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Table 2.2 Summary of the major changes in the Investment Catalogue, 2007 and 2011
2011 Catalogue: Encouraged
2007 Catalogue: Permitted
Industry/Activity: Other: next-generation Internet system equipment; use of environmentally friendly resources in the production of bio fibre; venture capital firms.

Table 1.5 Inward foreign direct investment by sector, 2011-13
Water conservancy, environment and public facilities
2011:
- Number of projects: 151
- Amount of foreign capital actually used (US$ million): 864.3
2012:
- Number of projects: 122
- Amount of foreign capital actually used (US$ million): 850.3
2013:
Number of projects: 107
Amount of foreign capital actually used (US$ million): 1,035.9
% of total FDI: 0.9
(…)

China has always been an active participant and has played constructive role in the Trade and Environment negotiation under WTO framework. In January 2014, China joined the initiative on environment goods negotiation with other 13 WTO Members in Davos, Switzerland, with a view to further discussion on reduction of tariffs of environment goods. China believes that trade and environment negotiation should aim to realize triple-win among trade, environment and development, and contribute to the multilateral trading system.

The Vehicle and Vessel Tax Law was adopted in February 2011; it adjusted the scope and basis of taxation on vehicles and vessels and the tax amounts, regulated preferential tax policies and enhanced control measures. The State Council promulgated revised Interim Regulations on the Resource Tax on 30 September 2011; the purpose was to improve the tax system, while promoting a more efficient exploration and use of resources, and protecting the environment. The reform entered into force on 1 November 2011; it established a new method for levying resource taxes on crude oil and natural gas based on value rather than on quantity and eliminated the taxation differences based on the origin of the capital of the mining venture. As a result of the reform, the tax treatment of Chinese and foreign oil and gas enterprises has been standardized. The Implementation Rules Concerning the Interim Regulations on the Resource Tax, promulgated on 28 October 2011, set the tax rate applicable to crude oil and natural gas at 5% and revised the tax rates applicable to certain resource categories. The Interim Regulations on Vessel Tonnage Dues were implemented on 1 January 2012, repealing the Provisional Procedures of the Customs of the People's Republic of China Governing the Levying of Vessel Tonnage Dues issued in September 1952. The new rules adjusted tax rates and modified rules on tax deductions and exemptions. The scope of taxation was broadened to all vessels entering the domestic ports of the People's Republic of China from overseas ports, including all Chinese-registered vessels engaged in international voyages.

China's "subsidy policy" aims, according to the authorities, at, inter alia: upgrading the industrial base through the use of scientific and technological innovation; promoting regional development; and encouraging energy conservation and the reduction of emissions. The authorities indicated that support in China is granted through tax preferences and direct transfers, and that local preferences should be relatively limited and in line with those granted at the central level (Table A3.3). (…)

Table 2.4 Incentives in the form of preferential tax treatment under the Enterprise
Income Tax Law
Type of enterprise: All enterprises
Conditions of eligibility: Income derived from one of the following: (…) • Qualified projects related to environmental protection, energy and water conservation
Form of the incentive: Deduction/exemption from income tax

Table A3. 3 Tax preferences at the central level
Government tax preference policies
Enterprise income tax (the income tax is 25%)
3. Enterprises that undertake environmental and energy conservation projects, including public sewage treatment, public garbage disposal, methane comprehensive exploitation and desalination of sea water, are exempt from income tax from the first to the third year that income starts to be generated, and the income tax from the fourth to the sixth year would be 12.5% (half the actual rate).

Table A3. 4 Support programmes notified to the WTO
20
Programme: Preferential tax treatment for projects for environmental protection, water and energy conservation
Forms of subsidy: Preferential tax treatment
Period/Validitya: In effect

Table 2.4 Incentives in the form of preferential tax treatment under the Enterprise
Income Tax Law
Type of enterprise: All enterprises
Conditions of eligibility: Investment made in specialized equipment for environmental protection, energy and water conservation, production safety…
Form of the incentive: Partial deduction of the invested amount from income tax

Table A3. 3 Tax preferences at the central level
Government tax preference policies
Enterprise income tax (the income tax is 25%)
12. 10% of cost of the investment made by enterprises in special facilities for environmental protection, energy and water conservation and safe production which are listed in the: "Environmental special facilities enterprise income tax preferential category", "Water and energy conservation special facilities enterprise income tax preferential category" and "Safety production special facilities enterprise income tax preferential category" can be deducted from the taxable income. If the taxable income is not sufficient, the deduction can be made in the next five fiscal years.