRC by Note Verbale of 18 July 2018, that it might resort to the use of facts available under Article 28(1) of the basic Regulation when examining the continuation or recurrence of subsidisation. The authorities of the PRC did not react to the Note.

In the Notice of Initiation, the Commission stated that it had provisionally selected a sample of Union producers, in accordance with Article 27 of the basic Regulation. Prior to the initiation, 21 Union producers had provided the information requested for the selection of the sample and expressed their willingness to cooperate with the Commission. On that basis, the Commission provisionally selected a sample of three producers, which were found to be representative of the Union industry in terms of volume of production and sales of the like product in the Union. The sampled Union producers accounted for 28 % of the estimated total production of the Union industry and for 27 % of the total sales volume of the Union industry to unrelated customers in the Union during the review investigation period. The Commission invited interested parties to comment on the provisional sample. No comments were received and the provisional sample was thus confirmed. The sample was considered representative for the Union industry.

In order to decide whether sampling was necessary and, if so, to select a sample, the Commission asked the nine unrelated importers identified in the request to provide the information specified in the Notice of Initiation. None of them came forward.

In order to calculate this benefit the Commission compared the prices of HRS and CRS paid by the OCS exporting producers concerned to the relevant benchmark. The Appellate Body confirmed that in a case where the market of the country of provision is distorted by the role of the government, the use of external benchmarks is permitted.

On the basis of the information on file in the original investigation, it was established that the prices of HRS and CRS sold by SOEs in China were distorted. This was a result of the strong predominance of SOEs in the HRS and CRS market in China and because the prices of HRS and CRS of private suppliers were aligned with the prices of SOEs.

Therefore, the Commission concluded that there were no reliable market prices in China for the HRS and CRS and constructed the benchmark on the basis of the world market prices of HRS and CRS, which are regularly published in various specialised steel journals like Steel Business Briefing, MEPS and CRU.

A comparison of the prices from HRS and CRS producers to the out-of-country benchmark showed that the prices in China were well below the benchmark prices and consequently resulted in benefit for the Chinese exporting producers of OCS within the meaning of Article 3(2) of the basic Regulation.

Furthermore, that subsidy programme was found to be specific within the meaning of Article 4(2)(c) of the basic Regulation given that HRS and CRS is only used by a limited number of industries and enterprises in China in their production process.

The subsidy rate established in the original investigation for the sampled OCS exporting producers varied from 23,02 % to 27,63 %, with the rate for non-cooperating companies being at 32,44 %.

In its request and corresponding annexes, the applicant provided evidence that Chinese OCS producers continued to benefit from the provision of HRS and CRS for less than adequate remuneration for the production of OCS, which covers both the purchases from SOEs and from non-SOEs.

As a first step, the applicant provided evidence that suppliers of HRS and CRS continue to be public bodies under the test set up by the WTO Apellate Body (see recital (48)). The applicant indicated that the GOC controls and manages SOEs in the various ways.

First, the institutional framework allowed the GOC to have a tight control over SOEs through various bodies.

The State-owned Assets Supervision and Administration Commission of the State Council (‘SASAC’) is the ultimate owner of all SOEs in China. SASAC directors and managers are all appointed by the Communist Party of China. SASAC has a leading role in the management of SOEs, including disciplinary surveillance, and ensures that SOEs follow the objectives set by the GOC. It is also involved in investment decisions, and stocks and share transactions. Therefore, the SASAC can be considered as the State regulator of SOEs.

The National Development and Reform Commission (‘NDRC’) is another regulatory authority that controls SOEs. The NDRC is in charge of elaborating the macroeconomic and industrial development strategies and ensuring that the local players properly implement the GOC policy. The NDRC adopts guidelines and directives and approves large investment projects. All investment by steel producers in China must be approved by the NDRC.

SOEs act as public bodies by pursuing governmental objectives and exercising governmental functions in the steel sector. They follow the GOC policy, implement mergers and acquisitions, focus their production on certain products, try to reach national targets and favour specific downstream industries.

As a third step, the applicant provided evidence that private companies in the CRS and HRS sector continued to be entrusted and directed by the GOC to provide goods in line with Articles 3(1)(a)(iii) and 3(1)(a)(iv) of the basic Regulation and that their pricing is similar to that of SOEs. Hence, the Commission findings in the original investigation remain valid during the review investigation period.

The above evidence shows continued behaviour of the SOEs in the CRS and HRS sectors as public bodies and the entrustment and direction of the non-SOE producers. In the absence of cooperation from the GOC, no arguments were presented that would challenge the evidence presented by the applicant in this regard. Therefore, the Commission concluded that the OCS producers continue to benefit from the supply of raw materials from the CRS and HRS producers at less than adequate remuneration as established in the original investigation.

In points 76 to 78 and Annex 20 of the request, the applicant provided a calculation of the benefit under this subsidy measure in the review investigation period, using the same methodology as in the original investigation and an international benchmark composed of roughly the same countries as in the original investigation. For both CRS and HRS, the price differential between the average Chinese domestic prices and the benchmark price exceeded 25 %.

In the absence of cooperation from the Chinese exporting producers, the Commission had no company-specific information on which it could calculate the amount of subsidy conferred during the review investigation period. However, for the finding of continued subsidisation reached in the current expiry review, the Commission does not consider it necessary to calculate such amounts. That being said, the information contained in the requests indicates that the subsidy amounts continue being similar to the levels found in the original investigation.

The subsidy measure in question is still specific within the meaning of Article 4(2)(c) of the basic Regulation taking into account limited number of industries China using CRS and HRS in their production.

Accordingly, the Commission concluded that there is sufficient evidence showing that the provision of hot-HRS and CRS for less than adequate remuneration as a countervailable subsidy continued during the review investigation period.

The Commission also established that the subsidy is specific under Article 4(2)(a) and 4(2)(c) of the basic Regulation, because the access to industrial land is by law limited only to companies respecting the industrial policies set by the State. Furthermore, only certain transactions were subject to a bidding process, prices were often being set by the authorities, and government practices in this area are unclear and non-transparent.

Using the benchmark of prices of land in Taiwan, the subsidy rate with regard to this measure was established in the original investigation for the sampled OCS exporting producers in the range of 0,34 % to 1,12 % with the rate for non-cooperating companies at the level of 1,36 %.

The applicant indicated that the law governing this matter has not changed since the original investigation. Private ownership of land is prohibited in China. The Land Administration Law, and Article 2 in particular, still provides that all land in China is ultimately owned by the GOC as it belongs collectively to China. The Property Law (Articles 45-48) specifies that land in China is either ‘collectively owned’ or ‘state owned’. No land can be sold but land-use rights can be assigned through public bidding, quotation or auction.

Neither the GOC nor the exporting producers provided evidence suggesting the OCS industry stopped benefiting from the provision of land-use rights for less than adequate remuneration.

Given the lack of the market for land in China, an external benchmark has to be used to determine an appropriate market price and calculate the amount of subsidy granted during the review investigation period in line with Article 6(d)(ii) of the basic Regulation. The above-mentioned Taiwanese prices of land, normally used as benchmark in such calculations, were updated and adjusted upwards following the findings of the most recent countervailing investigations.

In the absence of cooperation from the GOC and the Chinese exporting producers, the Commission had no company-specific information on the basis of which to calculate the amount of subsidy conferred during the review investigation period. However, for the finding of continued subsidisation reached in the current expiry review, the Commission does not consider it necessary to calculate such amounts. That being said, since the benchmark prices in Taiwan were higher than the ones used in the original investigation, it is likely that at the very least subsidisation continued at the same levels.

The subsidy is specific within the meaning of Articles 4(2)(a) and 4(2)(c) of the basic Regulation. Land-use rights are only granted to a limited group of companies. Furthermore, the steel sector, which is part of the encouraged category within the framework of Decision No 40 of the State Council, falls within the sectors that benefit from land-use rights. In addition, the provision of land-use rights in China continues being non-transparent.

Accordingly, the Commission concluded that there is sufficient evidence showing that the provision of land-use rights for less than adequate remuneration as a countervailable subsidy continued during the — review investigation period.

Additionally, the original investigation established that differential electricity rates applicable for certain sectors and/or at provincial and local level are set in accordance with certain factors, including the pursuit of the industrial policy goals set by the central and local governments in their 5-year plans as well as in the sectoral plans.

Furthermore, the Commission established that one of the cooperating sampled exporting producers benefited from an electricity rate lower than the rate generally applicable for large industrial users. It was found that in the specific area where this exporter was located a sub-category of certain industrial users, including those producing the product under review, were entitled to this lower rate. The company thus received a financial contribution in the sense of Article 3(1)(a)(iii) of the basic Regulation, in that the government provided electricity through the local public electricity supply company. This constituted a government contribution in the form of provision of goods other than general infrastructure within the meaning of the basic Regulation.

The subsidy was found to be specific within the meaning of Article 4(2)(a) and 4(3) of the basic Regulation. The lower electricity rate was set out in the relevant NDRC Notice and incorporated in the Notice issued by the local Price Bureau. Thus, it was mandated by a central authority and administered at local level. This lower rate was limited to certain enterprises in certain specified sectors. The subsidy was also limited to a certain region in that it only applies in a limited designated geographical area where the exporting producer was located.

Neither the GOC nor the Chinese exporting producers provided evidence suggesting the OCS industry stopped benefiting from the provision of electricity for less than adequate remuneration.

In the absence of cooperation from the GOC and the Chinese exporting producers, the Commission had no company-specific information on which to calculate the amount of subsidy conferred during the review investigation period. However, for the finding of continued subsidisation reached in the current expiry review investigation, the Commission does not consider it necessary to calculate such amounts. That being said, the level of subsidisation does not appear to have decreased when compared to the original investigation.

As explained in recital (90), the scheme was specific within the meaning of Article 4(2)(a) and 4(3) of the basic Regulation.

Accordingly, the Commission concluded that there is sufficient evidence showing that the provision of electricity for less than adequate remuneration as a countervailable subsidy continued during the review investigation period.

With respect to the banks that provided loans to the cooperating exporting OCS producers, the great majority was State-owned. The available information showed that at least 14 out of the 17 reported banks were State-owned banks, including the major commercial banks in China, like the Bank of China, the China Construction Bank and the Industrial and Commercial Bank of China. Furthermore, it was also found that these State-owned commercial banks held a predominant place in the market and in their capacity as public bodies were engaged in offering lending at below-market interest rates. Accordingly, it was concluded that the GOC had a policy to provide preferential lending to the OCS sector.

The Commission also established, on the basis of, inter alia, Articles 34 and 38 of the Commercial Banking Law and Articles 24 and 25 of Order No 35 — Policies for the development of Iron and Steel Industry, that privately owned commercial banks in China were entrusted and directed by the GOC to provide preferential loans to the OCS producers in line with Article 3(1)(a)(iv) of the basic Regulation.

Therefore, the Commission concluded that: there was a financial contribution to the OCS producers in the form of a direct transfer of funds from the government within the meaning of Article 3(1)(a)(i) of the basic Regulation; and privately owned banks were also entrusted or directed by the government to provide financial contributions to the same producers within the meaning of Article 3(1)(a)(iv) of the basic Regulation.

A benefit within the meaning of Articles 3(2) and 6(b) of the basic Regulation was found to exist to the extent that the government loans were granted on terms more favourable than the recipient could actually obtain on the market. Since it was established that non-government loans in China do not provide an appropriate market benchmark (privately owned banks being entrusted and directed by the GOC), such a benchmark was constructed on the basis of standard lending rate of the People's Bank of China. This rate was adjusted to reflect normal market risk by adding the appropriate premium expected on bonds issued by firms with rating of ‘non-investment grade’ bonds (at BB rate).

Furthermore, the programme was found to be specific under the Article 4(2)(b) of the basic Regulation, as certain government plans and documents were encouraging and instructing to provide financial support to steel industry also in specific geographical regions of China.

The subsidy rate established in the original investigation for the sampled OCS exporting producers varied from 0,25 % to 0,89 % with the rate for non-cooperating companies being at a level of 0,97 %.

1. (i)
   The banking sector continued to be controlled by the GOC, for which the applicant relied on recent statements from the People's Bank of China46 and recent new rules and guidelines from the China Banking Regulatory Commission, which further increased such control47. The request also indicated that the October 2017 review of the Market Economy Status of China by the US Department of Commerce concluded on the existence of distortions affecting the Chinese banking system48.
2. (ii)
   The banking sector followed GOC macro objectives, for which the applicant provided evidence that in accordance with the Chinese law on the Commercial Banks49, it is a legal requirement for the banking industry to comply with national strategic objectives laid down in the various binding guidelines and recommendations. The request indicated that such findings were made in the original investigation and remained valid, as confirmed by the 13th Five-Year plan for the steel sector, recent statements from the People's Bank of China (China Monetary Policy Reports), and recent Union anti-subsidy investigations.

The applicant provided evidence of the significant presence and continued market dominance of State Owned Banks (‘SOBs’) in the Chinese banking sector. In point (93), the request listed the major SOBs and Policy Banks, which constitute an instrument of the state in the intervention of the economy.

In the absence of cooperation from the GOC, no arguments were presented which would challenge the evidence presented by the applicant with regard to the current situation of the Chinese banking system.

In Annex 32 to the request and in the submission of 21 December, the applicant listed the Chinese OCS producers benefitting or having benefitted from that programme on the basis of their annual reports.

In the absence of cooperation from the Chinese exporting producers, the Commission had no company-specific information on which the amount of subsidy conferred during the review investigation period could be calculated. However, for the finding of continued subsidisation reached in the current expiry review, the Commission does not consider it necessary to calculate such amounts. Nothing on the record indicates, however, that the level of subsidisation has decreased when compared to the original investigation.

The subsidy programme in question was still specific within the meaning of Articles 4(2)(a) and 4(2)(b) of the basic Regulation, given that the legal situation described in recital (106) had not changed and in the light of the new 13th Five-Year plan for the steel sector, confirming the steel industry as an encouraged industry.

Accordingly, the Commission concluded that there is sufficient evidence showing that the preferential lending as a countervailable subsidy continued during the review investigation period.

Given that the GOC failed to provide any information on this programme, the original investigation based its findings on this programme on the information contained in the request.

Debt for equity swaps were found to constitute a financial contribution in the form of equity infusion and/or loan within the meaning of Article 3(1)(a)(i) of the basic Regulation or in the form of revenue forgone resulting from debt cancelled or not repaid within the meaning of Article 3(1)(a)(ii). The government provided this financial contribution through public bodies involved in these transactions, i.e. the four AMCs and various SOBs. In the absence of any cooperation from the GOC during the original investigation, the Commission concluded that the evidence on the record sufficiently demonstrated that AMCs were public bodies, as they were specifically created by the GOC to dispose of massive non-performing loans in key industries, including the steel sector, and to restructure the debts of SOEs. Consequently, it was considered that their behaviour coresponded to the exercise of government authority.

Furthermore, evidence was provided that the large amount of debt cancellations was not subject to normal commercial considerations, as the GOC did not carry out an assessment whether a normal private investor would have carried out these debts to equity swaps in the expectation that a reasonable rate of return would be generated over time. Instead, the request contended that the GOC exchanged massive amounts of debt in exchange for equity with the objective to reduce the liabilities-to-assets ratio of steel producers to increase their competitiveness aside from commercial considerations that a private investor would make. The Commission, after careful analysis of the information provided in the request and in the absence of any other information on the file, concluded that the measures were therefore conferring a benefit within the meaning of Article 6(a) of the basic Regulation.

This subsidy was found specific in the sense of Article 4(2) of the basic Regulation, as the award of this financing was restricted only to selected entities, was discretionary and no objective criteria existed.

In the expiry review request under points 115-125 and Annexes 25, 33 and 58, the applicant provided evidence that this programme was still in force, but its use evolved as it is now mainly used to reduce corporate debt of heavily indebted companies.

According to these documents, heavily indebted companies must find a domestic commercial bank that agrees to be involved in the programme. Banks with foreign capital are not qualified to partake in the programme. The participating bank sets up a separate swap fund, made up of the company debt. That debt is then converted into equity and other investors are invited to participate and acquire the equity. SOBs, including China Construction Bank, are the most active in the programme.

The request provided evidence that at least two OCS producers signed debt to equity agreements with China Construction Bank at the end of 2016 for the amounts exceeding RMB 20 billion each and at least four other OCS producers benefitted from this scheme, although in their cases the exact values of the agreements were not known. According to the ThinkDesk report at least three of the companies benefitting from this debt to equity swap were in dire financial situation at the time the swap took place.

In the absence of cooperation, the Commission concluded on the basis of the available evidence that the debt to equity swaps to the OCS producers were not based on market conditions.

Consequently, the Commission found that the debt for equity swaps are a financial contribution in the form of equity infusion and/or loan pursuant to Article 3(1)(a)(i) of the basic Regulation or in the form of government revenue forgone leading to debt cancelled or not repaid within the meaning of Article 3(1)(a)(ii). The programme conferred a benefit to the recipient companies.

In the absence of cooperation from the GOC and the Chinese exporting producers, the Commission had no company-specific information on the basis of which to calculate the amount of subsidy conferred during the review investigation period. However, for the finding of continued subsidisation reached in the current expiry review investigation, the Commission did not consider it necessary to calculate such amounts.

The subsidy was specific in accordance with Articles 4(2)(b) of the basic Regulation, as there were no objective criteria for the provision of the subsidies and it has been unclear under which conditions OCS producers may or may not be involved into this programme. The swaps were also specific in line with Article 4(2)(c) of the basic Regulation, given major discretion of the public authorities to grant the subsidy and only certain sectors have benefitted from the subsidy such as those suffering overcapacity.

Accordingly, the Commission concluded that there is sufficient evidence showing that the debt for equity swaps as a countervailable subsidy continued during the review investigation period in the form of financial assistance to reduce corporate debt of heavily indebted companies.

The original investigation also positively concluded on the existence of a number of ad hoc subsidies granted to certain OCS producers that were listed in the request, based on the analysis of the audited accounts of the companies in question. These subsidies were either grants or other tax exemptions or reductions in order to finance particular projects or assets. According to the request, they were granted in the context of the general strategic policy to upgrade the steel industry.

These grants and other ad hoc subsidies were found to constitute a subsidy in the meaning of Article 3(1)(a)(i) of the basic Regulation in the form of a direct transfer of funds with regard to the grants and similar transfers of resources. Furthermore, they constituted a subsidy in the meaning of Article 3(1)(a)(ii) of the basic Regulation in the form of revenue forgone for the various exemptions or reductions of taxes and/or fees at central, provincial, or municipal level otherwise due.

They were also found to be specific either under Article 4(2)(a) of the basic Regulation, due to limits in access for only specific enterprises, or under Article 4(2)(b), given the apparent absence of objective criteria and conditions for the application of these programmes by the granting authority.

Some of these subsidies were found to be specific pursuant to Article 4(3) of the basic Regulation, since their access was limited to certain enterprises located in designated geographical regions in a certain province, or pursuant to Article 4(4)(a), as the benefit was found to be contingent upon export performance (for example in the case of ‘famous brand’ products).

In the expiry review request under points 191-198 and Annex 32, the applicant provided evidence that many Chinese steel producers, including at least nine major OCS producers, continue to benefit from grant programmes although the main schemes used are different than those found in the original investigation.

Under points 207-217 and Annexes 32 and 35 of the expiry review request, the applicant also provided evidence of the existence of a number of ad hoc subsidies granted to certain OCS producers in the review investigation period (or before the review investigation period, but due to the nature of the grant the benefit under the subsidy could be allocated to the review investigation period). The evidence in this regard is based on the Annual Reports of the respective OCS producers.

In the submission of 21 December 2018, the applicant provided a more detailed list of ad hoc subsidies per the OCS producer, including references to the specific lines of the audited annual reports of the companies in question.

The subsidies in question were essentially grants pertinent to assets or pertinent to incomes.

Subsidies pertinent to assets are credited to a deferred income account. They are released to the current income statement/the current profit and losses (‘P&L’) as non-operating income over the expected useful life of the relevant asset by equal annual instalments, or deducted from the carrying amount of the asset and released to the income statement by way of reduced depreciation charges.

Subsidies pertinent to income and use for compensating the related future expenses or losses are recognised as deferred income and include in the current P&L, while those used for compensating the related expenses or losses incurred are directly included in the current P&L of the relevant accounting period.

Subsidies given to compensate past expenses or losses are recognised in the income statement in the period during which the subsidy is received. The positive balance between the compensation payments and the compensation amount transferred to deferred income should be considered as capital reserve.

Most of the grants were provided in order to finance particular projects or assets, reward energy conservation or environmental protection, and modernise steel mills.

• In February 2016, the GOC published the ‘Opinions on Resolving Overcapacity in the Steel Industry, Escape from Distress and Realize Development’. This document contained a plan, seeking to increase the financial support for steel companies that decrease production capacity.

• In April 2016, the People's Bank of China and regulatory commissions in charge of the monitoring of banking, securities and insurance sectors jointly released ‘Opinions on supporting the steel and coal industries to resolve overcapacity and achieve turnaround in development’. This document was directed to all financial institutions and gave instructions as to how to implement the ‘Opinions on Resolving Overcapacity in the Steel Industry, Escape from Distress and Realize Development’. This document indicated that banks are required to give ‘credit support to high-performance key companies’. They are prohibited from charging ‘unreasonable conditions when issuing loans’. Banks must further facilitate the transfer of excess capacity overseas. They must ‘give financing support to steel and coal enterprises in their transferring capacity to overseas and exploiting international market’.62

• In May 2016, the GOC issued the ‘Measures for the Management of Special Bonuses and Subsidies for the Structural Adjustment of Industrial Enterprises’ which included details on the allocation of RMB 100 billion of bonuses and subsidies.

The applicant also provided evidence, based on analysis of annual accounts of specific companies, that at least six OCS producers received financial support to compensate or incentivise a decrease in overcapacity between 2014 and 2016, whose benefits may still linger during the review investigation period and beyond.

All grants and other ad hoc subsidies analysed above constituted a subsidy in the meaning of Article 3(1)(a)(i) of the basic Regulation in the form of a direct transfer of funds with regard to the grants and similar transfers of resources.

In the absence of cooperation from the GOC, no arguments were presented which would challenge the evidence presented by the applicant with regard to the continued benefits of the OCS producers from grants, whether given to reduce overcapacity or under specific programmes, or awarded ad hoc.

In the absence of cooperation from the GOC and the Chinese exporting producers, the Commission had no company-specific information on the basis of which to calculate the amount of subsidy conferred during the review investigation period. However, for the finding of continued subsidisation reached in the current expiry review investigation, the Commission does not consider it necessary to calculate such amounts. That being said, on the basis of the Annual Reports of the OCS producers, such amounts are not negligible.

These subsidies were considered to be specific in law or in fact, within the terms of Article 4(2) of the basic Regulation. In the absence of cooperation from the GOC, they are deemed to be granted to a limited number of steel companies in the encouraged steel sector, and/or because of the manner in which discretion of the granting authorities has been exercised for their granting.

Accordingly, the Commission concluded that there is sufficient evidence showing that the exporting producers continued receiving grants as countervailable subsidies during the review investigation period.

• 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 ‘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.

On the basis of the information available to the Commission, and in the light of the GOC's and Sinosure's non-cooperation, the Commission concluded that Sinosure is a public body within the meaning of Article 2(b) of the basic Regulation. In particular, the conclusion that Sinosure is vested with authority to exercise governmental functions is based on facts available relating to State-ownership, formal indicia of government control, as well as evidence showing that the GOC continues exercising meaningful control over the conduct of Sinosure.

Sinosure is a 100 % State-owned policy insurance company established and supported by the State to support the PRC's foreign economic and trade development and cooperation. The Government has the power to appoint and dismiss the company's senior managers and supervisors.

On this basis, the Commission concluded that the GOC has created a normative framework that had to be adhered to by the managers and supervisors appointed by the GOC and accountable to the GOC. Therefore, the GOC relied on the normative framework in order to exercise control in a meaningful way over the conduct of Sinosure.

Due to lack of cooperation of the GOC and Sinosure, the Commission could also not establish any specific behaviour of Sinosure with regard to the insurance provided to the sampled exporting producers that would have enabled the Commission to determine whether Sinosure was acting based on market principles.

Therefore, the Commission concluded that the legal framework set out above is implemented by Sinosure in the exercise of governmental functions, thereby acting as a public body in the sense of Article 2(b) of the basic Regulation read in conjunction with Article 3(1)(a)(i). Furthermore, it could not be demonstrated that Sinosure acted under normal market conditions and that it did not provide benefits to the OCS exporting producers, notably that the insurance was provided at rates that were not below the minimum fee needed for Sinosure to cover its operational costs.

In addition, the applicant indicated in the request and the submission of 21 December 2018 that some of the OCS producers benefited from export credit insurance of Sinosure.

In the absence of cooperation from the GOC, no arguments were presented which would challenge the evidence presented by the applicant with regard of the OCS producers benefiting from export subsidies under this scheme.

Because of non-cooperation, the Commission had no company-specific information either on the basis of which to calculate the amount of subsidy conferred during the review investigation period. However, for the finding of continued subsidisation reached in the current expiry review, the Commission does not consider it necessary to calculate such amounts.

The export credit insurance of Sinosure is specific under Article 4(4)(a) of the basic Regulation as it is contingent upon export performance.

Accordingly, the Commission concluded that this subsidy is countervailable.

In the original investigation, the Commission established that OCS producers were receiving countervailable subsidies related with preferential treatment under income and other direct tax programmes and policies.

With regard to two specific programmes: Tax Policies for the Deduction of Research and Development Expenses, and Tax Concessions for Central and Western Regions, the Commission, having sufficient cooperation of the GOC and the Chinese exporting producers, based its findings as to the legal basis, eligibility, nature of the subsidy and its specificity on the verified questionnaire replies and was able to calculate individual subsidy rates for the sampled companies.

The income and other direct tax programmes were found to be subsidies within the meaning of Article 3(1)(a)(ii) and Article 3(2) of the basic Regulation in the form of government revenue foregone which confers a benefit upon the recipient companies.

The subsidy schemes were also found to be specific within the meaning of Article 4(2)(a) of the basic Regulation given that the legislations pursuant to which the granting authority operated, limited the access to the schemes only to certain enterprises and industries classified as encouraged, such as those belonging to OCS industry. In addition, that the lack of cooperation from the GOC did not permit the Commission to reach the conclusion to whether objective criteria of eligibility to certain schemes existed which made them also specific under the Article 4(2)(b) of the basic Regulation.

In the expiry review request under points 126-136 and Annexes 34 and 35, the applicant provided evidence that many Chinese steel producers, including at least three OCS producers, continue to benefit from at least two of the direct tax subsidy programmes countervailed in the original investigation, namely Preferential Tax Policies for the Companies that are Encouraged as High and New Technology Enterprises, and Tax Policies for the Deduction of Research and Development Expenses.

Under points 176-186 and Annex 35 of the expiry review request, the applicant provided evidence that some OCS producers were benefiting from three additional preferential income tax policies, not countervailed in the original investigation, namely Enterprise Income Tax Privileges for Resource Products from Synergic Utilization (at least one OCS producer is using this scheme), Land Use Tax Exemption (at least two OCS producers are using this scheme) and Tax Reduction on Iron Ore (at least one OCS producer is using this scheme). The evidence in this regard is based on the findings of the HFRP investigation and the audited accounts of the companies in question.

In the absence of cooperation from the GOC, no arguments were presented which would challenge the evidence presented by the applicant with regard to the continued benefits of the OCS producers from income and other direct tax programmes and policies.

The schemes in question are considered to be subsidies within the meaning of Articles 3(1)(a)(ii) and 3(2) of the basic Regulation in the form of foregone government revenue which confers a benefit upon the recipient companies.

In the absence of cooperation from the GOC and the Chinese exporting producers, the Commission had no company-specific information on the basis of which to calculate the amount of subsidy conferred during the review investigation period. However, for the finding of continued subsidisation reached in the current expiry review, the Commission does not consider it necessary to calculate such amounts.

The schemes are specific within the meaning of Article 4(2)(a) of the basic Regulation given that the legislations pursuant to which the granting authority operated, limited the access to the schemes only to certain enterprises and industries.

Accordingly, the Commission concludes that there is sufficient evidence showing that some of the tax programmes continued being as countervailable subsidies during the review investigation period.

1. (a)

   Import tariff and VAT exemptions foreign-invested enterprises (‘FIE’) and certain domestic enterprises using imported equipment in encouraged enterprises, and

2. (b)

   VAT refunds to FIE purchasing domestically produced equipment.

Additionally, one more regional scheme and several other ad-hoc tax privileges related with indirect taxes were countervailed.

The indirect tax and import tariff programmes were found to be subsidies within the meaning of Articles 3(1)(a)(ii) and 3(2) of the basic Regulation in the form of foregone government revenue which confers a benefit upon the recipient companies.

The subsidy schemes were also found to be specific within the meaning of Article 4(2)(a) of the basic Regulation given that the legislations pursuant to which the granting authority operated, limited the access to the schemes only to certain enterprises and industries. In addition, the lack of cooperation from the GOC did not permit the Commission to reach the conclusion to whether objective criteria of eligibility to certain schemes existed which made them also specific under the Article 4(2)(b) of the basic Regulation.

The second scheme referred to in recital (189) was additionally found specific with the terms of Article 4(4)(b) of the basic Regulation as contingent upon use of domestic over imported goods, while regional scheme and ad-hoc privileges were additionally found specific under the terms of Article 4(3) of that Regulation as their eligibility was limited to certain designated areas and municipalities within the jurisdiction of the authority of granting the subsidy.

Under points 187-190 of the request, the applicant indicates also that as a result of the HRFP investigation it was found that the same OCS producer was granted ex post refund of all the VAT and income taxes paid between 2006-2009, due to the relocation of its production. In the HRFP investigation the subsidy in question was treated as financial contribution related to a large-scale investment project and thus the benefit upon it was amortised over the average life span of the company's fixed assets. Thus, it can be concluded that the company in question was still benefiting from this subsidy in the review investigation period.

In the absence of cooperation from the GOC, no arguments were presented which would challenge the evidence presented by the applicant with regard to the continued benefits of the OCS producers from indirect tax and import tariff programs and policies.

The schemes in question are considered to be subsidies within the meaning of Articles 3(1)(a)(ii) and 3(2) of the basic Regulation in the form of foregone government revenue which confers a benefit upon the recipient companies.

In the absence of cooperation from the GOC and the Chinese exporting producers, the Commission had no company-specific information on the basis of which to calculate the amount of subsidy conferred during the review investigation period. However, for the finding of continued subsidisation reached in the current expiry review, the Commission does not consider it necessary to calculate such amounts.

The schemes are specific within the meaning of Article 4(2)(a) of the basic Regulation as the access to the schemes is limited only to certain enterprises and industries.

Accordingly, the Commission concludes that there is sufficient evidence showing that some of the indirect tax amd import tariff programmes continued being as countervailable subsidies during the review investigation period.

Over the period considered there was a modest increase in production volume (+ 8 %) and capacity (+ 5 %), while the capacity utilisation increased by 2 %, to reach 89 %.

The sales by the Union industry on the Union market increased by 14 % during the period considered.

The market share of the Union industry decreased during the period considered to 84,9 %.

Both employment and productivity of the Union producers' workforce, measured as output (tonnes) per person employed per year, increased during the period considered. Those increases reflect the overall increase in production and sales volume.

The Union industry managed to benefit from growth on the Union market even if facilities that had been more affected by the lower capacity utilisation observed during the original investigation are still in a recovery phase. The Union industry kept significant market shares during the whole period considered.

Subsidiasation continued during the review investigation period at a significant level, as explained under section 3 above. It is noted that Chinese producers undercut Union industry's sales prices to a significant extent and that the Union industry is still in a fragile situation.

Since the volumes of the subsidised imports from China were much lower than during the original investigation period, the Commission concluded that the impact of the magnitude of the countervailing margin on the Union industry was significantly less pronounced than in the original investigation.

The Union producers increased their stock in the period considered. This indicator, however, is not considered to be very relevant to assess the economic situation of the Union producers. OCS is mostly produced on the basis of orders. In any event, the stocks merely represented around 2 % of the total sales during the review investigation period.

Over the period considered, the Union industry managed to increase its sales prices by 11 %. Following price decreases between 2014 and 2015 and then between 2015 and 2016, prices went up again between 2016 and 2017. Both the decreases and the increase are closely connected to the changes in raw material prices.

The Commission established the profitability of the sampled Union producers by expressing the pre-tax net profit of the sales of the like product to unrelated customers in the Union as a percentage of the turnover of those sales. The net cash flow is the ability of the Union producers to self-finance their activities.

During the period considered the evolution of the cash flow reflects mainly the development of the overall profitability of the Union industry.

During the period considered the Union industry, highly capital-intensive, made regular investments for the optimisation and upgrading of the existing production machinery. In addition, significant investments were made in order to comply with legal requirements for environment protection and increased safety. Depending on the company, there were investments aimed at costs reduction, energy optimisation and/or also at revamping facilities that had been negatively affected by the lower capacity utilisation observed during the original investigation period.

Return on investments is the profit in percentage of the net book value of investments. The return on investments during the period considered followed closely the profitability trend.

Since the imposition of measures the ability to raise capital has improved.

The average wage levels increased slightly over the period considered, but less than the unit cost of production.