(1)

On 4 October 2023, the European Commission (‘the Commission’) initiated on its own initiative an anti-subsidy investigation with regard to imports into the Union of new battery electric vehicles (‘BEVs’) designed for the transport of persons originating in the People’s Republic of China (‘the country concerned’, ‘the PRC’, or ‘China’) pursuant to Article 10(8) of the basic Regulation. It published a Notice of Initiation in the Official Journal of the European Union (2) (‘the Notice of Initiation’).

(2)

The Commission initiated the investigation on the grounds that imports of BEVs originating in the PRC are being subsidised and are thereby causing injury (3) to the Union industry.

(3)

After an in-depth analysis of recent market developments and considering the sensitivity of the electric vehicle sector and its strategic importance to the EU economy in terms of innovation, value added and employment, the Commission collected market information from various independent sources. This information tended to show the existence of subsidisation by the PRC which negatively affects the situation of the Union BEV industry.

(4)

On the basis of readily available information, there was sufficient evidence demonstrating that imports of the BEVs originating in the PRC benefit from countervailable subsidies provided by the Government of the People’s Republic of China (‘the GOC’). Those subsidies have allowed the subsidised imports to rapidly increase their market share in the Union to the detriment of the Union industry.

(5)

The available evidence showed the likelihood of substantially increased subsidised low-priced imports that would pose an imminent threat of injury to an already vulnerable Union industry. Such a surge of low-priced imports, gaining significant market share in a rapidly growing market in which a significant and sustained rate of investments is needed as the Union market transitions to full electrification, would lead the Union industry to incur heavy financial losses which could become rapidly unsustainable.

(6)

In these special circumstances, since the Commission was in possession of sufficient evidence tending to show the existence of subsidisation, threat of injury and causal link required for the initiation of an anti-subsidy investigation, it decided, in accordance with Article 10(8) of the basic Regulation, to proceed with such an initiation without having received a written complaint by or on behalf of the Union industry.

(7)

Prior to the initiation of the anti-subsidy investigation, the Commission notified the GOC that it had decided to initiate an ex officio proceeding concerning imports of new BEVs from the PRC and invited the GOC for consultations in accordance with Article 10(7) of the basic Regulation. The GOC accepted the offer for consultations, which were held on 2 October 2023. During the consultations, due note was taken of the comments submitted by the GOC. However, no mutually agreed solution could be reached.

(8)

As set out in recital (8) of the Commission Implementing Regulation (EU) 2024/1866 (4) (‘the provisional Regulation’), the Commission, on its own initiative, made imports of new BEVs designed for the transport of persons, originating in China, subject to registration as of 7 March 2024 by Commission Implementing Regulation (EU) 2024/785 (5) (‘the registration Regulation’).

(9)

In accordance with Article 29a of the basic Regulation, on 12 June 2024, the Commission provided parties with a summary of the proposed provisional duties and details about the calculation of the subsidy rates. Interested parties were invited to comment on the accuracy of the calculations within three working days. Comments were received from the sampled Chinese producers BYD Group, SAIC Group, and Geely Group, and from exporting producers Great Wall Motor Co. Ltd. (‘GWM’), Spotlight Automotive Co. Ltd. (‘Spotlight’), and Volkswagen (Anhui) Automotive Co. Ltd. (‘Volkswagen (Anhui)’).

(10)

On 4 July 2024, the Commission imposed provisional countervailing measures on imports of BEVs originating in China by Implementing Regulation (EU) 2024/1866.

(11)

Following the disclosure of the essential facts and considerations on the basis of which provisional countervailing measures were imposed (‘provisional disclosure’), the BYD Group, SAIC Group, and Geely Group’s subsidiaries Polestar Performance AB (‘Polestar’) and Volvo Car Cooperation, exporting producers Dongfeng Group, GWM, NIO Holding (‘NIO’), Spotlight, Tesla (Shanghai) Co. Ltd. (‘Tesla (Shanghai)’), Volkswagen (Anhui), the Government of China (‘GOC’), the China Chamber of Commerce for Import & Export of Machinery & Electronic Products (‘CCCME’), the China Association of Automobile Manufacturers (‘CAAM’), Union producers Company 18, Company 22 and Company 24, and the German association Verband der Automobilindustrie e.V. submitted comments.

(12)

At the outset, the Commission noted that the CCCME and the GOC commented in detail on the assessments made by the Commission in the provisional Regulation on injury and causality, often without acknowledging the findings and their justification provided by the Commission in the provisional Regulation. The CCCME and the GOC likewise reiterated a large number of comments that were raised in its post-initiation submissions again without addressing the specific explanations and reference to the relevant evidence provided by the Commission in the provisional Regulation. The Commission also noted that the CCCME and the GOC mainly criticised the analysis made by the Commission without bringing new evidence in this regard or supporting the statements made with any evidence. In the sections below, the Commission addressed in detail the comments raised by the CCCME without, however, repeating identical comments raised in various sections.

(13)

The parties who so requested were granted an opportunity to be heard. Hearings took place with the BYD Group, the CCCME, the Geely Group, the GOC, Polestar, the SAIC Group, Spotlight, Volkswagen (Anhui), Company 22, Company 24, and Company 27.

(14)

The Commission continued to seek and verify all the information it deemed necessary for its definitive findings. When reaching its definitive findings, the Commission considered the comments submitted by interested parties and revised its provisional conclusions when appropriate. In order to have at its disposal more comprehensive data on the Union’s sales prices, cost of production, and profitability in the post-investigation period, the sampled Union producers were requested to provide additional data. All sampled Union producers submitted the requested information.

(15)

On 20 August 2024 the Commission informed all interested parties of the essential facts and considerations on the basis of which it intended to impose a definitive countervailing duty on imports of BEVs originating in the PRC (‘definitive disclosure’). All parties were granted a period within which they could make comments on the definitive disclosure.

(16)

Parties who so requested were also granted an opportunity to be heard following the definitive disclosure. Hearing took place with the SAIC Group, Company 27, the BYD Group, the CCCME, the GOC, Tesla (Shanghai), the Geely Group, Company 22 and Polestar.

(17)

Comments following definitive disclosure were received from the BYD Group, CATL, the GOC, Tesla (Shanghai), GWM, the CCCME, the CAAM, the SAIC Group, the Geely Group, VDA, Eurofer, Company 27, Company 18, Company 24, Company 22, and Polestar.

(18)

On the basis of these comments, the Commission revised some of its provisional findings, modified some of the considerations on the basis of which it intended to impose a definitive countervailing duty and informed all interested parties thereof (‘additional definitive disclosure’) on 9 September 2024.

(19)

Comments on the additional definitive disclosure were received from the GOC, the CCCME, BYD, Tesla, Smart and Company 18 (only in confidential version). In addition, Company 18 also submitted comments, in confidential version, after the deadline for comments on the additional disclosure. Most of these comments were already addressed in the specific confidential disclosure addressed to the company.

(20)

Following provisional disclosure, the CCCME and the GOC claimed, on one hand, that the sample of Union producers was unknown and unrepresentative and, on the other hand, that the interested parties could not assess the representativity of the sample. The CCCME and the GOC further claimed that it was not known if Union OEM producers were included in the sample, whether all the companies in the sample are the Union OEMs/companies transitioning from the production of ICEs to BEVs or there were other BEV producers in the sample, as the Union producers transitioning from ICEs to BEVs may be in a worse economic position than other Union producers. The CCCME and the GOC also claimed that the sample of Union producers was unrepresentative as the Commission did not apply the single economic entity principle to the Union producers that were sampled, even though it was applied with regard to the sampled exporting producers. The CCCME and the GOC further claimed that the single economic entity principle was applied to the Union industry in previous trade defence investigation such as Silicon metal from China (6) where two production entities (FerroPem and FerroAtlantica) of the Union producer group, Ferroglobe group, were considered related parties and the Union producer’s production by both the production entities were considered together. The CCCME and the GOC also claimed that the single economic entity principle was relevant for the establishment of the Union industry sales prices which are compared with the export price for the undercutting and price suppression analysis.

(21)

As it was explained in recital (12) of the provisional Regulation, anonymity was granted to the Union producers due to a risk of significantly adverse effect in the form of retaliatory actions. Therefore, the Commission cannot disclose the identity of the sampled Union producers. However, the anonymity granted to the sampled Union producers does not make the sample unrepresentative. As explained in recital (26) of the provisional Regulation, the selection of the sample was based on the largest representative volume of sales and production in the Union of the like product during the investigation period (7). The Commission also considered the geographical spread of Union producers within the Union as well as ensured the inclusion of a wide range of BEVs models. The sampled Union producers accounted for 38 % of sales and 34 % of total production volume of the Union industry in the investigation period. Furthermore, after the verification visit of the sampled Union producers, on 4 June 2024 the Commission added a Note to the file (8) and confirmed that the sampled Union producers amounted to 32 % of sales in the Union and 30 % of production in the Union in the investigation period. Furthermore, disclosing whether all sampled companies were OEMs that produced ICE vehicles and are producing BEVs, likewise, would inadvertently disclose the identity of certain Union producers and thus the Commission would breach its legal obligation to keep the anonymity granted to the Union producers. Therefore, the request to disclose this information was rejected.

(22)

Finally, the CCCME confused the single economic entity principle with sampling at the level of the group. For the sake of clarity, the single economic entity principle is applied in certain conditions for the calculation of the export price at ex-works level (i.e. at the factory gate of the producer) for dumping margin calculations. In the present anti-subsidy investigation, the Commission did not need to calculate an ex-works export price and therefore this principle is not applied in the current investigation. As concerns sampling of the Union producers, the Commission informed interested parties at the initiation of the investigation that it will be made at the production entity level and not at group level (9). This is the Commission’s common practice for the sampling of Union producers and there was no information available that could suggest that a different approach was warranted in this investigation. The CCCME and the GOC did also not provide any evidence in this regard. Furthermore, in the Silicon metal from China investigation, contrary to CCCME and the GOC’s claim, the Commission did not apply the single economic entity principle but investigated two producers from the same group. Finally, in the current investigation the calculation of undercutting margin was made at the level of the price to the dealer in the Union as explained in recital (1023) of the provisional Regulation, which is different than the ex-works level.

(23)

Therefore, the conclusions in recitals (24) to (45) of the provisional Regulation were confirmed.

(24)

In the absence of any comments with respect to the sampling of importers, the conclusions set out in recitals (46) to (47) of the provisional Regulation were confirmed.

(25)

Following provisional disclosure, the BYD Group submitted that the selection of the sample distorted the resulting findings, as Tesla (Shanghai) was not sampled despite its large volume of exports of BEVs to the Union market, and that in almost every trade remedy investigation, the Commission selected the sample based on the volume of exports. The BYD Group also claimed that the Commission did not provide a clear explanation for not sampling Tesla (Shanghai) and on what ground the Commission accepted Tesla (Shanghai)’s request for individual examination.

(26)

Following definitive disclosure, the GOC and CCCME reiterated their claim that the sample of Chinese exporting producers selected was result-oriented, biased and inconsistent with Article 27(1) of the basic Regulation. Notably, the non-inclusion of Tesla (Shanghai) in the Chinese exporting producers’ sample ran counter to the very purpose of sampling, the basic Regulation, and reflected the Commission’s discriminatory approach. According to the GOC and CCCME, the non-inclusion of Tesla (Shanghai) made the sample unrepresentative, and Tesla (Shanghai) could be reasonably investigated within the time frame. Moreover, the Commission had the time and resources to verify this company and establish its subsidy rate and therefore it could have been included in the sample at the outset. By not including Tesla (Shanghai) in the sample, the Commission artificially increased the weighted average duty applicable to the cooperating non-sampled Chinese exporting producers, showing a targeted and selective approach.

(27)

The Commission highlighted that similar allegations were already addressed in recitals (54) and (55) of the provisional Regulation. The selection of the sample fully complied with the provisions of Article 27 of the basic Regulation, taking into account the specificities of the case and was therefore considered to be representative for the Chinese exporting BEV sector. The Commission did not have a targeted and selective approach in establishing the sample. The reasons why the Commission accepted the individual examination request are explained in recital (30) of this Regulation. That the Commission could provide an individual subsidy rate to Tesla (Shanghai) does not mean that, at the time of the selection of the sample, the inclusion of this exporter was possible or appropriate.

(28)

Therefore, the conclusions in recitals (48) to (76) of the provisional Regulation were confirmed.

(29)

Tesla (Shanghai), an exporting producer in the PRC, requested and was granted an individual examination under Article 27(3) of the basic Regulation.

(30)

The Commission accepted the individual examination request of Tesla (Shanghai) given the simple corporate structure of the company, which allowed the Commission to have sufficient time and resources to examine the company. No other individual examination requests were received.

(31)

Following provisional disclosure, the BYD Group, the CAAM, the CCCME, the Geely Group, the GOC, the SAIC Group, and NIO commented on procedural issues.

(32)

Following definitive disclosure, the CCCME and the GOC commented on procedural issues.

(33)

Following provisional disclosure, the CAAM submitted that the Commission required companies to supply information, details and ‘business secrets’ beyond the scope of the investigation.

(34)

The Commission disagreed with the claim. The Commission considered the requested information from the sampled exporting producers and their related parties necessary to assess the existence of countervailable subsidies regarding BEVs and their parts and components. Moreover, as already stated in recital (284) of the provisional Regulation, it is for the Commission to determine what information is deemed necessary for the investigation, and not for a party to make that determination. The Commission also recalls that, pursuant to Article 29(6) of the basic Regulation, the information received within the framework of this investigation was used only for the purpose of assessing the existence of countervailable subsidisation in accordance with the basic Regulation and the SCM Agreement. Therefore, the claim was rejected.

(35)

Following provisional disclosure, the BYD Group submitted that the ex officio initiation of the investigation was unwarranted. The BYD Group claimed that the wording of ‘special circumstances’ contained in Article 10(8) of the basic Regulation must inform something more than what paragraph 2 of Article 10 of the basic Regulation provides for, and that the explanations given in the Notice of Initiation describe a situation no different from an initiation of the investigation based on a written complaint.

(36)

The BYD Group added that the evidence on which the Commission initiated the investigation was a collection of alleged subsidies based on media reports, publicly available audited financial reports of certain holding companies of companies not only producing BEVs and a list of policies and references from previous investigations on imports of products involving different sectors of industry from China, and that a listing of a series of policies and subsidies from previous cases could not be considered compliant with the provisions of Article 11(2) of the SCM Agreement and to meet the standard of sufficiency of evidence regarding the BEV sector.

(37)

Moreover, the BYD Group submitted that the allegations on threat of material injury and in particular transition of production structures of the Union automobile industry could not justify an ex officio initiation of the investigation, since the overall economic performance of the Union industry showed quite strong forward momentum.

(38)

The Commission recalled that the Initiation document and the memorandum contained sufficient evidence tending to show the existence of subsidisation, threat of injury and causal link required for the initiation of an anti-subsidy investigation, pursuant to Article 10(8) of the basic Regulation, and that the special circumstances for the initiation of this proceeding have been spelled out in great detail both in the initiation document (10), and also in the Notice of Initiation (11). Moreover, as already addressed in recital (119) of the provisional Regulation, for all different schemes alleged in the Initiation document, the Commission provided the legal basis, the specificity of these subsidy schemes to the BEV sector, and, to the extent the Commission had access to it, detailed information from publicly available sources on amounts of subsidies provided by the GOC to the BEV exporting producers. Therefore, the Commission considered that it had sufficient evidence of countervailable subsidisation in accordance with the basic Regulation and the WTO Agreement of Subsidised and Countervailing Measures (‘SCM Agreement’). The Commission noted that the BYD Group does not dispute the existence of policies but only the extent to which they are binding for the BEV sector. The Commission further observed that the readily available information provided evidence indicating that the BEV sector is mentioned in several government documents. The BYD Group failed to produce any evidence showing that those documents would not be applicable to the product concerned. Therefore, the arguments were deemed moot.

(39)

Furthermore, in recital (117) of the provisional Regulation, it was explained that in the Initiation document the Commission justified sufficiently the ex officio initiation. In particular, the Commission considered the rapid market penetration by the Chinese low-priced and subsidised imports of BEVs, which threatens to irreparably damage the Union industry, to be of a special nature justifying the initiation of an ex officio investigation. The subsidisation of the Chinese BEV sector caused a large and accelerating influx of imports of Chinese produced BEVs on the Union market at prices that depress prices or prevent price increases which otherwise would have occurred, threatening to cause material injury to the Union BEV industry, which might be irrevocable because of the technological development and level of R & D financing required. Therefore, the claims were rejected.

(40)

Following provisional disclosure, the SAIC Group and NIO claimed that since the Notice of Initiation of the ongoing investigation was published on 4 October 2023, under Article 12(1) of the basic Regulation, the Commission should have imposed provisional duties by 4 July 2024 and not 5 July 2024, i.e. ‘no later than nine months from the initiation of the proceedings’.

(41)

However, according to Article 3.1 of Regulation (EEC, Euratom) No 1182/71 of the Council (12) determining the rules applicable to periods, dates and time limits, ‘where a period expressed in days, weeks, months or years is to be calculated from the moment at which an event occurs or an action takes place, the day during which that event occurs or that action takes place shall not be considered as falling within the period in question’. This means that the starting date for computing the nine months deadline was the day following the publication of the Notice of Initiation, i.e. 5 October 2023, and lapsed on 5 July 2024, in accordance with Article 3(2)(c) of Regulation (EEC, Euratom) No 1182/71. The Commission considered that it had complied with the relevant provisions of the basic Regulation and the claim was rejected.

(42)

Following provisional disclosure Geely Group claimed that the continuous stream of questionnaires and additional clarification requests of the Commission placed an unreasonable burden on the Group, violating its due process rights, namely, it was asked to provide large amount of information just one week after sampling, before the minimum 30-day period for sampled exporting producers to respond to the questionnaire, as required under the SCM Agreement and basic Regulation.

(43)

The Commission considered that its requests for information were reasonable, and it engaged with the Geely Group in full respect of its procedural rights. The Commission recognized the efforts made by the Geely Group in responding to the Commission’s questionnaires and deficiency requests, which it considered proportional to the size and complexity of the Geely Group itself. It noted that all the replies provided by the Group were analysed and verified, where possible, thereby ensuring that the information provided by the Geely Group corresponded to the Group’s efforts and resulted in findings that were closest to the situation of the Group during the IP. Therefore, the claim was rejected.

(44)

The Geely Group further claimed that after the questionnaire and sampling decision were published, the Commission expanded the scope of the responding entities (13). Geely Group compiled and submitted information for over 120 entities, even though many of these submissions were not directly relevant to the investigation. This unreasonable burden violated party’s due process rights.

(45)

The Commission noted that the scope of responding entities was not extended by the letter in the reference. The related companies in the group with the activities specified in the Commission’s letter were critical in establishing the facts of subsidization of the group in any subsidy investigation, while the number of responding entities was proportional to the size and complexity of any exporter group investigated. Therefore, the information provided by these related companies only enhanced the adequate findings of the Geely Group, which were closest to the situation of the group during the investigation period, thereby ensuring that the rights of the Geely Group were respected. Therefore, the claim was rejected.

(46)

The Geely Group further claimed that the investigation placed an extreme burden on the Group, namely it submitted over 280 responses, often meeting very short deadlines, managed 14 weeks of on-site verification across three locations, producing over 880 verification exhibits. Despite the repeated requests (14) under Article 12.11 of the SCM Agreement, these requests were rejected by the Commission.

(47)

The Commission observed that all requests submitted by the Geely Group were duly considered throughout the course of the investigation. However, the missing elements necessary to complete the findings of the Group were required and used in accordance with Article 28 of the basic Regulation, as aligned with the standard procedures of the anti-subsidy investigations as stipulated in Article 10(8) of the basic Regulation. Therefore, the claim was rejected.

(48)

Following provisional disclosure, the Geely Group argued that due to the anonymity granted to Union producers, suppliers and importers (i) the Commission treated as confidential the data pertaining to the Union industry, thus materially affecting disclosure of the essential information about the injury assessment which violated the sound exercise of Geely Group’s right of defence, (ii) it had little visibility into the information gathered from the Union industry by the Commission, and (iii) the Commission applied very broad confidentiality to all submissions by Union parties.

(49)

The Commission did not treat all the information related to the Union industry as confidential, only the information that could disclose the identity of the Union industry. As it was explained in recital (16) of the provisional Regulation, because of the low number of groups manufacturing BEVs in the Union market and the significant amount of public and subscription-based information available about these groups, the Commission could not disclose certain information related to the sampled Union producers as such information could reveal the identity of the sampled Union producers. In Section 4 of the provisional Regulation, the Commission analysed all injury indicators requested by the basic Regulation. Furthermore, the Commission added to the non-confidential file of the investigation, the non-confidential questionnaire replies of the four sampled Union producers, the non-confidential pre-verification letters for the on-spot verification visit as well as the non-confidential mission reports such as in any other investigation. Despite the Geely Group’s claim, the Commission did not apply a very broad confidentiality treatment to all submissions by Union parties. Proper non-confidential versions of such submissions were added to the non-confidential file of the investigation and the Geely Group did not mention what exactly was missing in these submissions. Therefore, these claims were rejected.

(50)

Following provisional disclosure, the CCCME, the GOC, the Geely Group and the SAIC Group claimed that, as regard the undercutting margin calculations, the Commission provided insufficient explanation and factual details for CCCME and the GOC and, therefore, they were not able to understand the calculations and make meaningful comments. In particular, the CCCME, the GOC and the SAIC Group argued that the Commission had not provided any reasoned explanations as to how the description of the Product Control Numbers (‘PCNs’) and the PCN-level aggregate unit prices and volumes of the Union industry could result in the disclosure of the identities of the sampled Union producers because the data is aggregated for the four sampled producers. This claim was also reiterated by the CCCME and the GOC after definitive disclosure.

(51)

Therefore, the CCCME, the GOC and the SAIC Group requested the Commission to disclose: (i) the PCNs of the Chinese exporting producers and the Union producers used for price comparability; (ii) the PCN-wise quantity and value of the seven PCNs of the Union industry used for the comparison. The CCCME and the GOC requested the Commission to disclose (i) the undercutting margin of the five comparable PCNs, i.e., excluding the closely resembling PCNs, and the sales matching percentage of the Chinese sampled exporters and the Union sampled producers if the two close resembling PCNs were to be excluded; (ii) the difference in the PCN elements and whether adjustments were made to account for the differences. A similar request was also made by the SAIC Group. The SAIC Group also requested the Commission to disclose: (i) how many PCNs were sold by the Union sampled producers, (ii) PCNs sold by the Union sampled producers during the investigation period in total and (iii) the quantity and value of the seven PCNs matched with the Chinese PCNs as a percentage of the total Union sales of the sampled Union producers. Furthermore, the CCCME and the GOC argued that it was known that the Union BEV producers’ sales pertained mainly to the luxury/premium segments in which the Chinese producers have negligible sales if at all and therefore the quantum of Union sales comparable to the sampled Chinese exporting producers’ sales was necessary to understand the representativeness of the calculation.

(52)

The Commission disclosed the calculation of the weighted average undercutting margin to the three sampled Chinese exporting producers only. However, it appears that these companies provided these files to the CCCME and the GOC although this information was not disclosed to the CCCME and the GOC. Furthermore, the CCCME was also representing Chinese exporting producers that were not sampled and therefore did not receive from the Commission the calculation of the weighted average undercutting margin. Furthermore, the three sampled Chinese exporting producers also received from the Commission their detailed calculations of the selling price to the dealer for each of their sale transaction. Therefore, it was reasonable to conclude that the sampled Chinese exporting producers also provided to the CCCME and the GOC these files and therefore the CCCME and the GOC was able to calculate the volume and sales prices per PCN for the three Chinese sampled exporting producers. Furthermore, as the Commission also disclosed the total volume and value of the sales of the sampled Chinese exporting producers, the CCCME and the GOC can verify these data accordingly. Moreover, the Commission disclosed the matching percentage for the sales of the Chinese exporting producers (i.e. the percentage of the sales of the sampled Chinese exporting producers that was matched with the sales of the sampled Union producers). As the matching was very high overall and for each sampled Chinese exporting producer, and each PCN was sold in different volumes, the CCCME and the GOC can perfectly understand which PCNs of the Chinese exporting producers were used in the calculation of the undercutting margin.

(53)

Furthermore, in the individual disclosure sent to the sampled Chinese exporting producers, the Commission explained that the PCNs, quantity and prices of the Union industry at PCN level could not be disclosed as they could reveal the identity of the sampled Union producers. Moreover, in recital (95) of the provisional Regulation, the Commission explained that the Union BEV market was made of a small number of groups of producers. There was a significant amount of public information as well as very detailed information available based on a paid subscription regarding the Union BEV industry that CCCME, the GOC, the Geely Group and SAIC Group could have access to. For example, the technical descriptions of each BEVs sold by the Union industry was publicly available either in the catalogue/brochure of the Union producers or dealers as well as in certain databases such as Electric Vehicle Database (15). Therefore, any interested party can create the PCNs for all the models of BEVs sold by the Union industry and the Chinese exporting producers on the Union market. Furthermore, based on public information published by European Environment Agency (‘EEA’) or paid subscription from S&P Global Mobility, the CCCME, the GOC, the SAIC Group and the Geely Group can understand the volume of sales of each model of BEVs on the Union market. It follows that by disclosing the PCNs of the Union industry and/or the volume of sales of the Union industry in the investigation period as well as the PCN-wise quantity and value of the seven PCNs of the Union industry used for the comparison, in view of the large information publicly and paid subscription available there is a very high risk that the identity of the sampled Union producers will be revealed.

(54)

As concerns the disclosure of the undercutting margin of the five comparable PCNs, the Commission noted that it disclosed the undercutting margin for each PCN that was matched with the Chinese PCNs (7 PCNs out of 17 PCNs exported by the Chinese exporting producers during the investigation period). However, the Commission did not see the point of disclosing such calculations, as the Chinese exporting producers clearly did not export only these five PCNs on the Union market in the investigation period.

(55)

As concerns the difference in the PCN elements and whether adjustments were made to account for these differences, the Commission hereby clarified that the difference in the PCN and the close resembling PCN concerned only the power of the BEVs, i.e. a more powerful Chinese BEVs was compared to a less powerful Union BEV. The Commission did not make any adjustment for the difference in power, as a more powerful BEV was more expensive than a less powerful BEV, all other characteristics of the PCNs being the same.

(56)

Furthermore, the number of PCNs sold by the Union industry is irrelevant for the undercutting calculation. Moreover, as explained in recital (53) of this Regulation, the Commission cannot disclose the PCNs sold by the sampled Union producers during the investigation period.

(57)

As concerns the quantity and value of the seven PCNs matched with the Chinese PCNs as a percentage of the total Union sales of the sampled Union producers, in recital (1044) of the provisional Regulation the Commission stated that the matching between the Chinese PCNs and the Union PCN was very high on average, and this matching corresponds to 88 % of total sales of the sampled Union producers. The Commission noticed that there was a typo in recital (1044) of the provisional Regulation, the matching corresponded to 83 % instead of 88 % of the sampled Union producers. If the closely resembling PCNs were excluding, the matching was 61 %. This calculation was made for volume of sales. A calculation based on the value of sales is irrelevant in this regard as the prices of the PCNs are different and therefore the result would be misleading.

(58)

Moreover, as it was highlighted in recital (1042) of the provisional Regulation there was no universally accepted segmentation for passenger cars and it was not clear what ‘entry’, ‘mid’, ‘premium’ and ‘luxury’ brands meant as there was a wide margin of interpretation. Nevertheless, for the sake of clarification, it is not factually correct that the Union BEV producers’ sales pertained mainly to the luxury/premium segments in which the Chinese producers have negligible sales. For example, according to LMC Automotive or S&P Global Mobility, the Union producers like e.Go Mobile, Hyundai, Renault, Stellantis, and Volkswagen sell brands than are not considered luxury/premium brands. Furthermore, Geely has sold in the Union the brand Polestar 2 which is considered a premium brand by LMC Automotive or S&P Global Mobility.

(59)

Finally, the Commission mitigated the impact of the less than full disclosure by providing a very detailed assessment of the methodology employed and an analysis of the various players, sales channels and sales models employed in the investigation period. As explained above, further details could not be disclosed because of the risk that the identities of the Union producers would be revealed. This approach is justified because the Union BEV market is open and transparent and all players on the market have well developed marketing capabilities to examine the models of their competitors. It is for these reasons that further details of the undercutting calculation such as PCNs cannot be disclosed.

(60)

Therefore, these requests were rejected.

(61)

Following provisional disclosure, the SAIC Group stated that it did not receive an individual undercutting margin calculation.

(62)

There is no legal obligation for the Commission to calculate an undercutting margin per sampled exporting producers. The undercutting margin is an injury indicator and therefore the calculation of a weighted average undercutting margin is sufficient for the injury assessment. This is different than the injury margin (underselling margin) that must be calculated per exporting producer when the duty is based on underselling margin. Therefore, this claim was rejected.

(63)

Following provisional disclosure, the Geely Group claimed that in the undercutting calculations the Commission used distinct PCNs from those that Geely Group was instructed to use by the Commission and no explanation of the scope of the new PCNs was given by the Commission.

(64)

However, the Commission did not use different PCNs for the calculation of the undercutting margin from the ones that it asked the sampled exporting producers and sampled Union producers to use. The Commission simply replaced each PCN with PCN1, PCN2 etc. in order to not disclose the exact PCNs used in the calculation of undercutting as it could reveal the identity of the sample Union producers as explained in recital (53) of this Regulation. Therefore, this claim was rejected.

(65)

Following definitive disclosure, the GOC and the CCCME argued that the definitive disclosure failed to provide the essential facts underpinning the Commission’s findings of subsidisation and threat of injury caused thereby, especially regarding (i) the alleged preferential lending, (ii) the alleged provision of inputs and (iii) land use rights at less than adequate remuneration, (iv) the factual basis for the Commission’s statement in recital (771) of this Regulation that the Union producers’ sales quantities would have been vastly different and large in the absence of Chinese BEV imports, (v) how the Commission filtered EEA data and split them into Chinese brand BEV imports and self-imports and assessed the origin of the BEVs; the basis for the segregation of the EEA data into product concerned and non-product concerned; the basis for the split of Tesla’s EU and non-EU production of Model Y, (vi) the factual basis for the Commission’s determination that ‘the situation of the Union industry will get worst as the subsidised imports from China at undercutting prices will increase in the foreseeable future’, (vii) the factual basis relied upon by the Commission in its non-attribution analysis for dismissing (a) the self-imports by the Union industry, (b) the intra-Union industry competition, and (c) the Union industry transitioning from ICEs to BEVs as well as other known factors having a negative impact on the situation of the Union industry, and (viii) the factual basis for the Commission’s conclusion that any increases in cost due to regulatory issues would have affected the Union industry merely in the past.

(66)

At definitive disclosure, the Commission informed all interested parties of its findings in a General Disclosure Document and provided detailed information on the methodology and calculations done regarding the subsidy rates of the sampled and individually examined companies, including details on the choice of the sample, preferential lending, the provision of inputs and land use rights for less than adequate remuneration. A detailed overview of the comments received regarding these subsidy schemes is set out in Sections 3.5 and 3.7 below.

(67)

Concerning point (iv), in recital (771) of this Regulation the Commission stated that it disagreed that price suppression would have occurred in the absence of Chinese imports and that clearly the Union market would have been vastly different had large quantities of subsidised Chinese imports not been present on the Union market at prices which undercut the Union prices. In fact, in the absence of unfair Chinese competition, the Union industry would have sold much more BEVs on the Union market (of note, the subsidised imports unfairly gained market share during the period considered at the expense of sales by the Union industry, the Chinese sold similar BEVs as the Union industry as the matching between the Chinese PCNs and the Union PCNs in the investigation period was above 90 % for each of the exporting producers as explained in recital (1031) of the provisional Regulation), which would have allowed the Union industry to reduce unit costs taking advantage of a much better ability to spread its fixed costs over more sales. This would have enabled the Union producers to set prices at more profitable levels within the context of the transition of the market from ICE vehicles to BEVs.

(68)

Concerning point (v), these have been addressed in recitals (716) and (717) of this Regulation.

(69)

Concerning point (vi), as explained in recital (1023) of this Regulation, the Commission concluded that the imports from China would increase after assessing several measures indicating likelihood of further substantial increase in imports in recitals (1113) to (1118) of the provisional Regulation, the attractiveness of the Union industry in recitals (1119) to (1129) of the provisional Regulation, the likely evolution of market shares of Chinese imports on the Union market in recitals (1130) to (1137) of the provisional Regulation. Furthermore, the Commission concluded in recital (1138) of the provisional Regulation that it was likely that there would be an increase of market shares mainly from Chinese brands in the foreseeable future by assessing the high number of announcements made by the Chinese exporting producers for launching new BEVs models on the Union market as explained in recitals (1126) and (1127) of the provisional Regulation, while the Union ICE OEMs transitioning to production of BEVs did not announce any major plans to import BEVs from China and most of them had one BEV model or brand that was imported from China in significant lower volumes as compared to their production in the Union. Moreover, the stocks of BEVs in the Union of Chinese BEVs as established in recitals (1157) to (1159) of the provisional Regulation are a relevant indicator for future pressure exercised by the Chinese BEVs on the Union industry as these quantities are clearly mainly intended for sale on the Union market.

(70)

Furthermore, an increase in market share of Chinese imports resulted into a decrease in market share of the Union industry, which translates into lower production volume for the Union industry, and therefore higher unit costs. On the other hand, in order to be able to compete with the Chinese BEVs, the Union industry would have to decrease prices and therefore its financial losses would increase. Moreover, an industry that continuously loses market share and records increasing financial losses will not be able to continue to invest and also not able to launch new BEVs models on the Union market. Therefore, the situation of the Union industry will get worst as the subsidised imports from China at undercutting prices will increase in the foreseeable future.

(71)

Concerning point (vii), the self-imports of the Union industry as a factor causing a threat of injury to the Union industry was addressed in recital (1213) of the provisional Regulation and recital (1218) of this Regulation. In particular, in recital (1218) of this Regulation, the Commission stated that it performed an analysis of the so-called self-imports in recitals (1212) to (1214) of the provisional Regulation and provided a breakdown of the market share of imports of (i) Chinese exporting producers related to the Union ICE OEMs transitioning to production of BEVs, (ii) Tesla and (iii) all other Chinese imports in Tables 12a and 12b of the provisional Regulation under recitals (1132) and (1134) respectively. The Commission further explained that this analysis should be considered together with the data in Table 13 of this Regulation. Moreover, the Commission stated that the legal standard on causation requires that all imports originating in the country concerned should be assessed collectively. This is in fact what the Commission has done in Section 6.1 of the provisional Regulation. Additionally, the Commission, broke down Chinese imports, using, inter alia, Tables 12a and 12b of the provisional Regulation and Table 13 of this Regulation, in order to determine developments in the profile of Chinese imports. The Commission concluded that imports of Chinese brands were increasing in importance and that sales on the Union market were set to increase, due to the availability of stocks and announcements made concerning the increase of imports on the Union market in the post-IP and beyond in the coming years. This conclusion was also confirmed by the post-IP data that showed that the imports of Chinese brands significantly increased to 14,1 % in the second quarter of 2024, while all the other imports from China decreased as shown in Table 10 of this Regulation. Thus, the Commission properly carried out an analysis of the so-called self-imports and concluded that those imports were not likely to contribute to the threat of material injury.

(72)

Moreover, the intra-Union industry competition as a factor causing a threat of injury to the Union industry was addressed in recitals (1225) and (1227) of this Regulation. In particular, the Commission explained that while the CCCME and the GOC did not submit any evidence about how intra-Union industry competition was having or could have a negative effect on the Union producers, in any event, the purpose of the investigation was to assess whether the imports of BEVs from China were subsidised, were threating the Union industry and if it was in the Union interest to impose countervailing measures if the legal conditions were met. The Commission further explained that the investigation found that for the Union industry, its deteriorating situation was the result the unfair outside competition from subsidised Chinese imports that threaten it with material injury. This investigation did not assess the competition between the Union producers on the Union market as the findings concern the Union industry as a whole. Moreover, the Commission noted that the CCCME and the GOC had not submitted any evidence that the intra-Union industry competition was contributing to any harm to the Union industry, or in any event, attenuating the link between the subsidised imports from China and the threat of injury.

(73)

Furthermore, the Union industry transitioning from ICEs to BEVs was explained in recitals (1232) to (1234) of this Regulation. In particular, the Commission stated that the transition from ICE vehicles to BEVs formed key background context to the whole threat of injury, causation and Union interest analysis. This transition is ongoing and is planned to continue up to 2035. The transition was a key part of the Commission’s Green Deal in order to meet CO2 emission targets. Union producers have developed detailed strategies, involving the implementation of massive investment plans, in order to comply with the relevant legislation to meet these targets. The transition is therefore essential to the future of the Union industry. Furthermore, the transition of the Union market from ICE vehicles to BEVs is part of the regulatory framework of the auto industry in the Union. The Union vehicles producers must comply with this regulatory framework as well as other legislations. Such regulatory framework cannot be considered to cause threat of injury within the meaning of Article 8(8) of the basic Regulation. On the contrary, it constitutes the framework in which the assessment of the threat of injury within the meaning of Article 8(8) of the basic Regulation is carried out. In fact, the Commission found that the imminent threat to the Union industry was not the transition itself, but the subsidised Chinese imports which threaten the achievement of the transition process.

(74)

Concerning point (viii), in recital (1229) of this Regulation the Commission stated that it considered that any increases in cost due to regulatory issues would have affected the Union industry. No evidence was provided that this issue would be a threat of injury to the Union industry in the years following the investigation period. Furthermore, while some Union producers started to invest in production of BEVs before the period considered as explained in recital (996) of the provisional Regulation, the largest investments in the BEV production started to materialise following the publication of Regulation (EU) 2019/631 of the European Parliament and of the Council (16), which was later amended by Regulation (EU) 2023/851 of the European Parliament and of the Council (17). As showed in Table 1 of the provisional Regulation, at the beginning of the period considered (i.e. 2020) only 5,4 % of the Union passenger vehicles market transitioned to BEVs. The Regulation (EU) 2019/631 demanded the Union passengers car manufacturers to increase the production of BEVs and decrease the production of ICE vehicles to be sold on the Union market. As stated in recital (1229) of this Regulation, whilst the transition to electrification is required by law, this in itself does not pose a threat to the Union industry within the meaning of Article 8(8) of the basic Regulation, as like any industry, the BEV’s producers must adapt to the existing regulatory framework. In fact, the regulatory framework constitutes the framework in which the assessment of the threat of injury within the meaning of Article 8(8) of the basic Regulation is carried out. Furthermore, whilst compliance with various regulations continues post-IP, the CCCME and the GOC did not identify any new important regulations that threatens to cause injury to the Union industry within the meaning of Article 8(8) of the basic Regulation. Rather, the Commission established that it is the subsidised imports which threatens the viability of the Union BEVs industry. Without fair market conditions, the Union producers will not be able to reach the necessary economies of scale.

(75)

Following definitive disclosure, the CCCME claimed that the Commission did not address the factual bases relied upon by the Commission for dismissing and/or not considering and addressing the two economic analyses prepared by the professors of the Katholieke Universiteit Leuven and the Centre of Economic Policy Research submitted by the CCCME on 20 December 2023 and 19 July 2024.

(76)

In recital (1252) of the provisional Regulation the Commission explained that the report submitted on 20 December 2023 concluded that the Chinese BEV imports were indispensable for the Union BEV market, the Union BEV producers and consumers, and the Union as a whole because these imports are necessary to maintain competition and innovation in the Union and accelerate the availability of affordable BEVs for average consumers and to ensure that the Union’s climate goals are met. Furthermore, in recital (1253) of the provisional Regulation, the Commission stated that regardless of the authoritative and objective value of the report submitted on 20 December 2023, the Commission noted that the purpose of the countervailing duties was not to stop the imports of BEVs from China, but to restore the level playing field on the Union market distorted by the subsidized imports from China at low prices. Therefore, the Commission addressed the core purpose of the report. Furthermore, the complete report was submitted in a sensitive version and only a summary of it was submitted in a non-confidential version. Finally, the report presents the opinion of the two professors and refers to several academic articles and books prepared in the period 1951 – 2020. Neither of these articles or books specifically refer to the BEV industry in the Union and China during the period considered.

(77)

The Commission considered that it had sufficiently examined and addressed the arguments contained in those reports, even if in many instances those arguments were not substantiated with any evidence or did not refer to any relevant source. For the sake of clarity, at a more granular level, the report states that the import growth of Chinese BEVs into the Union is not due to alleged subsidies as (a) most imports of BEV into the EU are ‘self-imports’ by firms active in the EU industry, (b) China has long-standing experience in batteries for consumer electronics, (c) the imports from China reflect the state in technology cycle, (d) the prominence of battery production for success in the BEV industry is temporary.

(78)

In Section 3 of the provisional Regulation and Section 3 of this Regulation, the Commission demonstrated that the BEVs from China are subsidised. Concerning point (a) the Commission explained in recital (998) of the provisional Regulation that some of the Union producers were importing BEVs from China. Furthermore, the self-imports as a factor causing a threat of injury to the Union industry was addressed in recital (1213) of the provisional Regulation and recital (1183) of this Regulation. In particular, in recital (1183) of this Regulation, the Commission stated that it performed an analysis of the so-called self-imports in recitals (1212) to (1214) of the provisional Regulation and provided a breakdown of the market share of imports of (i) Chinese exporting producers related to the Union ICE OEMs transitioning to production of BEVs, (ii) Tesla and (iii) all other Chinese imports in Tables 12a and 12b of the provisional Regulation under recitals (1132) and (1134) respectively. The Commission further explained that this analysis should be considered together with the data in Table 13 of this Regulation. Moreover, the Commission stated that the legal standard on causation requires that all imports originating in the country concerned should be assessed collectively. This is in fact what the Commission has done in Section 6.1 of the provisional Regulation. Additionally, the Commission, broke down Chinese imports, using, inter alia, Tables 12a and 12b of the provisional Regulation and Table 13 of this Regulation, in order to determine developments in the profile of Chinese imports. The Commission concluded that imports of Chinese brands were increasing in importance and that sales on the Union market were set to increase, due to the availability of stocks and announcements made concerning the increase of imports on the Union market in the post-IP and beyond in the coming years. This conclusion was also confirmed by the post-IP data that showed that the imports of Chinese brands significantly increased to 14,1 % in the second quarter of 2024, while all the other imports from China decreased as shown in Table 10 of this Regulation. Thus, the Commission properly carried out an analysis of the so-called self-imports and concluded that those imports were not likely to contribute to the threat of material injury.

(79)

Concerning point (b), (c) and (d), it is irrelevant that China has long-standing experience in batteries for consumer electronics. As explained in Section 3 of the provisional Regulation and this Regulation the batteries for BEVs have been subsidised by the GOC.

(80)

Furthermore, the report states that there was no threat of injury as (a) temporary instances of excess production are a natural occurrence, (b) since BEV capacity is dynamic, it cannot be viewed in isolation from ICE capacity, (c) the presence of considerable market segmentation diminishes any competitive effect, (d) price differences between models are the result of a myriad of factors, but prices of BEV imported from China are not systematically lower than prices of BEV produced in the EU, (e) market penetration of BEV follows predictable patterns of new technologies and ultimately results in Chinese investments in Europe, (f) substantial network effects in charging infrastructure require fast BEV adoption, (g) because of global value chains in NEV components, EU producers gain from a developed Chinese market.

(81)

The Commission demonstrated in Section 5 of the provisional Regulation and Section 5 of this Regulation that actually there is a threat of injury. This conclusion was reached by assessing the factors stipulated by Article 8(8), second subparagraph of the basic Regulation as explained in recital (1105) of the basic Regulation.

(82)

Furthermore, the Commission addressed the issue of capacity, segmentation, price difference (i.e. undercutting margin) in the provisional Regulation and this Regulation. Furthermore, the Commission does not consider that the high spare capacity in China is temporary, and no evidence was submitted by the CCCME in this regard. Furthermore, the Commission did not see the BEV capacity in isolation from the ICE capacity as explained in recital (1142) of the provisional Regulation. Moreover, the future investments of Chinese exporting producers in the Union is not an aspect that is covered by this investigation as the purpose of this investigation is to level the playing field on the Union market. The Commission also addressed the issue of charging infrastructure in Section 7 of the provision Regulation. Finally, the imposition of the measures will not stop the imports from China either of the BEVs or parts needed by the Union industry.

(83)

Finally, the report states that the measures to limit imports of Chinese BEVs would not be in the Union interest as limiting BEV imports (a) foregoes important environmental benefits, (b) implies a reduction in static price competition, (c) implies a reduction in dynamic competition and (d) limits the incentives of firms to innovate.

(84)

As explained in recital (81) of this Regulation, the imposition of the countervailing measures will not stop the imports from China. It will only level the playing field on the Union market.

(85)

The report of 19 July 2024 commented on the findings of the provisional Regulation. The report quotes three references, i.e. the report of 20 December 2023 and two academic articles prepared in 2016 and 2023 respectively.

(86)

The report states that the price gap was overstated and does not imply price undercutting because of (a) differences in observable characteristics, (b) different market segments, (c) brand value for Union firms, (d) value of legacy dealership for Union firms, (e) introductory pricing by new market entrants, (f) differences in production cost, (g) selective sampling.

(87)

Point (a), (b), (c), (d) have been addressed in recitals (1022) to (1049) of the provisional Regulation and recitals (748) to (831) of this Regulation. Furthermore, regarding point (e) the fact that new entrants generally enter a market at lower prices than incumbents is irrelevant. The fact of the matter is that the BEVs from China are subsidised and are threating the Union market. Moreover, the fact that the Chinese have a lower production cost is also irrelevant as the lower cost seems to relate to the subsidised received. Finally, there was no selective sampling applied to the Chinese exporting producers and this issue was already addressed repeatedly in the provisional Regulation and this Regulation.

(88)

The report also states that the import growth from China is overstated and will not continue to rise. The Commission disagreed this this claim. As it was explained in Table 13 of this Regulation, in the second quarter of 2024 the imports of Chinese brand BEVs already reached 14,1 % market share.

(89)

Furthermore, the report states that the overcapacity argument is irrelevant as (a) both Union and Chinese producers have spare capacity, but this does not influence pricing and export decisions, (b) for both Union and Chinese producers medium-term capacity, which combines ICE & BEV, is virtually unlimited relative to the size of the BEV market.

(90)

The Commission strongly disagreed that the overcapacity of the Chinese exporting producers is irrelevant. Furthermore, the fact that the Union industry has an alleged overcapacity (a claim that was rejected by the Commission in recital (845) of this Regulation) is irrelevant as the Union industry is not threatening to injure the Chinese domestic industry. The exports of the Union industry to China of BEVs are very low. Furthermore, as the investigation covers only BEVs, the Commission is legally obliged to investigate BEVs and not ICE vehicles. The Commission addressed the production capacity of ICE vehicles in China as an alternative calculation for spare capacity of BEV (see recital (1142) in the provisional Regulation).

(91)

Moreover, the report also states that the (a) Chinese exports of BEV are not particularly high, (b) Union producers realize strong export growth, (c) Chinese producers are not targeting export markets.

(92)

The Commission disagreed with these claims. Clearly a market share of the Chinese imports in the investigation period of 25,0 % as stated in Table 2a of the provisional Regulation is significant. The exports of the Union industry were addressed in Section 6.2.2 of the provisional Regulation. Furthermore, the fact that the Chinese are targeting export market have also been addressed in recitals (1114) to (1118) of the provisional Regulation and recitals (1031) to (1043) of this Regulation.

(93)

The report also states that (a) possible subsidies to Chinese firms should be compared with possible subsidies to Union firms and (b) the subsidies to Chinese BEV producers are likely overestimated.

(94)

Point (a) was addressed in recital (1262) of the provisional Regulation. Concerning point (b), the Commission explained in detail in Section 3 of the provisional Regulation and Section 3 of this Regulation how the subsidies were calculated, and the detailed calculations were disclosed to the sampled Chinese exporting producers which had the opportunity to submit comments.

(95)

In addition, the report reiterates the arguments on Union interest stated in recital (83) of this Regulation.

(96)

The CCCME did not highlight which particular points presented in these reports were not addressed directly or indirectly by the Commission either in the provisional Regulation or this Regulation. Therefore, in view of the explanations provided in recitals (76) to (95) of this Regulation, the Commission considered that the key points of the two reports have been addressed directly or indirectly either in the provisional Regulation and/or this Regulation.

(97)

Following definitive disclosure, the CCCME and the GOC also claimed that it was not clear how the Commission calculated the production volume for the investigation period as the data in Prodcom was not reported on a monthly basis. Also the CCCME and the GOC claimed that no details as to the publicly available sources referred to by the Commission have been provided.

(98)

This claim was addressed in recital (689) of this Regulation. Furthermore, the Commission could not disclose which Union producer’s website it used in this regard as it would disclose which Union producer cooperated in the investigation. Therefore, the claim was rejected.

(99)

Following definitive disclosure, the CCCME and the GOC also claimed that throughout the investigation, the Commission has failed to make information provided by interested parties available to other interested parties in a prompt and timely manner.

(100)

The Commission disagreed with this claim. Due to the anonymity granted to certain parties, the Commission needed to check carefully the information submitted by parties to make sure that the identity of the Union producers was not inadvertently disclosed. This process was significantly time consuming. Furthermore, by the time the Commission disclosed its findings, the non-confidential file of the investigation was fully updated and the CCCME and the GOC had plenty of time to submit comments. This can also be seen from the significantly large number of comments raised by the CCCME and the GOC following both provisional and definitive disclosures.

(101)

Following definitive disclosure, the CCCME and the GOC reiterated the claim that the Commission granted excessive confidentiality to the Union producers. It further claimed that (i) the non-confidential summaries of the post-IP data submitted by the sampled Union producers are not available in the non-confidential file and (ii) instead, a consolidated non-confidential summary of the responses to the post-IP questionnaires was prepared by the Commission.

(102)

The post-IP questionnaire did not include a narrative questionnaire like the original questionnaire. Furthermore, in line with the excel tables of the non-confidential reply of the original questionnaire, in order to protect the anonymity of the identity of the sampled Union producers, the Commission decided to include in the non-confidential file of the investigation the non-confidential version of the main information requested in the excel tables of the questionnaire on a consolidated basis (i.e. the data of all sampled Union producers was aggregated) by using indexes.

(103)

The CCCME and the GOC further argued that the Commission did not provide sufficient details and sufficiently detailed explanations on key material issues of fact and law concerning the findings of injurious subsidisation and did not respond to the comments of the CCCME or provide reasons for the rejection of arguments raised. According to the CCCME, the following issues were unaddressed or no sufficient evidence or explanations were provided: (i) the reasons for the decision not to include Tesla (Shanghai) in the sample of the Chinese exporting producers and to accept its request for individual examination at a late stage of the proceeding, (ii) the composition of the Union BEV industry, the level of cooperation of the Union industry, what is meant by and the relevance of OEM producers in the context of the Union industry, as well as the degree of transition of the various Union producers from ICEs to BEVs, (iii) the role and relevance of the price undercutting analysis and the assessment of Chinese BEV prices being 30 % below the Union industry’s production cost in the determination of price suppression.

(104)

The reasons for not including Tesla (Shanghai) in the sample and providing it individual examination is set out in Sections 1.5.3 and 1.6 above.

(105)

Points (ii) and (iii) were addressed in recitals (682) and (793) of this Regulation.

(106)

Following definitive disclosure, the GOC claimed that the rights of defence of interested parties had been disrespected. In particular, it claimed that the Commission had disregarded arguments and evidence submitted by the GOC and other parties.

(107)

The Commission noted that the allegation was not substantiated and constituted a general comment without specific evidence. The Commission reiterated that it had addressed all comments made by the parties. The entire investigation was conducted in full transparency, with all parties having several opportunities to present data, arguments, and evidence throughout the procedure. The Commission requested the necessary data, issued deficiency letters, carried out on-the-spot inspections at more than a hundred of companies and disclosed all relevant calculations. Comments from parties were taken into consideration and allowed the Commission to adjust its findings where duly justified. Therefore, the claim, which was unsubstantiated, general and not in line with the reality of the proceeding, was rejected.

(108)

Following additional definitive disclosure, the GOC claimed that there was no evidence of any communication between the Commission and the Union industry in the open file with regard to the Commission’s renewed requests for and receipt of the Q1 2024 data. The GOC further argued that it was surprised that the Union industry had the privilege of providing information until the last minute and that their data was accepted at such a late stage in the investigation which was in sharp contrast to the Commission’s blunt and unexplained rejection of the GOC’s well-substantiated request to schedule the hearing after the submission of the written comments and the strict imposition of the 10-day deadline on the GOC to comment on the 177-page General Disclosure Document, file the hearing presentation and have the hearing. The above facts further substantiate that interested parties on the Chinese side have been illegally and discriminatorily denied a full and proper opportunity to exercise their rights of defence in violation of Articles 12.1, 12.1.2, 12.3 and 12.4.1 of the Agreement on Subsidies and Countervailing Measures.

(109)

The respective information was submitted on 29 August 2024 (18), namely as soon as all the requested data was available for the Commission. Furthermore, on 9 September 2024 in the non-confidential file of the investigation the Commission updated the Note for the file with the quarterly data for the post-IP (19).

(110)

Moreover, the Commission was able to accept the missing data from the respective Union producer as the information did not impede the completion of the investigation within the legal deadlines. This was significantly different than agreeing to extend the period to hold the hearings. Moreover, although the GOC complained that the 10 days period for commenting on the General Disclosure Document was not sufficient, the Commission noted that the GOC managed to submit rather extensive comments (the GOC’s submission included 151 pages of comments). The GOC failed to show how providing its comments within the requested time period would have prevented it from exercising its right of defence. Therefore, the Commission disagreed that the Chinese interested parties have been illegally and discriminatorily denied a full and proper opportunity to exercise their rights of defence.

(111)

Following provisional disclosure, the CCCME, the GOC and the Geely Group claimed that the product scope of the investigation was illegally and belatedly extended by including electric vehicles with an internal combustion range extender without giving interested parties notice or opportunity to comment on the intended modification, which affected the due process rights of the interested parties. The CCCME and the GOC further claimed that (i) there was no reference to a range extender in the Notice of Initiation or the Initiation document although there was a clear reference to the charging/recharging of the vehicles in the Initiation document, (ii) the BEVs with a range extender have a drive range comparable to that of an internal combustion engine (‘ICE’) vehicle while the BEVs without a range extender have a much lower drive range than the ICE vehicles, (iii) the product control number (‘PCN’) and the product characteristics provided in the questionnaire for the Chinese exporters and the Union industry did not include a reference to the range extender and did not take into account the specific characteristic of these vehicles, (iv) there is no information as to how the Commission obtained or estimated the data for these BEVs as none of the sampled Chinese exporting producers produced and exported these type of BEVs, as neither Prodcom nor S&P Mobility Data provide such information for these type of BEVs. Therefore, the CCCME and the GOC argued that BEVs with range extender should be excluded from the scope of the present investigation because, apart from the extremely limited exports of such vehicles from China to the EU, they are also completely different from standard BEVs in terms of physical and technical characteristics, production costs and prices, and consumer perception and are not in direct competition with standard BEVs.

(112)

The Commission noted that while the CCCME and the GOC simply explained these arguments they did not provide any underlying evidence in this regard.

(113)

In the Notice of Initiation, the product subject to this investigation was defined as new battery electric vehicles, principally designed for the transport of nine or less persons, including the driver, propelled solely by one or more electric motors. The Notice of Initiation also specified the CN code for the product subject to the investigation which was 8703 80 10 . The description of the product subject to the investigation does not need to include all the characteristics of the product subject to the investigation. Furthermore, the Notice of Initiation did not specify that BEVs with a range extender were excluded from the scope of the investigation.

(114)

As to how the Commission obtained the data, since such BEVs are also imported through the CN code covered by the investigation, the imports of such BEVs from China or other third countries during the period considered, if any, were captured by the data covered by CN Code 8703 80 10 . S&P Mobility Data and EEA reported such BEVs and during the IP no such BEVs from China were registered in the Union market. The only evidence in the file shows that after the investigation period the Chinese exporting producer Seres announced such BEVs for the Union market (Seres 7 with range extender (20)) and an immaterial number of such BEVs were registered after the investigation period.

(115)

Moreover, as concerned the Union industry, evidence on the file shows that there were immaterial sales of this product during the period considered.

(116)

To be noted that BEVs with a range extender are different than the plug-in electric vehicles (‘PHEVs’). In the BEVs with a range extender, the internal combustion engine solely recharges the battery, while in a PHEV, the internal combustion engine powers the wheels on its own. PHEVs are also imported via a different CN code than the CN code covered by the current investigation. Therefore, contrary to BEVs with a range extender, PHEV were indeed not covered by the scope of the investigation.

(117)

As concerns the PCN, while indeed the range extender was not specified in the PCN as such, the PCN specified the range of the vehicle, and the purpose of the range extender is to increase the range of the car.

(118)

Furthermore, while there were virtually no imports from China of BEVs with range extender during the period considered and virtually no sales by the Union producers on the Union market, it cannot be ruled out that in the future this type of BEV will be exported in significant quantities and produced by the Union producers on the Union market, in view of the fact that BEVs are based on a technology that is continuously evolving. In this respect, the Commission considered that BEVs without range extender and BEVs with a range extender are very similar BEVs, the main small technical difference being the range extender and the related components and thus they are clearly part of the same product covered by the scope of the investigation.

(119)

Therefore, the BEVs with range extender are covered by the scope of the investigation.

(120)

Furthermore, in the provisional Regulation, the Commission excluded from the scope of the investigation, L6 and L7 categories of vehicles according to Regulation (EU) No 168/2013 of the European Parliament and of the Council (21). The Commission hereby clarifies that all L1 to L7 categories of vehicles according to Regulation (EU) No 168/2013 were excluded from the scope of the investigation.

(121)

In absence of any other comments with regard to the product under investigation, product concerned and like product, the findings in recitals (184) to (195) are confirmed.

(122)

Following provisional disclosure, the BYD Group, the CAAM, the Geely Group, the Dongfeng Group, the GOC, NIO, the SAIC Group, and Tesla (Shanghai) commented on the provisional subsidy findings. Some comments raised by Tesla (Shanghai) were addressed in a separate sending due to their confidential nature.

(123)

In absence of any comments on the existence of those plans, projects and documents, recitals (196) to (206) of the provisional Regulation were confirmed.

(124)

In absence of any comments on the existing government plans and policies to support the BEV industry, recitals (207) to (253) of the provisional Regulation were confirmed.

(125)

Following provisional disclosure, the GOC objected to the Commission’s application of facts available in relation to preferential financing materials arguing that, as the investigating authority, it is the duty of the Commission to investigate and forward the questionnaire to financial institutions requesting for cooperation. The GOC added that facts available could only be applied in the absence of certain ‘necessary’ information; i.e. information ‘required’ by an authority to complete its determination(s) (22). More specifically, the GOC added that the information concerning the shareholding of the financial institutions is publicly available and that there was no basis for the Commission for the use of facts available.

(126)

Furthermore, the GOC added that the Commission had illegally reversed the investigatory burden and referred to Article 12 of the SCM Agreement and related jurisprudence whereby certain obligations are allegedly incumbent upon the investigating authority and cannot be transferred to the ‘interested Member’ (the GOC) (23). Consequently, the GOC considered that the resort to facts available was unlawful as the Commission had not properly notified the respondent of the information required from them. The GOC also commented that an authority cannot force the exporting government (the interested Member) to ‘do the work for the investigating authority’.

(127)

The GOC noted that there are distinct and non-fungible obligations imposed on the investigating authority and the interested Member. And, as well captured by the Panel in Mexico – Anti-Dumping Measures on Rice: ‘[an] investigating authority is not allowed to rely on the initiative of the interested parties for the fulfilment of obligations which are really its own’.

(128)

The Commission, as described in recitals (266) to (268) of the provisional Regulation, noted that the information requested was available to the GOC for all entities where the GOC is the main or major shareholder. Similarly, for non-State-owned financial institutions, the GOC as the regulatory body has the authority to require all financial institutions established in the People’s Republic of China to submit information, as well as to instruct financial institutions to disclose information to the public. Subsequently, the Commission highlighted that the GOC cannot evade its responsibilities by withholding information that, by virtue of its authority and regulatory role, is effectively within its possession.

(129)

For administrative convenience, with a view to obtaining the information more efficiently, the Commission requested the GOC to forward specific questionnaires to all relevant financial institutions, which it did not do, while the GOC is the authority competent to request answers to the specific questions from the financial institutions that provided financing to the sampled exporting producers. Additionally, it was found unreasonable to argue that it was for the Commission to contact the relevant financial institutions, particularly because the list of relevant financial institutions would only be known to the Commission after receipt of the questionnaire replies of the sampled exporting producers. Moreover, the fact that EXIM bank informed the Commission on its own initiative and the fact that in previous anti-subsidy investigation questionnaire replies from various financial institutions were received, showed that the GOC was able to forward the questionnaire. The website provided by the GOC containing the shareholding of financial institutions did not contain all the necessary information requested by the Commission in the questionnaire reply in relation to preferential lending. Consequently, the Commission rejected the claim.

(130)

In the absence of any other comments, recitals (255) to (273) of the provisional Regulation were confirmed.

(131)

Following provisional disclosure the GOC reiterated its claim regarding the Commission’s application of facts available in relation to input materials arguing that, as the investigating authority, it is the duty of the Commission to investigate and forward the questionnaire to input suppliers and request them to cooperate. The GOC added that it deemed the information requested and the information SAIC failed to provide as not necessary for the investigation and not required in a regular anti-subsidy investigation, and that the information on suppliers and market conditions could have been obtained from the sampled companies.

(132)

The Commission noted that the arguments were addressed in Section 3.3.1.2 of the provisional Regulation. First, the Commission reiterated its stance that it is for the Commission to determine what information is deemed necessary for the investigation and not for a party to make that determination. Furthermore, the Commission highlighted that, contrary to some past investigations (24), the GOC did not forward the questionnaire to third parties. CATL was also requested, through the sampled companies to which it was related, to submit a questionnaire and did not do so. In addition, the GOC also has the necessary authority to interact with the input producers, whether they are state-owned or not. In addition, the GOC failed to provide relevant information concerning certain markets such as batteries and lithium. Hence, the Commission had to rely on facts available. With respect to the requested information, it is noted that the Commission only requested information that was necessary to assess the existence and level of subsidisation available to the product concerned. Therefore, the claims were rejected.

(133)

Following definitive disclosure, CATL submitted that the Commission could have obtained any information needed on battery purchases from the sampled company groups, and that CATL’s non-cooperation could not in any event provide a basis for ‘unlimited inferences and conjecture relying on distorted facts’.

(134)

The claims raised by CATL were general and unsubstantiated. The Commission highlighted that, as previously covered in recital (810) of the provisional Regulation, although contacted by two of the sampled groups with which it had joint ventures, CATL refused to provide a questionnaire reply so that the Commission did not have crucial information in order to assess the situation of CATL based on its own data. Moreover, facts available on the provision of batteries were also applied to the SAIC Group (recitals (338) and (860) of the provisional Regulation), which is one of the companies with whom CATL has a joint venture with. Therefore, this claim was rejected.

(135)

In the absence of any other comments, recitals (274) to (286) of the provisional Regulation were confirmed.

(136)

Following provisional disclosure the GOC reiterated its claim regarding the non-existence of information on the preparation, monitoring, and implementation of the scheme, as well as statistics on the vehicles concerned. Consequently, the GOC could not provide information that it did not have, and any use of facts available would be unjustified and illegal.

(137)

The Commission noted, as described in recitals (297) and (298) of the provisional Regulation, that information regarding the scheme’s preparation, monitoring, and implementation, as well as statistics on vehicles affected by a program that has been in place for several years and has involved significant financial resources from the central budget managed by the GOC, was relevant and necessary for the Commission to reach its conclusion. In the absence of this information, which was not provided by the GOC, the Commission was entitled, where appropriate, to use available facts. Therefore, the claim was rejected.

(138)

In absence of any further comments, recitals (287) to (299) of the provisional Regulation were confirmed.

(139)

In the absence of comments, recitals (300) to (305) of the provisional Regulation were confirmed.

(140)

In the absence of comments recitals (306) to (317) of the provisional Regulation were confirmed.

(141)

Following provisional disclosure, the SAIC Group submitted that in general, the Commission has disregarded the information provided by the entities of the SAIC Group that it considered to be deficient in some respects and used instead, alternative information sources. The SAIC Group considered that the Commission should have undertaken a concrete examination of the deficiencies for each company, assessing the extent of those deficiencies and used the information that it had on record for each company of the group. Furthermore, the SAIC Group argued that under WTO rules, the term ‘facts available’ should in this context be interpreted as ‘best facts available’ as the Appellate Body held in US – Hot Rolled Steel, an investigating authority is ‘entitled to reject information submitted by interested parties’ only where information is not (i) verifiable, (ii) appropriately submitted so that it can be used in the investigation without undue difficulties, (iii) supplied in a timely fashion, and (iv) supplied in a medium or computer language requested by authorities. Investigating authorities must not discard information that is ‘not ideal in all respects’ if the ‘interested party has acted to the best of its ability’. Rather, where an investigating authority is not satisfied with the information submitted by an interested party, the WTO Appellate Body has held that it must examine those elements of the information with which it is not satisfied.

(142)

With regard to the alleged ‘good faith’ showed by the SAIC Group concerning its cooperation with this investigation, the Commission noted that in several instances, which were all duly recorded at the end of each verification visit by both the investigating team and the company representatives, companies belonging to the SAIC Group refused to submit or give access to crucial information to the investigation team although it was readily available and could have been provided, had the SAIC Group acted to the best of its ability. The Commission therefore decided to reject the partial information which was considered deficient or incomplete and could not be fully verified. In line with the conditions set out in Article 28(3) of the basic Regulation this partial information was disregarded on the ground that the SAIC Group did deliberately not act to the best of its ability as shown by the above-mentioned uncontested annexes to the on-spot verification reports listing those documents which the entities, part of the SAIC Group, refused to provide as a whole or for which certain relevant parts were redacted, although readily available. The claim was therefore rejected.

(143)

Following provisional disclosure the SAIC Group claimed that the provisional findings did not reflect the fact that it ‘has at all times cooperated in good faith with the investigation and has consistently sought to facilitate the work of the Commission’. Furthermore, the SAIC Group alleged that it could not compel legal entities being part of joint venture structures to cooperate to the investigation.

(144)

In this regard, the Commission refers to the two ‘Article 28’ letters sent to the SAIC Group upon receipt of its questionnaire reply and following the on-the-spot verification, which both listed the numerous areas where the SAIC Group had failed to provide crucial information requested in the framework of this investigation, thereby impeding the investigation. Furthermore, the Commission extensively informed the SAIC Group of the consequences of applying facts available with respect to the SAIC Group, including for the related legal entities being part of the joint venture structures. The Commission reiterated that given the existing links in terms of shareholding and/or the nature of their activities they should have provided a questionnaire reply allowing the Commission to verify the information and eventually request further evidence. In the absence of cooperation by some of the related joint venture legal entities, the Commission was entitled, where appropriate, to use facts available. Therefore, the claim was rejected.

(145)

Following provisional disclosure the SAIC Group argued that the Commission should not have applied Article 28 of the basic Regulation to some companies in the SAIC Group and finally to the SAIC Group.

(146)

As mentioned in recitals (318) to (371) of the provisional Regulation, the replies received from the different entities part of the SAIC Group were found to be highly deficient. Consequently, the provisional findings of the investigation had to be partly based on facts available, pursuant to Article 28 of the basic Regulation. Indeed, the SAIC Group failed to either disclose the existence of related companies or to provide questionnaire replies for other related companies. Despite possible existing evidence of joint decisions taken by the three shareholders of one company in the SAIC Group, the SAIC Group alleged that one of the three shareholders was not directly related to the SAIC Group, but solely to a foreign company and therefore could not exercise any control or compel this company to provide a questionnaire. This information seemed not to be correct based on publicly available financial reports and could not be verified as the company redacted some parts of the Board of Directors meeting minutes where representatives of its three shareholders could be present.

(147)

It remains that despite the requests addressed to the SAIC Group to provide a questionnaire reply regarding several of its related entities, this company chose not to cooperate and therefore exposed its related companies to the use of facts available in compliance with Article 28 of the basic Regulation.

(148)

The SAIC Group further argued that the Commission had used information regarding asset-backed securities issued by one related company for which it never requested the SAIC Group to provide a questionnaire reply. Indeed, this entity is one of the new companies mentioned in recital (329) of the provisional Regulation, which according to publicly available sources, were found to be related and were involved in various key contractual relations involving activities such as the provision of input materials, capital, loans, guarantees and other types of financing within the SAIC Group. Since the SAIC Group did not provide any information regarding the existence of this company, the Commission could not have been in the position to request a questionnaire reply. Had this company provided a questionnaire reply, the Commission could have established the existence, activities and precise links between the various related companies. In the absence of such questionnaire reply and relevant information, the Commission had to resort to facts available to establish its findings, which included information relating to the asset-backed securities issued by this company, which were considered a source of preferential financing as explained in recitals (368) and (369). On these grounds, this claim was rejected.

(149)

In the absence of any further comments regarding the application of the provisions of Article 28(1) of the basic Regulation concerning the SAIC Group, recitals (318) to (371) of the provisional Regulation were confirmed.

(150)

Following provisional disclosure, the Geely Group submitted comments concerning the application of facts available.

(151)

Firstly, the Geely Group reiterated its claim that its inability to exert control over CATL prevents them from compelling this third party to provide information. It also argued that when an exporting producer and a third party are linked solely through a joint venture, the information from the third party cannot substantiate the use of available facts.

(152)

As stated in recital (376) of the provisional Regulation, the Commission noted that the CATL and Geely Group had established a joint venture for the development, production, and sale of battery cells, modules, and packs. Consequently, they were legally acknowledged as business partners. Within the meaning of Article 127 of the Commission Implementing Regulation (EU) 2015/2447 (25), they were considered related parties and therefore both parties were requested to submit a subsidy questionnaire response. Consequently, claim was rejected.

(153)

Secondly, the Geely Group claimed that the request for information regarding companies within their group participating in BEV financing arrived at an advanced stage of the investigation and lacked specificity.

(154)

However, the Commission noted that the questionnaire for exporting producers, available since the initiation of the investigation in October, already included a request for information concerning companies involved in financing activities. Furthermore, the Commission’s letter dated 6 March 2024, specifically pointed to entities that may have raised funds through asset-backed securities (including green asset-backed securities), and other means. The Commission also granted a deadline extension for providing such information. Consequently, the claim was rejected.

(155)

Thirdly, concerning grants the Geely Group claimed that it provided all available information in the questionnaire response and during on-site verifications. The purpose of grants was indicated on bank slips, which were thoroughly discussed during on-site visits. It also claimed that asset-related grants exclusively cover relevant assets, while non-asset-related grants support daily operations for both BEVs and non-BEVs.

(156)

The Commission noted, as described in recitals (300) and (380) of the provisional Regulation, that based on the limited information available from bank slips, it could not ascertain the underlying subsidy schemes for the grant programs related to the investigated product. Additionally, the GOC did not provide details about ad hoc grants given to the sampled groups. Consequently, the group’s claim was rejected.

(157)

The Geely Group also claimed to have provided the necessary information at an early stage of the investigation and to have demonstrated full transparency by disclosing and explaining the structure and organization of its operations.

(158)

The Commission acknowledged the Geely Group’s efforts in responding to its information request. However, the Commission also noted, as described in recital (384) of the provisional Regulation, that the late submission of certain information hindered its ability to verify its completeness and accuracy. In particular, the Commission was unable to validate input supplies relative to the production volume and costs of BEVs since the cost information provided lacked the necessary details requested from producing entities in the questionnaire. Therefore, the claim was rejected.

(159)

Concerning land use rights, the Geely Group claimed that its headquarters are unrelated to BEV production and sales, rendering them irrelevant to the investigation. It also claimed to have provided the requested information.

(160)

As noted in recital (387) of the provisional Regulation, it was established that the headquarters are partly used for activities related to BEVs. Consequently, the claim was dismissed.

(161)

In its comments on provisional disclosure Geely Group reiterated its claim that requests about future projects linked to the production of BEVs exceed the investigation’s scope. However, the Commission dismissed this claim as inconsistent, since, at the same time, in one of its submissions a manufacturing entity of the group was requested to be added to the list of Geely Group’s producing entities (26) after starting the manufacturing and exporting new BEV model after the investigation period as defined in recital (9) of the provisional Regulation.

(162)

In the absence of any further comments regarding the application of the provisions of Article 28(1) of the basic Regulation concerning the Geely Group, recitals (372) to (387) of the provisional Regulation were confirmed.

(163)

Following provisional disclosure, the BYD Group contested the application of Article 28 concerning the lack of a questionnaire reply from its related LFP supplier, Hunan Yuneng New Energy Materials Co. Ltd, based on the fact that this supplier was falling within the definition of a ‘related company’ to the BYD Group for only part of the investigation period. The BYD Group asked the Commission to include the quantities and prices provided by the supplier at hand in the calculation of the benefit for LFP at less than adequate remuneration. This request was reiterated after definitive disclosure. The BYD Group also reiterated its comments contesting the application of Article 28 to a company of the BYD Group deemed as not being related, adding that the Agreement concluded between the two parties concerned production capacity, and not price-setting, and that purchase prices were determined according to market’s demand-supply forces. The BYD Group also submitted a copy of three purchasing orders at different time periods as additional evidence for their claims.

(164)

The Commission recalled that the purchase agreements between the BYD Group and Hunan Yuneng New Energy Materials Co., Ltd. submitted by the BYD Group predated the beginning of the investigation period, and that purchases were thus done at prices set when the BYD Group was a related company to its LFP supplier. Concerning the allegations by the BYD Group that the Agreements between the two parties only established production capacity, and not prices, the Commission recalls that, as already covered in recital (892) of the provisional Regulation, they contained provisions relating to price ensuring that it would benefit from the most favourable supply; i.e. that it would not pay a higher price than any other customer of Hunan Yuneng New Energy Materials Co. Ltd., as well as a price-setting formula. Concerning the allegations that such transactions were made according to market dynamics, as noted in recital (864) of the provisional Regulation, the Chinese market has been deemed distorted due to the national and sector-specific policies enacted by domestic battery and LFP suppliers, particularly those pertaining to pricing structures. Moreover, given the lack of cooperation from the raw material supplier, the Commission could not assess whether the price at which the BYD Group purchased LFP could be deemed at arms’ length and, as explained in recital (928) of the provisional Regulation, the Commission thus replaced this price with the average purchase price of LFP from unrelated suppliers. In light of this, since no verifiable information was provided, the Commission rejected this claim.

(165)

In the absence of any further comments regarding the application of the provisions of Article 28(1) of the basic Regulation concerning the BYD Group, recitals (388) to (400) of the provisional Regulation were confirmed.

(166)

In the absence of comments recitals (401) to (406) of the provisional Regulation were confirmed.

(167)

In the absence of any comments regarding the subsidies and subsidy programmes as presented in Section 3.4 of the provisional Regulation, recital (407) of the provisional Regulation was confirmed.

(168)

Following provisional disclosure, the GOC claimed that the Commission was required to analyse the core characteristics, functions, and relationship with the government of each entity (‘on its own merit’, as it were) and determine whether each entity (individually; not as a group) can be classified as a public body (27).

(169)

In this regard, it claimed that, except for the EXIM bank, the Commission did not perform such assessment on an individual basis but rather allegedly relied on past investigations and other publicly available documents and relied on a top-level assessment of the EXIM bank and some other banks allegedly involved in providing financing to the BEV industry. It further claimed that the EXIM bank does not perform a ‘governmental function’ (28) and that the GOC does not exercise control over the EXIM bank. On this basis, the GOC concluded that the Commission had not based its conclusions on robust evidence and proper reasoning.

(170)

The Commission analysed not only the situation of EXIM bank, but also that of all other Chinese State-owned commercial banks (‘SOCBs’) which provided preferential financing to the BEV sector, and which did not cooperate. In the absence of cooperation by other SOCBs, the Commission had to revert to facts available to make its findings in this regard as concluded in recital (460) of the provisional Regulation. On these grounds, as explained in the recital (464) of the provisional Regulation, the Commission decided to use facts available to determine whether those State-owned financial institutions qualified as public bodies. On this basis, this claim was rejected, and the conclusions drawn in recitals (466) to (467) of the provisional Regulation were confirmed.

(171)

First, the Commission determined the ownership of the State in each of the fifteen SOCBs that provided preferential financing to the sampled groups individually, after referring to the existing normative framework in which SOCBs operate in recitals (461) and (462) of the provisional Regulation. Specific examples in this respect were mentioned in recitals (430) and (431) of the provisional Regulation, for those banks which accounted all together for a very large share of the PRC financial sector in terms of assets by the end of 2021/2022. In addition, in recital (463) of the provisional Regulation, the Commission provided evidence of the state ownership for the other SOCBs that provided financing to the BEV sector based on publicly available information, such as recent annual reports.

(172)

Following definitive disclosure, the GOC argued that the Commission’s determination on (state) shareholding as elaborated in recitals (430) and (431) of the provisional Regulation and recital (170) of this Regulation were not equivalent to an entity-per entity assessment and were not sufficient to conclude that the financial institutions at issue are state-owned. The GOC also claimed that the Commission had allegedly concluded that the GOC did not have shareholding in all financial institutions (SOCBs).

(173)

In the absence of new supporting elements contradicting the Commission’s conclusion concerning state shareholding, the Commission maintained its conclusion which is based on a thorough analysis of the information on file. The collection of information was however affected by the lack of cooperation by Chinese financial institutions except for the EXIM bank that cooperated only partially so that the Commission had to rely on facts available. Furthermore, the Commission disagreed with the GOC’s claim that the Commission had allegedly admitted that the GOC would not have shareholding in all state-owned commercial banks. The GOCs inference is unsupported and goes against the principle that a SOCB is, by essence, state owned.

(174)

The Commission then established meaningful control of the GOC over the SOCBs. Evidence was provided of formal indicia of control over the SOCBs via the governance structure of the banks. Indeed, as mentioned in recitals (431) to (432) of the provisional Regulation, since 2017 the Articles of Association of all SOCBs have integrated a clear role for the Chinese Communist Party (‘CCP’) in the supervision and decision-making process of the financial institutions. Finally, the evidence concerning the meaningful control of the GOC via the regulatory framework was set out in Section 3.5.1.5 in the provisional Regulation. The Commission noted that all SOCBs operate under the same governance structure and regulatory framework as the EXIM bank.

(175)

In the absence of reply by the GOC on the governance structure, risk assessment or examples relating to specific loans to the BEV industry, the Commission also had to resort to facts available. Contrary to the GOC’s claim, the Commission did not only refer to past investigations but also to thorough reports (29) issued during or shortly after the investigation period and confirming the conclusions drawn in previous investigations. In any case, as far as findings of past investigations are concerned, the Commission considered that they were still valid, and that the GOC did not provide any element contradicting such conclusions. On the basis of all these elements, the Commission rejected this claim and confirmed its findings.

(176)

Furthermore, as far as the alleged superficial analysis of ownership is concerned, the Commission referred to the information provided by the GOC in the course of the verification visit whereby it was allegedly not in a position to provide information on the shareholder owning close to 90 % of EXIM bank’s paid-in capital; i.e. Wutongshu Investment Platform Co., Ltd. According to the Commission’s information, based on publicly available information (30), such investment platform is owned 100 % by the Chinese authorities through China’s State Administration of Foreign Exchange (‘SAFE’). In this context, the Commission also had to resort to facts available to establish its findings and ‘fill the gaps’ left by the lack of cooperation by the GOC. On this basis, this claim was rejected.

(177)

Following definitive disclosure, the GOC also claimed that the Commission had not analysed whether the government had delegated governmental authority to the entities at issue and referred to the WTO jurisprudence (31). In this respect, the Commission considered that the applicable jurisprudence whereby ‘State ownership, while not being a decisive criterion, may serve as evidence indicating, in conjunction with other elements, the delegation of governmental authority.’ confirmed that it had acted in line with the applicable legal framework by analysing state ownership and other elements such as formal indicia of control and the regulatory framework.

(178)

Following provisional disclosure the GOC also indicated that the ability of a government to nominate or hire officials or staff in an entity is not sufficient to demonstrate control and that it should demonstrate whether these ‘nominations’ act independently. Furthermore, it added that the Commission’s statements that the ‘GOC relied on [a] normative framework in order to exercise control in a meaningful way over the conduct of the cooperating State-owned bank whenever it was providing loans to the BEV industry’ and the EXIM bank acts in a ‘manner prescribed by the GOC’ lack supporting evidence.

(179)

With regard to the above claims, the Commission referred to recitals (426) and (427) of the provisional Regulation, which provide that ‘the State directly nominates the management of EXIM bank. The Board of Supervisors is appointed by the State Council’ and that ‘the Party Committee of EXIM bank plays a leading and political core role to ensure that policies and major deployment of the Party and the State are implemented by EXIM bank, and that the Party’s leadership is integrated into all aspects of corporate governance’. In this strict context, the Commission considered that members of the management and board of supervisors nominated or appointed by the State are directed to perform government action in line with the Party’s policies and major developments. Moreover, it should be noted that the Commission did not only rely on the GOC’s ability to nominate staff in an entity to demonstrate that the GOC exercised control over the SOCBs.

(180)

Following definitive disclosure, the GOC argued that the Commission did not conduct an entity-by-entity assessment with regard to the management of the financial institutions, other than the EXIM bank.

(181)

In this regard, the Commission referred to recitals (431) to (433) of the provisional Regulation which do not apply exclusively to the EXIM bank but to all State-owned financial institutions in the PRC. For this reason, such entity-by-entity assessment was not considered necessary. On this basis, this claim was rejected.

(182)

Following provisional disclosure, the GOC also added that the Commission cannot rely on Article 34 of the Bank law to conclude that banks are required to act in a certain manner or that the EXIM bank is meaningfully controlled by the GOC and that it should have a more comprehensive reading of the entire Bank Law, and Article 4, 5 and 41 thereof, which prohibits the GOC from exercising any form of control over the decisions of banks and ensures that banks operate independently.

(183)

The GOC also referred to Article 15 of the General Rules on Loans which provides that ‘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’ and indicated that such provision did not demonstrate a meaningful control of the government or the exercise of governmental authority.

(184)

The GOC also commented that Decision 40 was more of a guidance document and that Article 17 of this Decision ‘requires banks to respect credit principles’ and that credit support is limited ‘only to investment projects pertaining to the encouraged category’ whereby the Commission has the legal obligation to prove that ‘such bonds’ are related to the allegedly encouraged investment projects.

(185)

The GOC also referred to the Provisional Measures on Administration of Working Capital Loans as provided in its questionnaire response and pointed to the fact that the relevant acceptance of loan applications, checking, examination and approval do not refer to any requirements on consideration of alleged industrial policies.

(186)

The GOC also indicated that the Commission cannot rely on ‘overarching goals’ of the GOC (citing the Three-Year Action Plan of the CBIRC for the years 2020 to 2022) and is required to show that some concrete action of the government results in its control of the entity (public body) in question and cannot rely on the fact that a financial institution follows or complies with the law of the land as being equivalent to government control.

(187)

The GOC also indicated that the Commission reading of the EXIM bank’s 2022 annual report was selective and that certain parts were taken out of context and concern considerations of general economic stability of the country disconnected from the advancement of industrial policy whereby the EXIM bank provided financing to various sectors.

(188)

As far as the nature and legal effect of Article 4, 5 31, and 41 of the Bank Law, Article 15 of the General Rules on Loans, Article 19 of Decision 40, and the Provisional Measures on Administration of Working Capital Loans, the Commission referred to recitals (449) and (450) of the provisional Regulation where it already addressed these claims. In the absence of new elements, the above claims were rejected.

(189)

The GOC also provided that State-ownership does not equate to the concept of ‘public body’ and that the government’s ability to appoint officials needs to be complemented so that these government appointees do not act independently. In this regard, the GOC referred to Article 5 of the ‘Interim Regulations of Board of Supervisors of Key State-owned Financial Institutions’ and pointed to the fact that the Board of Supervisors ‘shall not participate in nor interfere with the business decision-making and business management activities of the state-owned financial institution’ to underline that there is no institutional control.

(190)

The Commission disagreed with this claim and referred to recital (178) of this Regulation whereby the Commission considered that members of the management and board of supervisors nominated or appointed by the State are directed to perform government action in line with the Party’s policies and major developments. On this basis, this claim was rejected.

(191)

Following definitive disclosure, the GOC argued that the nomination of the management and board of supervisors of EXIM bank by the State did not imply that these individuals were directed to perform government action in line with the Party’s policies and major developments. The GOC also argued that the Commission had ignored evidence on the record allegedly showing that the financial institutions and members of their management are required to act independently. In the same vein, the GOC argued that the evidence on the record showed that by law, the Board of Supervisors shall not interfere with the decision-making of state-owned financial institutions.

(192)

In this regard, the Commission referred to recital (178) of this Regulation whereby the Commission considered that members of the management and board of supervisors nominated or appointed by the State are directed to perform government action in line with the Party’s policies and major developments. Furthermore, the Commission also considered that supervisors would perform government action in line with the Party’s policies and major developments in the framework of their functions and responsibilities. On this basis, these claims were rejected.

(193)

Following provisional disclosure, the GOC also provided that the New Energy Vehicle Industry Development Plan 2012-2020 (‘the 2012-2020 plan’) does not specify any amount of funding that is to be given to the concerned sectors and that it was not operational during the investigation period.

(194)

The Commission considered the fact that the plan does not specify any amount of funding irrelevant. The Commission also noted that 2012-2020 plan is the predecessor of the New Energy Vehicle Industry Development Plan (2021-2035), which subsequently followed and that both plans relate to the sector including the product under investigation. In any case, as can be seen from Section 3.2 of the provisional Regulation, the 2012-2020 plan is not the only that foresees preferential financing to encouraged industries such as the BEV industry.

(195)

The GOC also indicated that the Commission only pointed to certain elements of the Ministry of Finance Notice on the Commercial banks performance evaluation method, issued on 15 December 2020 and ignored the fact that this Notice also refers to aspects such as: to ‘give play to the decisive role of the market mechanism’ to support its claim that financial institutions are not required to pay attention to industry policy considerations, to the exclusion of commercial (market-oriented) considerations.

(196)

On this basis, the GOC concluded that the Commission had not demonstrated that the ‘normative framework did not leave any margin of manoeuvre to the managers and supervisors of the bank as to whether to follow this framework or not with respect to the sampled exporting producers, thus putting the management of that bank in a position of dependence’.

(197)

Should the Commission still conclude that the financial institutions are indeed public bodies, the GOC held that the Commission had not established what (if any) governmental function they exercised.

(198)

In the same context, the GOC claimed that policy loans do not exist and that there is no interference of the GOC in the process of granting loans whereby banks operate independently and on the basis of market-oriented principles. The GOC also repeated its claims rejecting the Commission’s determination that SOCBs are public bodies.

(199)

Furthermore, the GOC referred to the Commission’s findings that the BEV producers received loans at ‘interest rates below or close to the Loan Prime Rate (“LPR”)’ (see recital (486) of the provisional Regulation) and argued that such rate is actually based on quoting banks based on the actual lending rates implemented for the highest quality customers taking into account the cost of funds, market supply and demand, risk premiums and other factors.

(200)

The Commission considered that it had established which governmental functions were exercised by the SOCBs; i.e. provide preferential financing to an encouraged sector; i.e. the BEV sector in line with the applicable national plans as defined in Section 3.2 of the provisional Regulation. Also, in the absence of cooperation by any bank, except for the partial cooperation by the EXIM bank, the Commission was not in a position to verify the claims made by the GOC with regard to important elements such as the assessment of creditworthiness.

(201)

On the contrary, as noted in recital (453) of the provisional Regulation, the Commission established that the three sampled groups of exporting producers had benefited from loans at interest rates below or close to the Loan Prime Rate (‘LPR’), a rate supposedly available to the highest quality customers, taking into account the cost of funds, market supply and demand, risk premiums and other factors (32). The fact that the three sampled producers benefitted from even lower rates than those available to the ‘highest quality’ customers confirmed that the existence of a normative framework in which financial institutions do not operate independently but are directed to implement national policies by providing preferential financing to the BEV industry as described in recital (455) of the provisional Regulation. On this basis, the above claims were rejected.

(202)

Following definitive disclosure, the GOC argued that the Commission had cherry-picked information from various documents to support its view that the GOC had created a normative framework in order to exercise meaningful control over the financial institutions. In addressing the GOC’s claim, the GOC argued that the Commission had merely restated the GOC’s arguments but ignored the evidence on the record.

(203)

The Commission disagreed with this claim. In essence, the Commission considered that it had addressed the GOC’s claims and had not ‘cherry-picked’ information to support its conclusion relating to the normative framework but rather based such conclusion on a thorough analysis of the elements on record which derived from the documents pertaining to the legal framework in which financial institutions operate, national and sectoral policy documents, information collected from the cooperating BEV producers, findings from past investigations and facts available in view of the lack of cooperation by Chinese banks. In the absence of cooperation by the Chinese financial institutions after the GOC did not forward the ad hoc questionnaire to the financial institutions concerned, the Commission was not in a position to confirm the alleged ‘evidence on file’ submitted by the GOC. On this basis, these claims were rejected.

(204)

Following provisional disclosure, the CAAM argued that commercial banks cannot be considered as public institutions, since banks carry out market-oriented operations with the purpose of gaining profits, and that automotive companies carry out financing through these commercial banks in accordance with market mechanisms.

(205)

As described in Section 3.5.1.1 of the provisional Regulation, the Commission concluded that State-owned financial institutions are public bodies within the meaning of Article 2(b) read in conjunction with Article 3(1)(a)(i) of the basic Regulation and that they are in any event considered entrusted or directed by the GOC to carry out functions normally vested in the government within the meaning of Article 3(1)(a)(iv) of the basic Regulation. In Section 3.5.1.9 of the provisional Regulation, the Commission concluded that private financial institutions are also entrusted and directed by the government. Furthermore, the findings of this investigation as well as the Commission’s findings in previous investigations (33) concerning the same financial institutions did not support the claim that banks operate according to market mechanisms and do not take government policy and plans into account when making lending decisions. Therefore, the claim was rejected.

(206)

In the absence of further comments, the conclusions drawn in recitals (409) to (467) of the provisional Regulation were confirmed.

(207)

Following provisional disclosure the GOC submitted that the Commission had relied on the same elements to demonstrate that the financial institutions were entrusted and directed by the GOC and rejected such finding. It referred to WTO jurisprudence to claim that the entrustment/direction and public body analyses differ and that the notion of delegation (in the case of entrustment) or command (in the case of direction) must take the form of an affirmative act (34). It also noted that entrustment and direction (i) cannot be a by-product of government regulation; (ii) imply a more active role than mere acts of encouragement; and (iii) need to be demonstrated on the basis of evidence that a government ‘gives responsibility’ in case of entrustment or ‘exercises its authority over a private body to effectuate a financial contribution’ in the context of direction (35). In this regard, the GOC claimed that the Commission had failed to identify any ‘functions normally vested in the government’ that the financial institutions are being entrusted/directed to perform. Furthermore, the GOC pointed to the assessment of whether (and how) the GOC ‘[gave] responsibility to a private body – or exercise[d] its authority over a private body – in order to effectuate a financial contribution’ and the absence of ‘demonstrable link’ between the GOC and the conduct of the private players. The GOC also submitted that the Commission had not performed an entity-by-entity assessment of entrustment/direction for the financial institutions.

(208)

In this regard the Commission considered that the elements allowing to conclude that State-owned banks were public bodies also warranted the existence of entrustment and direction at the level of private financial institution. In particular, as explained in recitals (471) to (473) of the provisional Regulation, the Commission established the existence of a normative framework that applied to all financial institutions in the PRC, whether privately or State-owned and resulted in similar conditions. Such findings are also in line with those reached in past investigations.

(209)

As far as the entity-by-entity assessment is concerned, the Commission recalled that it did not receive any questionnaire reply by private financial institutions so that it had to rely on facts available.

(210)

The GOC also submitted that the fact that similar conditions applied for loan contracts with private financial institutions as with State-owned financial institutions show that the market is competitive and that all banks are subject to the same treatment.

(211)

The Commission recalled that in the absence of cooperation from the banks, whether privately or State-owned, the Commission had to rely on facts available. The fact that there was an overlap in rates shows that the private banks also provided loans below market terms, not the opposite.

(212)

Following definitive disclosure, the GOC reiterated its claim that the Commission’s conclusion relating to similar loan conditions as developed in recital (472) of the provisional Regulation was wrong, as the facts actually demonstrated that China’s financial market was fully competitive.

(213)

The Commission confirmed its assessment and considered that the existence of similar conditions actually demonstrates that SOCBs and private financial institutions are operating in the same normative framework and are directed and or entrusted to provide preferential financing to the BEV industry, which belongs to an encouraged sector. In any case, in the absence of cooperation by financial institutions except for the EXIM bank that cooperated only partially, the Commission had to rely on facts available, which confirm the Commission’s assessment whereas the GOC did not submit supporting evidence pointing to the contrary that could be verified in the framework of this investigation. On this basis, this claim was rejected.

(214)

Following definitive disclosure, the GOC argued that the Commission had failed to meet the legal standard for entrustment/direction, and did not demonstrate that the GOC had given responsibility to private financial institutions, or exercised its authority over private financial institutions, to provide financing to BEV producers. In particular, it argued that the Commission’s conclusion on the existence of a normative framework is based on cherry-picked information and not on the entirety of the evidence on record. It also argued that, on top of its public body assessment relying on the nature of an entity and of its relationship with a government, the Commission should also have demonstrated a link between the conduct of the private entity and the government (36).

(215)

The Commission referred to recital (203) of this Regulation where it already addressed the claim relating to alleged ‘cherry-picking’ with regard to the normative framework. With regard to the link between the conduct of the private entity and the government, the Commission referred to the existence of a normative framework applicable to SOCBs as described in recital (445) of the provisional Regulation, which also applies to private banks (see recital (208) of this Regulation). Through the existence of such framework, private financial institutions are entrusted or directed to follow a given conduct; i.e. provide preferential financing to the BEV industry. On this basis, these claims were rejected.

(216)

In the absence of further comments, the conclusions drawn in recitals (467) to (473) of the provisional Regulation were confirmed.

(217)

Following provisional and definitive disclosure, the GOC argued that the information used by the Commission to disregard Chinese credit ratings was outdated and did not take into account recent developments on the Chinese credit rating market. Indeed, China issued new regulations to govern the market, including Administrative Measures for the Credit Rating Business in the Securities Market in 2021. China has also actively opened up its credit ratings market to foreign agencies and provided national treatment in accordance with the current rules and regulations of competent administrative and business management authorities of the credit rating industry. Both S&P Global Ratings Inc. and Fitch Ratings have been operational in China. Therefore, the Commission could not consider the Chinese credit rating market to be closed or distorted.

(218)

The Commission does not dispute that certain foreign agencies are operating on the Chinese market. However, the GOC disregarded the evidence provided by the Commission in recitals (474), (475) and (477) of the provisional Regulation, showing that such foreign agencies represent only a tiny fraction of the ratings performed on the Chinese credit rating market, that they follow the same rating scales as the Chinese agencies and that they apply an uplift to their rating in terms of the companies’ strategic importance to the GOC and implicit State guarantees.

(219)

As to the allegedly outdated nature of the evidence provided by the Commission, the Commission noted that the GOC selectively chose the oldest pieces of evidence submitted by the Commission, and ignored several references from the years 2021-2022 used in recitals (474), (478) and (479) of the provisional Regulation, as well as the reference to the Commission’s Staff Working Document on Significant Distortions in the Economy of the People’s Republic of China, which was issued in April 2024. These references clearly show that the situation of the Chinese credit rating market had not significantly changed during the Investigation period. These claims were thus rejected.

(220)

Following provisional disclosure, the BYD Group submitted that the credit rating assessment analysis carried out by the Commission did not provide evidence on why the BYD Group had been downgraded to a B rating. This claim was reiterated after definitive disclosure.

(221)

The Commission noted that due to the absence of creditworthiness assessment by Chinese lending financial institutions, as referenced in recital (492) of the provisional Regulation, it undertook an evaluation of the BYD Group’s credit rating in recitals (495) to (498) of the provisional Regulation.

(222)

As done in previous cases, the Commission downgraded the Chinese AAA rating to a BB rating, taking into account the actual circumstances of each group. However, such rating implies a relative low level of debt. As demonstrated in recital (498) of the provisional Regulation, the BYD Group had a very high debt to equity ratio of 0,78 based on the consolidated accounts of the BYD Group and BYD Finance. As a debt level of almost 80 % cannot be considered as low, the credit rating was further downgraded to B. The calculation of the ratio’s mentioned in recitals (495) to (498) of the provisional Regulation were part of the definitive disclosure document.

(223)

The GOC also contested BYD’s downgrade to B. The claim was rejected because the GOC compared the rating of a particular bond issued by the BYD Group and certain individual companies. The information provided by GOC is not comparable. A particular bond issued by a company does not mean that the rating for that bond also applies to the BYD Group as such. Consequently, the claim was rejected.

(224)

Following definitive disclosure, the BYD Group requested to receive the criteria or method classifying the BYD Group as a B rating company by arguing that there must be internationally recognized or generally accepted standard rules to set out the different ratings that are used by the Commission. It also argued that the methodology used by the Commission should have been part of the essential facts which haven’t been disclosed.

(225)

The Commission noted that there are no specific internationally recognized criteria to establish different ratings. Each rating agency has its own specific methodology, which is not made publicly available. However, rating agencies do follow certain general principles, as highlighted by S&P in their guide on credit rating essentials: ‘In forming their opinions of credit risk, rating agencies typically use analysts or mathematical models, or a combination of the two. […] A small number of credit rating agencies focus almost exclusively on quantitative data, which they incorporate into a mathematical model. […] In rating a corporation or municipality, agencies using the analyst driven approach generally assign an analyst, often in conjunction with a team of specialists, to take the lead in evaluating the entity’s creditworthiness. Typically, analysts obtain information from published reports, as well as from interviews and discussions with the issuer’s management. They use that information and apply their analytical judgment to assess the entity’s financial condition, operating performance, policies, and risk management strategies (37).’

(226)

The same document also highlights that ‘the credit analysis of a corporate issuer typically considers many financial and non-financial factors, including key performance indicators, economic, regulatory, and geopolitical influences, management and corporate governance attributes, and competitive position (38)’.

(227)

The Commission used the same principles as those applied by credit rating agencies, as highlighted in the two preceding recitals, to form an opinion on the sampled companies. Indeed, on one hand, the Commission calculated and interpreted a number of financial indicators for each sampled group of companies. As mentioned in recital (222) above, these ratios were part of the definitive disclosure document. On the other hand, the Commission used the entire set of information submitted by the companies during the investigation process, such as financial statements, bond prospectuses, details provided on financing transactions and on the market situation as a whole to make an analytical judgment of the company’s specific financial condition, but also of the overall economic, regulatory, and general market conditions in which it operates.

(228)

In this respect, the Commission thus took into account the context in which the companies operate on top of the specific financial situation of BYD. The Commission noted that the BEV companies operate in a highly capital-intensive and volatile market environment, with rapid technological changes and innovations, with fierce competition between Chinese operators, and where companies have to continuously invest and adapt to changing market circumstances. In short, this is very similar to a start-up environment for new products, which typically involves higher overall risks and thus would yield lower overall credit ratings for companies operating on that market.

(229)

Finally, the Commission notes that according to S&P, a B-rating corresponds to a situation where a company is ‘More vulnerable to adverse business, financial and economic conditions but currently has the capacity to meet financial commitments (39)’. In view of the specific financial ratios calculated for BYD, combined with the risks of the market environment in which it operates, the Commission thus maintains its position on the credit rating of BYD. This claim was therefore rejected.

(230)

Following provisional disclosure the Geely Group argued that it had been unfairly penalised by the downgrading of its credit rating from a AAA to a B.

(231)

The Commission noted, that due to the absence of creditworthiness assessment by Chinese lending financial institutions, as referenced in recital (518) of the provisional Regulation, it undertook an evaluation of the Geely Group’s credit rating in recitals (506) to (517) of the provisional Regulation.

(232)

The Commission analysed specific short-term liquidity ratios, including the average current ratio, quick ratio, and cash ratio. The assessment indicated that the Group faced short-term liquidity challenges, resulting in a risk debtor profile. Additionally, the Commission analysed long-term debts using ratios such as the Debt-to-Asset ratio and Debt-to-Equity ratio, concluding that the group finances its activity mainly through debt.

(233)

Considering the identified short-term liquidity issues and the group’s reliance on debt financing, the Commission concluded that the awarded AAA credit rating for the Group was unwarranted, but should rather be a BB.

(234)

Furthermore, in recitals (510) to (512) of the provisional Regulation, the Commission identified additional risks associated with the Geely Group. These risks included the issuance of bonds for debt restructuring, the contracting of loans specifically to replace existing ones, and a debt-to-equity swap arrangement.

(235)

To account for the heightened risk exposure faced by the banks, particularly due to liquidity issues and both short-term and long-term financing challenges, the Commission downgraded the risk rating by one notch and opted to use B corporate bonds (instead of BB) as the basis for determining the market-based benchmark. On this basis, the claim was rejected.

(236)

The GOC also contested the downgrading of the Geely Group to B. The Commission noted that the GOC only provided a web reference with a credit rating in support of this argument, from which it was not possible to ascertain whether it referred to certain individual companies or to the group as a whole. It was also not clear from the information provided what period the rating referred to. Furthermore, the rating given on the website for Geely was BBB- with a negative outlook. This information indicates the distortion of the credit rating in China, where the group was rated AAA, and is not very different from the standard BB used by the Commission. Due to the lack of information and unsubstantiated arguments, the Commission rejected the claim.

(237)

Following definitive disclosure, the Geely Group argued that the Commission failed to account for the fact that one of the Group’s companies, Genius Auto Finance Co. Ltd (‘GAF’) was awarded AAA credit rating by S&P. The Commission noted that the credit rating, that the Group was referring to, was awarded to the trustee of ABS security, namely Shanghai International Trust Co. Ltd., but not GAF (the service provider of the ABS mortgage loan). The argument was therefore dismissed.

(238)

Following provisional disclosure the SAIC Group argued that it had been unfairly penalised by first, its downgrading from a AAA credit rating to a B credit rating and second, by the application of the spread to the People’s Bank of China (‘PBOC’) Loan Benchmark Rate (or the National Interbank Funding Centre (‘NIFC’) Loan Prime Rate) at the date the loan was granted and for the duration of each loan in question, rather than to the rate that was applicable the SAIC Group.

(239)

In the absence of creditworthiness assessment by the Chinese lending financial institutions, as mentioned in recital (518) of the provisional Regulation, the Commission assessed the credit rating of the SAIC Group in recitals (519) to (527) of the provisional Regulation. In these recitals it first assessed certain ratios pertaining to profitability, average current ratio, quick ratio, cash ratio, Debt-to-Assets, Debt-to-Equity and considered that such ratios did not warrant the alleged AAA rating mentioned in recital (238) of this Regulation and recital (524) of the provisional Regulation, but rather a BB rating. Furthermore, as noted in recitals (522) and (523), certain BEV exporting producers within the SAIC Group had to resort to debt-to-equity swaps or equity injection to ensure the sustainable continuation of their operations. In addition, the Commission had also observed that the group had contracted loans with the specific purpose of replacing existing loans. On this basis, the Commission decided to downgrade the SAIC Group from BB to B to reflect the additional risks related to its financial and liquidity problems.

(240)

Furthermore, the Commission did not consider that the SAIC Group had been unfairly penalised. In order to assess the level of the subsidy that it received, the Commission compared the interests to be paid in the investigation period as reported by the SAIC Group with the interest that it should have paid in an undistorted market, had an undistorted credit rating been applied.

(241)

In this regard, it used the LPR, i.e. the benchmark rate formed by major Chinese banks quoting the actual lending rates implemented for the highest quality customers, taking into account the cost of funds, market supply and demand, risk premiums and other factors (40). Considering that the SAIC Group benefitted from more beneficial rates than the average rate offered to the highest quality customers used for the formation of the LPR, the Commission considered that the basis for an undistorted benchmark should be set, at least, at the level of the LPR. In a second step, in order to reflect the credit worthiness of the SAIC Group, a spread based on the difference between AA and B credit rating was applied as explained in recital (504) of the provision Regulation.

(242)

The GOC also contested the downgrading of the SAIC Group to B. The Commission noted that in support of this argument the GOC provided a web reference with a credit rating of a leading Latin American producer of confectionary and cookie products. The Commission failed to see the connection between Argentine chocolates and the Chinese BEV industry. Therefore, the Commission rejected this argument.

(243)

On this basis, this claim was rejected. In the absence of any other claim in this respect, the conclusions drawn in recitals (474) to (481) and (491) to (527) of the provisional Regulation were confirmed.

(244)

Following provisional disclosure the SAIC Group submitted that the amount of benefit generated by the loans in foreign currency should not have been only allocated on the basis of the export turnover of the product under investigation (‘PUI’), but on the total export turnover. Following definitive disclosure, SAIC provided additional arguments, claiming that the Commission had sufficient verified information on record regarding export turnover from sales to the Union and outside the Union. It also noted that loan contracts do not specify the purpose or the use of these loans. Rather, these contracts indicated that they related to working capital only. These loans in foreign currencies should therefore have been treated as the loans in CNY and be allocated on the total turnover of the group.

(245)

The Commission accepted the claim regarding the allocation of the benefit amount generated by the loans in foreign currency and revised the calculation accordingly. In the absence of transactions in foreign currencies relating to other elements than sales of finished products, the Commission considered that loans in foreign currencies related exclusively to the export sales activities.

(246)

Following provisional disclosure the SAIC Group submitted that a number of intercompany loans in CNY should have been removed from the subsidy calculation. Accordingly, the SAIC Group suggested a modified calculation method as regards the subsidy amount.

(247)

This claim was partially accepted insofar as supporting evidence was available to the Commission. The supporting evidence regarding the non-current liabilities due within one year of one company in the SAIC Group that was provided by the SAIC Group as part of its comments, also led to the identification of preferential financing in the form of bonds that was previously not known to the Commission. The calculation of the subsidy amount was revised accordingly.

(248)

Following provisional disclosure the SAIC Group submitted that one interbank loan of one company in the SAIC Group was fundamentally different than loans and therefore should not have been treated as such. However, if the Commission would still treat this interbank lending as analogous to a loan, the applicable benchmark interest rate should be the one for short-term loans with a term of three months from December 2022 (i.e. 3,65 %), since the term of interbank lending for auto financing companies was legally capped at three months.

(249)

The Commission rejected the SAIC Group’s claim and considers that the company’s access to interbank lending within the SAIC Group at exceptionally low rates constitutes preferential financing. The Commission therefore considered this interbank lending as analogous to a loan. In the absence of any information provided by the SAIC Group regarding the interbank loan or the potential existence of other similar loans, the Commission continues to rely on facts available to assess the benefit related to these interbank loans.

(250)

In the absence of further comments on the types of loans, the conclusions drawn in recitals (482) to (485) of the provisional Regulation were confirmed.

(251)

Following provisional disclosure the GOC claimed that Commission had failed to conduct a proper specificity analysis for the various alleged preferential financing programs showing that there is ‘unambiguous’ and ‘clear’ limitation on access to the alleged subsidy in question, a limitation which ‘distinctly express[es] all that is meant; leaving nothing merely implied or suggested’ (41).

(252)

The GOC also added that the Commission had consistently failed to specify which part of the documents at issue mandates the explicit granting of preferential financing to the BEVs producers.

(253)

The GOC also submitted that the Commission had failed to show any explicit limitation of the alleged preferential lending to certain enterprises or sectors as preferential loans did not target a sufficiently limited group in the sense that the alleged subsidy was not limited to just the BEV industry but to so-called ‘encouraged’ industries.

(254)

As set out in recital (486) of the provisional Regulation, several legal documents, which specifically target companies in the BEV sector, direct the financial institutions to provide loans at preferential rates to the BEV industry. Pursuant to Article 4(2) of the basic Regulation, it is not necessary that the subsidy is limited to just the BEV industry to be considered specific, but it is sufficient that the access to the subsidy is explicitly limited to certain enterprises. The group of encouraged industries is considered to be of an explicit limited nature. Therefore, the claims were rejected.

(255)

Following definitive disclosure, the GOC reiterated that the Commission had failed to substantiate its determination relating to specificity based on positive evidence and relied on documents which ‘allegedly’ demonstrate that the financial institutions ‘only provide preferential financing to a limited number of enterprises or industries, which comply with the relevant policies of the GOC’. More specifically, it argued that the encouraged industries, taken as a whole, do not constitute a sufficiently discrete segment of the economy as to constitute ‘certain industries’ within the meaning of Article 4(2)(a) of the basic Regulation and Article 2(1)(a) of the SCM Agreement. In particular, the GOC argued that the breadth of the so-called ‘encouraged’ industries results in the alleged subsidies being broadly available throughout China’s economy such that it cannot logically be considered to be explicitly specific. The GOC also argued that the Commission had not demonstrated that such specificity was ‘unambiguous’ and ‘clear’ (42) and that the documents relied on by the Commission (see recital (254) of this Regulation) were either irrelevant to the BEV industry or non-binding.

(256)

The Commission considered that the set of documents referred to in recital (486) of the provisional Regulation such as Article 15 of the of the General Rules on Loans (implemented by the People’s Bank of China) and and Article 34 of the Bank law constituted positive evidence demonstrating in an unambiguous and clear manner that the provision of preferential financing was specific to the BEV industry. Furthermore, as already explained in recitals (253) and (254) of this Regulation, the Commission considered that the documents relied upon explicitly limited this program to certain enterprises and is not broadly available throughout the Chinese economy. As a matter of fact, the Commission noted that the BEV industry is an encouraged industry and that such status is not generally available in the sense that it is limited to a restricted number of industries which are listed in a designated catalogue, as explained in recital (711) of the provisional Regulation. Furthermore, the BEV industry is also a sector for which dedicated national or subnational multi-annual plans were designed, thereby clearly indicating that it is not any industry but an industry that is entitled to a preferential treatment in the eyes of the GOC and that such status will come together with certain preferential policies as elaborated in the various policy documents mentioned in Section 3.2 of the provisional Regulation. On this basis, these claims were rejected.

(257)

Following definitive disclosure, the GOC also referred to the fact that the Commission had requested the GOC to forward questionnaires to the relevant financial institutions and claimed that information gathering should be performed by the investigating authority and the burden should not be shifted to the respondent parties. Furthermore, the GOC argued that an undertaking cannot be presumed to have benefitted from an advantage ‘solely on the basis of a negative presumption, based on a lack of information enabling the contrary to be found, if there is no other evidence capable of positively establishing the actual existence of such an advantage’.

(258)

As explained in recital (129) of this Regulation, the Commission requested the GOC to forward specific questionnaires that the Commission had prepared to all relevant financial institutions for administrative convenience and good administration, with a view to obtaining the information more effectively. Such request can in no case be equivalent to shifting the responsibility of information gathering. By not cooperating, GOC did not allow the Commission to assess additional documents that would have allegedly demonstrated the absence of specificity, quod non, so that Commission had to rely on the information on file supporting its conclusions. Such legal reasoning is not equivalent to a negative presumption as the Commission relied on elements on record in view of the GOC’s refusal to cooperate which is in contrast with its behaviour in past investigations where financial institutions cooperated and allowed the Commission to proceed with its investigatory work, collect and verify the information that it deemed necessary as far as the BEV industry is concerned and the sampled producers in particular. On this basis, these claims were rejected.

(259)

The GOC also argued that the Commission should have assessed the specificity for each of the alleged program or instrument that it countervailed and that the Commission cannot establish that the various forms of financing are specific because the interested parties have not provided evidence to the contrary. It further argued that interested parties showed that that these instruments are available to all entities in all sectors of China’s economy.

(260)

As showed in the various sections of the provisional Regulation, the Commission did assess specificity for each program that it countervailed on the basis of positive evidence which were not contradicted by any substantiated claims submitted by any party. The claim that interested parties showed that these instruments were available to all entities in all sectors of China’s economy was found to be vague and unsubstantiated. On this basis, these claims were rejected. In the absence of further comments regarding specificity, the conclusions drawn in recital (486) of the provisional Regulation were confirmed.

(261)

Following provisional and definitive disclosure the GOC claimed that the Commission resorted to an out-of-country benchmark without providing sufficient evidence that the market in China is distorted, and that this distortion renders in-country rates unusable as a benchmark, in line with the applicable WTO jurisprudence (43).

(262)

The Commission disagreed with this claim and argued that the GOC’s claim was vague as it referred to the benchmarks used for preferential financing in general but also referred to credit lines in particular (recital (117) of the provisional Regulation). Furthermore, the Commission pointed out again that the GOC seemed to ignore that the benchmark used for loans in CNY, equity injections, bonds and bank acceptance drafts were based on a Chinese benchmark i.e. the LPR. The only out-of-country part of the benchmark consisted of the credit risk premium added to the LPR. In this context, the Commission provided extensive evidence in Section 3.5.1.10 of the provisional Regulation showing that credit ratings and hence credit risk premiums were distorted in the PRC, thus rendering them unusable to establish a benchmark.

(263)

As far as the analysis of the existence of distortions in the PRC is concerned, the Commission also referred to recital (471) of the provisional Regulation confirming the existence of a normative framework and recital (473) of the provisional Regulation concluding that all financial institutions (including private financial institutions) operating in China under the supervision of the NFRA were entrusted or directed by the State to pursue governmental policies and provide loans at preferential rates to the BEV industry. In any case, in the absence of full cooperation by any cooperating financial institution, no other benchmark could be established. On this basis, this claim was rejected.

(264)

Following definitive disclosure, the GOC also claimed that the Commission had not responded to its comments concerning the choice of a relative spread rather than an absolute spread to establish the difference between AA rated and B rated corporate bonds. According to the comments provided following the provisional disclosure, the GOC argued that the use of a relative spread made no economic sense and that the Commission did not explain how the addition of the relative spread approximates a ‘comparable commercial loan which the firm could actually obtain on the market’ within the meaning of Article 14(b) of the SCM Agreement; and why the Commission considered that no adjustments were necessary to the benchmark with regard to the addition of the (relative) spread.

(265)

The Commission noted first that the GOC only made some general statements on the use of the relative spread at provisional disclosure. It did not provide its rationale for considering the relative spread as economically illogical, the reasons for considering an absolute spread as more appropriate, or the adjustments to the benchmark that it would consider necessary. The GOC also did not provide any evidence to support its statements or to rebut the Commission’s position.

(266)

Concerning the use of the relative spread as such, the Commission highlighted clearly in recital (490) of the provisional Regulation that it had followed the same calculation methodology for preferential financing through loans established in the anti-subsidy investigation on aluminium converter foil originating in the PRC, as well as the anti-subsidy investigation on hot-rolled flat steel products originating in the PRC, the anti-subsidy investigations on tyres originating in the PRC, certain woven and/or stitched glass fibre fabrics originating in the PRC and optical fibre cables originating in the PRC, and it provided the relevant references to these Regulations, where the rationale of the use of the relevant spread was explained at great length. The application of this calculation methodology for each individual group of sampled companies was further explained in more detail in the specific disclosure of the individual companies. The GOC did not provide any new arguments that would have warranted a change in the Commission’s long-standing practice on the use of the relative spread.

(267)

However, for the sake of completeness, the Commission reminds the GOC that in principle, the aim of the relative spread was to construct a credit risk premium for each company, to be applied to the risk-free rate in order to arrive at a benchmark interest rate. In this context, it recalls the following observations made in relation to the economic sense of the relative spread, and the fact that it approximates a commercial loan, in recital (256) of the Definitive Regulation of the anti-subsidy investigation on tyres originating in the PRC:

(268)

The GOC did not provide any elements that would warrant a review of these observations, nor did the Commission find any new elements in this investigation that would lead to a change of its previous assessment.

(269)

Finally, the GOC’s assertion that no adjustments were made to the relative spread is incorrect. Indeed, the Chinese LPR rate is used as a starting point for the calculation. Furthermore, the use of the relative spread captures changes in the underlying country-specific market conditions which are not expressed when following the logic of an absolute spread, as explained in recital (267) above. In addition, recitals (504), (516) and (526) of the provisional Regulation clearly highlight that the relative spread was determined individually for each loan provided to the group of companies, according to the date when the loan was granted and the duration of the loan in question. The specificities of each individual loan were thus also taken into account in the use of the relative spread. The GOC’s claims were thus rejected.

(270)

Following definitive disclosure, the GOC argued that the Commission confused its obligation to establish the existence of a financial contribution by a government with the existence of a benefit through such financial contribution on the ground that there is a difference between the amount the recipient pays and what would be payable on a comparable commercial loan which the company could obtain on the market.

(271)

The Commission considered that it had established the existence of a financial contribution and the existence of a benefit when assessing this scheme. In particular, recital (487) of the provisional Regulation defined the basis on which the BEV producers received a benefit based on the difference between the amount of interest that the company had paid on the preferential loan and the amount that the company would have paid for a comparable commercial loan, which the company could have obtained on the market. As far as the financial contribution is concerned, the Commission considered that the provision of preferential financing through loans or other financial instruments consisted in a financial contribution for the GOC on the grounds that the financial institutions acting as public bodies or being entrusted / directed by the GOC charged a higher interest rate or fee for companies active in a sector other than the BEV sector or another encouraged sector benefitting from a similar favourable treatment. Therefore, the claim was rejected.

(272)

The Geely Group claimed that the Commission should not use corporate bonds data to establish a benchmark for loans, given the significant differences related to associated risks, tradability, repayment periods and conditions (including early repayment options), and debt restructuring. It argued that these differences lead to differences in the interest rates.

(273)

The Commission disagreed with the Geely Group’s claim on the grounds that it did not use corporate bonds to establish a benchmark for loans. Rather, as explained in recital (526) of the provisional Regulation, the Commission relied on a basket of AA and B corporate bonds to establish the spread to be added to the PBOC Loan Benchmark Rate, or after 20 August 2019, to the Loan Prime Rate as announced by the NIFC, to establish an undistorted market-based interest rate. On this basis, this claim was rejected.

(274)

The Geely Group claimed that there were specific errors related to the calculation of loans for certain companies within the group. The Commission acknowledged this claim and subsequently revised the calculation.

(275)

In the absence of further comments on the calculation of the subsidy amount, the conclusions drawn in recitals (487) to (490) of the provisional Regulation were confirmed.

(276)

The conclusions drawn in recitals (528) to (529) of the provisional Regulation were confirmed and the subsidy rates definitively established with regard to the preferential financing through loans during the investigation period for the sampled groups of companies amounted to:

Preferential financing: loans

(277)

Following provisional disclosure the BYD Group contested the Commission’s assessment on credit lines, arguing that both Chinese and international banks that provided credit lines to the companies within the BYD Group (both located in China and outside of China) did not charge opening fees.

(278)

However, the evidence submitted by the BYD Group, which consisted of credit line agreements with foreign institutions for companies of the BYD Group located outside of China, demonstrated that either commission fees, arrangement and amendment fees were part of the agreements, or that no commitment fees were charged by the bank as it did not provide commitments to issue financing for the company. Hence, the additional evidence submitted by the BYD Group showed that a commitment fee was normally paid for the commitment of some banks to set aside money for their clients. Therefore, the claim was rejected.

(279)

Following definitive disclosure, the BYD Group contested the analysis carried out by the Commission, reiterating that no fees were charged for handling/opening credit lines, and that the Commission focused instead on what related to subsequent banking operations such as loans.

(280)

The Commission recalled that first, as explained in recital (530) of the provisional Regulation, the purpose of a credit line is to establish a borrowing limit that the company can use at any time to finance its current operations, via short-term loans, bank acceptance drafts etc., thus making working capital financing flexible and immediately available when needed. As such, loans are indeed one of the banking operations connected with credit lines. Second, the Commission disagreed with the statement that no fees were charged for credit lines, as out of three documents submitted, one clearly mentioned a commission to be paid, another one referred to another credit term agreement, and thus the company did not submit the full documentation, and the third one concerned an uncommitted credit line. Therefore, the Commission rejected these claims.

(281)

Following provisional disclosure the Geely Group also claimed that the existence of a credit line was not required when contracting individual loans. In the absence of supporting evidence in this regard, this claim was rejected. In the absence of further comments regarding the general assessment of credit lines, the conclusions drawn in recital (530) of the provisional Regulation were confirmed.

(282)

In the absence of comments regarding the findings of the investigation, the conclusions drawn in recitals (531) to (533) of the provisional Regulation were confirmed.

(283)

Following provisional disclosure the BYD Group stated that credit lines are not specific within the meaning of Article 4(2)(a) of basic Regulation since all enterprises in China, regardless of what their industry type is, are equally eligible for obtaining credit lines, and that Decision No 40 contains no expression of limiting access the credit lines.

(284)

The Commission disagreed with the claim of the BYD Group that credit lines are not specific. In this respect, the Commission noted that the BYD Group failed to demonstrate that companies in the PRC can equally benefit from the preferential conditions observed as regards the BEV industry. Moreover, as credit lines are intrinsically linked to other types of preferential lending such as loans and as they are part of the credit support specifically provided to encouraged industries, the specificity analysis for loans developed in Section 3.5.2.2 of the provisional Regulation is also applicable to credit lines. As a result, this claim was rejected.

(285)

In the absence of further comments regarding specificity, the conclusions drawn in recitals (534) to (535) of the provisional Regulation were confirmed.

(286)

Following provisional disclosure, the SAIC Group claimed that an alternative benchmark should have been used with respect to the fees applicable to the SAIC Group’s credit lines as those mentioned in recital (537) of the provisional Regulation were inappropriate. In SAIC’s view, the use of the rates from the UK’s Metrobank was not suitable since they were rates applied to credit lines below GBP 60 000, whereas the credit lines of the entities in the SAIC Group were as high as several billion euros and thus not comparable to the loans obtained by the SAIC Group. The Geely Group also claimed that the benchmark used was not appropriate. Following definitive disclosure, the BYD Group submitted that the Commission inappropriately relied on credit lines in GBP issued by a small bank to conclude that the absence of fees charged for opening credit lines by banks in China constituted a subsidy.

(287)

The GOC claimed that the out of country benchmark used by the Commission was unreasonably high (1,25 % to 1,75 %) in comparison with other publicly available information (0,25 % to 1 %) (45). Following provisional and definitive disclosure, the GOC considered that the selected bank and credit line size (up to GBP 60 000) were problematic. It also argued the companies were not operating in GBP. Following definitive disclosure, the GOC also claimed that Article 14(b) of the SCM Agreement required the investigating authority to adjust the benchmark to approximate the comparable commercial loan of a government (46). The GOC also referred to publicly available information (47) allegedly showing lower applicable rates, and also a sample of banks which allegedly charge a commitment or arrangement fees usually ranging between 0,25 %-1 %. In addition, the GOC claimed that the benchmark rates used in this investigation were unjustifiably higher than in previous investigations and that the Commission had not explained why such rates were higher than in previous investigations.

(288)

The Commission disagreed with the above claims. The underlying information pertaining to the benchmark used in this investigation does not provide for a different fee depending on the value of the credit line. As far as the rates mentioned by the GOC are concerned, they were not supported by original information stemming from specific banks or pointing to certain conditions. Moreover, the benchmark used in this investigation was in line with the benchmarks used in previous investigations for which no superior limit amount had been set and which stemmed from a major international bank (48). Therefore, the claims were rejected. The Commission also considered that the benchmark that it used sufficiently reflected the financial conditions on the basis of which a credit line would be granted under normal market conditions in the country where the companies operated. In any case, the GOC did not provide additional information with regard to the adjustments that would have been needed or the specific reasons for performing such adjustment.

(289)

As far as the publicly available information is concerned, the Commission considered that the GOC did not clearly point to specific elements on the website to which it referred. In any case, the information contained on the website provided in support of this claim was not considered conclusive as it referred to arrangement/commitment fees of up to 4-5 % and/or referred to a commitment fee applicable during a so-called ‘grace period’ without providing further information as to what such grace period would correspond to.

(290)

The Commission did not consider that the benchmark used was unjustifiably higher. As a matter of fact, it was very close to that used in past investigations and based on publicly available information. The fact that the BEV producers do not operate in GBP was not considered relevant for the appropriateness of the benchmark chosen, where what matters is the market conditions offered to borrow money (regardless of the currency). In any case, considering the LIBOR interest rate applicable in the IP, which was lower than a comparable rate applicable in the PRC, such benchmark was considered conservative. On this basis, such claim was rejected.

(291)

The GOC added that the Commission had failed to justify how the selected benchmark approximated a credit line available to leading Chinese car companies and that it is disconnected from prevailing market conditions in the PRC. The GOC also argued that large companies such as the BEV producers could usually negotiate more favourable fees. In the absence of supporting evidence, this claim was rejected.

(292)

The GOC also argued that it is common practice in China that banks do not charge for credit lines unless credit is taken up and loans are issued under them. In this respect, it referred to Article 1.1 of the Circular of the China Banking and Insurance Regulatory Commission, the Ministry of Industry and Information Technology, the National Development and Reform Commission, the Ministry of Finance, the People’s Bank of China and the State Administration for Market Regulation on Further Regulating Credit and Financing Charges to Reduce Overall Financing Costs for Enterprises whereby ‘[no fund management fee shall be charged] [for the credit proceeds transferred but not yet used by the enterprise]’. The GOC also referred to answers of Zhihu which states that ‘no fees are charged for credit lines’.

(293)

The Commission disagreed with such finding and referred to the website of the Bank of China pointing to the charging of fees for the existence of credit lines (49) in the investigation period. On this basis, the Commission also rejected the GOC’s claim pointing to instructions no to charge fund management fees. In any case, the GOC did not provide evidence that ‘fund management fees’ correspond to arrangement or renewal fees. Eventually, the claim relating to Zhihu was unsubstantiated and lacked legitimacy. On this basis, this claim was rejected.

(294)

In the absence of any other comments, recitals (536) to (538) of the provisional Regulation were confirmed.

(295)

Following provisional disclosure the GOC and the Geely Group indicated that bank acceptance drafts are not a form of preferential financing that should be countervailed. They claimed that bank acceptance drafts allow companies to ‘buy on credit’ from the seller of goods with an attached guarantee. They argued that banks provided a guarantee for the payment of the buyer but no financing. The GOC also argued that, if the Commission were to find that this operation constitute a subsidy, it should calculate the benefit only for the provision of the guarantee as provided for by the conditions of the banks on bank acceptance drafts (50).

(296)

The GOC also claimed that the Commission relied on findings from past investigations which do not overlap (51) and did not establish that bank acceptance drafts in China result in preferential financing to BEV producers and that the Commission ignored that bank acceptance drafts work differently from one country to another.

(297)

The Commission disagreed with these claims. It argued that, in the absence of cooperation by Chinese financial institutions, the Commission had to resort to facts available. In this context, it had to rely partly on the uncontested findings from past investigations including those relating to alleged differences between countries. In any case, the Commission also relied on the facts gathered in this investigation where it concluded that the bank acceptance system put in place in the PRC provided all sampled exporting producers a free financing of their current operations, which conferred a countervailable benefit as described in recitals (562) to (566) of the provisional Regulation. On this basis, this claim was rejected.

(298)

The GOC also argued that the Commission had failed to take account of the bank acceptance offset system in place with different banks as presented in recital (557) of the provisional Regulation. In the absence of new elements brought forward by the GOC or the sampled exporting producers in this regard, this claim was rejected.

(299)

After provisional disclosure, the BYD Group argued that no benefits was bestowed from bank acceptances, given the percentage of deposits or equivalent pledges to the banks, and requested the Commission to revise the benefit calculation, arguing that the deposits or pledges provided by the BYD Group to the banks, and interest income deriving therefrom, fully compensated the risks and interest costs borne by the banks, thus not conferring any benefit.

(300)

As the Commission concluded in previous investigations (52), it should first be noted that it is common practice for banks to request guarantees and collaterals from their clients when granting financing. Furthermore, it should be noted that such guarantees are used to secure that the exporting producer will bear its financial responsibility vis-à-vis the bank, and not vis-à-vis the supplier. The investigation also revealed that these guarantees are not systematically requested by Chinese banks and are not always linked to specific bank acceptance drafts. In this respect, the alleged deposits do not amount to an advanced payment by the drawer to the banks but merely an additional guarantee requested by banks, and which does not have any impact of the bank’s decision to issue the bank acceptance drafts with no additional borrowing interests for the drawer. Furthermore, they can take various forms including term deposits and pledges. The deposits may bear interests in favour of the drawer, and therefore, do not represent a cost for the drawer of the bank acceptance draft. Similarly, as described in Section 3.5.3.2 of the provisional Regulation, bank acceptance drafts effectively have the same purpose and effects as short-term working capital loans, as they are used by companies to finance their current operations instead of using short-term working capital loans, and that consequently, they should bear a cost equivalent to a short-term working capital loan financing. On this basis, this claim was rejected.

(301)

The SAIC Group claimed that bank acceptances should, in this case, be considered as a payment method as the banks did not provide any financial contribution insofar as the banks merely took on the legal obligations for payment as instructed by the purchasers who, in turn, acted pursuant to the underlying purchase and supply contracts. Furthermore, this method was not specific to the producers of BEVs but also available to any other company in China.

(302)

The Commission rejected the SAIC Group’s claim that the banks did not provide any financial contribution on the grounds that the banks actually take over the account payables of the SAIC Group and provide for an extended payment term to the SAIC Group without requesting the payment of any form of interest, which would normally be due. In the absence of evidence on the availability of bank acceptance drafts offered at similar conditions to any other party in China, this claim was rejected.

(303)

Following definitive disclosure, the Geely group claimed that it never utilized bank’s funds during the IP, as it did not have any instances where it failed to pay at maturity. The Commission rejected on this claim on the grounds that benefit is not conferred when companies fail to repay the borrowed funds but rather on the basis of the free short-term loan that it receives through the existence of bank acceptance drafts. On this basis, this claim was rejected.

(304)

Following definitive disclosure, the GOC reiterated that the Commission should not have treated bank acceptance drafts similarly to short-term loans as they are different form of financing.

(305)

For reasons mentioned in Section 3.5.3.2 of the provisional Regulation, the Commission considered that bank acceptance drafts are equivalent to short term loans and rejected this claim.

(306)

In the absence of further comments regarding the general assessment of bank acceptance drafts, the conclusions drawn in recitals (539) to (557) of the provisional Regulation were confirmed.

(307)

Following provisional disclosure, as far as bank acceptance drafts are concerned, the GOC indicated that the Commission had reversed the burden of proof by claiming that any undertaking in the PRC (other than within encouraged industries) could benefit from bank acceptance drafts under the same preferential terms and conditions.

(308)

The GOC argued that the Commission had failed to perform a specificity analysis and that it had relied on its assessment with respect to loans, which is insufficient.

(309)

The GOC, the BYD Group and the SAIC Group also submitted that bank acceptances are not specific within the meaning of Article 4 of the basic Regulation and Article 2 of the SCM Agreement, as all Chinese legal entities are entitled to bank acceptances, no limits and restrictions are conferred upon companies on how to utilize them for purposes of commercial transactions, and conditions for applying for bank acceptances are neutral, without circumscribing to a specific type of enterprises/industries. The GOC also indicated that the Commission had reversed the burden of the proof by claiming that there was no evidence that any undertaking in the PRC (other than within encouraged industries) could benefit from bank acceptance drafts under the same preferential terms and conditions.

(310)

These claims had to be rejected. The SAIC Group’s claim was unsubstantiated. Despite the fact that the BYD submitted the Measures for the Administration of Acceptance, Discount, and Central Bank Discount of Commercial Drafts (Order No 4 [2022] of the People’s Bank of China and China Banking and Insurance Regulatory Commission) (53) and the Measures for the Implementation of Administration of Negotiable Instruments (54) as applicable legislation for bank acceptances, the evidence submitted failed to demonstrate that any undertaking in the PRC (other than within encouraged industries) can benefit from bank acceptance drafts under the same preferential terms and conditions observed as regards the BEV industry. Furthermore, even if a form of financing could be in principle available to companies in other industries, the concrete conditions, under which such financing is offered to companies from a certain industry, such as the financing remuneration and the volume of financing, might make it specific. There was no evidence submitted by any of the interested parties demonstrating that the preferential financing through bank acceptance drafts of companies in the BEV sector is based on objective criteria or conditions in the sense of Article 4(2)(b) of the basic Regulation. As far as the burden of the proof is concerned, the Commission referred to its findings as summarized in recitals (555) and (558) to (560) of the provisional Regulation, which establish that all sampled exporting producers benefitted from a free financing of their current operations and that such benefit is linked to national decisions such as Decision No 40 or the CBIRC notice referred to in recital (560). Furthermore, in the absence of full cooperation by any Chinese financial institution, the Commission resorted to facts available. In this context, the Commission did not consider that it reversed the burden of the proof rather that the GOC and Chinese financial institutions did not submit any elements reversing the findings established by the Commission. On this basis, this claim was rejected.

(311)

In the absence of further comments regarding specificity, the conclusions drawn in recitals (558) to (561) of the provisional Regulation were confirmed.

(312)

Following provisional disclosure, the SAIC Group objected to the fact that for several entities, a number of days running after the end of the investigation period have been taken into account in the subsidy calculation. Furthermore, the intercompany bank acceptances granted a financial company in the SAIC Group should have been removed as it was not a recipient of this scheme. As a financial company this entity was giving and not receiving bank acceptances.

(313)

The Commission noted that certain companies had not provided the information in line with the instructions contained in the questionnaire as bank acceptance drafts that started before the investigation period had not been reported whereby no calculation could be based on such missing drafts. However, in agreement with certain companies and as explained in the specific disclosure, the SAIC Group companies were not requested to re-submit such detailed information due to the burden it would have created but agreed to the fact that the benefit would still be based on bank acceptance drafts still running after the investigation period. For other companies with which no agreement was sought, the Commission applied the same approach based on the information submitted by the companies and considered that using such information was reasonable as it covered a net period of 12 months when bank acceptance drafts were issued. On this basis, this claim was rejected.

(314)

As far as intercompany bank acceptance drafts are concerned, the Commission accepted the claims and reflected it in its revised subsidy amount calculation.

(315)

The Geely Group claimed that the benefit should be based on the fee for the credit, not on the bank’s interest rate and that no benefit should be calculated for bank acceptance drafts covered fully by a cash deposit or bank guarantee and that the fees paid by the Geely group should be deducted from the calculation of the benefit.

(316)

The Commission disagreed with the Geely Group’s claims. Considering the nature of the bank acceptance drafts which provide for an extended payment term through a free short-term loan, the Commission considered that the benefit should be calculated based on an undistorted benchmark. Furthermore, as established in previous investigations, the fact that the bank acceptance drafts are covered by a cash deposit or guarantee is irrelevant for the calculation of the benefit. The benefit was calculated as the difference between the amount that the company had actually paid as remuneration of the financing by bank acceptance drafts and the amount that it should pay by applying a short-term loan interest rate. Indeed, it is common practice for banks to request various forms of guarantees when providing loans. The existence of a guarantee does not imply that the funds were lent on market terms. Equally, the Commission did not consider that the fee paid upon the issuance of the bank acceptance draft is comparable to the payment of interest. Hence the Commission did not consider that such fee should be deducted. On this basis, these claims were rejected.

(317)

Following definitive disclosure, the GOC argued that the benchmark used should have the same structure as the financial contribution being compared in line with Articles 14(b) and (c) of the SCM Agreement. The Commission rejected this claim on the grounds that the benchmark used and the methodology applied correspond to the financial instrument at hand whereby BEV producers, benefitting from bank acceptance drafts, received preferential financing through a free short term loan. Hence, the Commission considered that the use of a short-term interest rate applicable to the duration of the loan was an appropriate basis to calculate the benefit conferred on the recipient. On this basis, this claim was rejected.

(318)

In the absence of any other comments, the conclusions set out in recitals (562) to (566) of the provisional Regulation were confirmed.

(319)

Following provisional disclosure, the GOC argued that the Commission should not rely on past investigations to establish its findings and that the Commission failed to demonstrate that discounted bills are a form of preferential financing.

(320)

As described in recitals (567) to (570) of the provisional Regulation, through the use of discounted bills, financial intermediaries advanced amounts of receivables before their due date. The companies at issue received early funds by transferring the rights of future receivables to financial institutions after the deduction of fees and the applicable discount rates. The applicable discount rate was found to be at preferential level. The benefit thus conferred on the recipients is the difference between the discount rate applied by Chinese financial institutions and the discount rate applicable for a comparable operation on the market. In the absence of cooperation by Chinese financial institutions, the Commission confirmed its finding that discounted bills provided financing at a preferential rate. The Commission opposed the claim of the GOC that it bases itself on findings in past investigations. On this basis, this claim was rejected.

(321)

The BYD Group submitted that intra-group discounted bills with a specific deposit percentage should have been excluded from the calculation of the benefit, based on the fact that the BYD Group did not transfer the immature receivables to banks, but regained the deposits provided to banks.

(322)

The Commission did not accept the claim because the discounted bill transaction is not made between related parties but between the receiver of the bill and a bank. The fact that the original bank acceptance, that afterwards was discounted, was initially issued by a related company is irrelevant and does not alter the fact that the company benefitted from a low discount rate as compared to the discount rate applicable for a comparable operation on the market.

(323)

In the absence of further comments regarding the general assessment of discounted bills, the conclusions drawn in recitals (567) to (570) of the provisional Regulation were confirmed.

(324)

Following provisional disclosure, the GOC and the BYD Group submitted that discounted bills are not specific but available to all sectors. The BYD Group referred to the provisions contained in Article 15 of the Measures for the Administration of Acceptance, Discount, and Central Bank Discount of Commercial Drafts (55).

(325)

As established in recital (572) of the provisional Regulation, discounted bills, as a form of financing, are part of the preferential financial support system by financial institutions to encouraged industries, such as the BEV industry, and the evidence submitted by the BYD Group failed to demonstrate that any undertaking in the PRC (other than within encouraged industries) can benefit from discounted bills under the same preferential terms and conditions observed as regards the BEV industry. Therefore, the claims were rejected.

(326)

In the absence of any other comments related to the specificity, the conclusions set in recitals (571) to (573) of the provisional Regulation are hereby confirmed.

(327)

In the absence of any comments regarding the calculation of the subsidy amount, the conclusions drawn in recitals (574) to (576) of the provisional Regulation were confirmed.

(328)

In the absence of any comments regarding the general assessment of debt-to-equity swaps, the conclusions drawn in recitals (577) to (580) of the provisional Regulation were confirmed.

(329)

In the absence of any comments regarding specificity, the conclusions drawn in recital (581) of the provisional Regulation were confirmed.

(330)

Following provisional disclosure according to the GOC, since the entities involved in a debt-to-equity swap are entitled to shareholder rights, the capital investment should not have been treated as a loan without interest for the benefit calculation.

(331)

The Commission considered that the benefit of the debt-to equity swap should be treated from the perspective of the beneficiary of the subsidy, i.e. NHBGAP. However, the shareholder rights taken into account by the GOC concerned the investors, not NHBGAP, and are thus irrelevant to calculate the benefit received by NHBGAP. To the contrary, the Commission noted that the benefit was equivalent to an interest free loan as, from the perspective of NHBGAP, debt with a certain interest rate owed to the debtor was converted into another type of subordinated debt to the same debtor, but with no interest payments involved anymore. This claim was thus rejected.

(332)

In the absence of further comments regarding the calculation of the benefit, the conclusions drawn in recitals (582) to (583) of the provisional Regulation were confirmed.

(333)

Following provisional disclosure, the GOC argued that the Commission did not analyse whether the various capital injections were more beneficial than a private capital injection.

(334)

The Commission disagrees with this assessment. For each of the cases, the Commission explained the beneficial nature of the transaction such as for example in recitals (579) and (582) of the provisional Regulation for the above-mentioned debt-to-equity swap, or in recitals (585) to (587) of the provisional Regulation for the Geely Group capital injection.

(335)

In addition, for the capital injection concerning SAIC, the Commission’s assessment had to be fully based on facts available, as highlighted in recitals (600) and (605) of the provisional Regulation, and thus the precise underlying conditions of the transaction were not known. On the other hand, based on publicly available information set out in recitals (601) to (606) of the provisional Regulation, the Commission concluded in recital (607) of the provisional Regulation that the participants in the transaction acted as public bodies in line with the applicable legislative framework to provide additional capital to SAIC at no cost.

(336)

Finally, the Commission noted that, apart from a general statement, the GOC did not bring any new elements to the file to contradict the findings of the Commission. Therefore, this claim was rejected.

(337)

Following provisional disclosure, the Geely Group claimed that the Hubei Jiyuan Yangtze River Industrial Fund Partnership is neither a public body nor vested with governmental authority. Furthermore, due to the transfer of its shares to a private entity in 2024, they argue that the benchmark should be modified.

(338)

The Commission noted, as described in recital (590) of the provisional Regulation, that the Yangtze River Industrial Fund – a Chinese Government Guidance Fund since 2017 – focuses on developing strategic emerging industries in Hubei province, including BEVs. The fund aligns with national strategies for modern industrial clusters, emphasizing its role in implementing key government industrial projects in the region. Regarding the claim that the fund transferred its shares to a private entity after the investigation period, it does not contradict the finding that the GOC directly transferred funds to the Geely Group through this fund during the IP. Consequently, the claims were rejected.

(339)

Following provisional disclosure the SAIC Group submitted that the entire benefit amount of equity injection found in recital (598) of the provisional Regulation should not have been allocated on the total PUI turnover. The SAIC Group alleged that the publicly available information the Commission relied on did not clearly indicate what was specifically for BEVs and what was for other purposes or what was not specific to the PUI.

(340)

The Commission partially accepted this claim insofar as the publicly available information mentioned in recital (339) of this Regulation indicated that the capital injection was not fully related to BEVs and revised the calculation. In the absence of verified information, which was not provided by the SAIC Group, the Commission was entitled, where appropriate, to use available facts. Therefore, the remainder of the claim was rejected. In the absence of any other comments on the general assessment of debt-to-equity injections, the findings of the investigation, the benefit, specificity, and the calculation of the benefit, the conclusions drawn in recitals (584) to (610) of the provisional Regulation were confirmed.

(341)

Following definitive disclosure, the GOC resubmitted its claims that the questions asked by the Commission on the subject of the green bonds were too broad for the GOC to provide any meaningful information, and that the lack of cooperation of the GOC alleged by the Commission was in fact induced by the Commission itself.

(342)

The Commission recalls again, as outlined in recital (270) of the provisional Regulation, that in the course of the investigation, the Commission presented a series of detailed, well-defined, and relevant questions to the GOC in its deficiency letter, additional request for information, and during the verification visit at the premises of the GOC, to which the latter failed to provide the necessary information. Furthermore, in its request for information, the Commission cited several specific official documents pertaining to green bonds and auto finance companies. Since the GOC insists on naming some of these documents, it suffices to say that these documents included e.g. the Guidelines on the Issuance of Green Bonds issued by the NDRC, the Guiding Opinions on Supporting the Development of Green Bonds issued by the CSRC, the Notice on Issuing the Green Bond Endorsed Projects Catalogue (2021 Edition), issued by the PBOC, NDRC, and CSRC, the Environmental Equity Financing Tool published by the PBoC, and the Green Financial Evaluation Programme for Banking Financial Institutions, issued by the PBoC. These are essential documents, which form the basis of the legal and regulatory framework for the issuance of green bonds and green financing in a broader sense. Without these documents, the Commission was clearly missing the basic information to determine whether preferential financing was provided via the issuance of green bonds. However, the GOC did not provide these documents, nor did it explain the legal and regulatory framework, or offered an explanation of what constitutes a green bond despite its mention in official documents. The claim was therefore rejected.

(343)

Following provisional and definitive disclosure, the GOC objected to the references to Article 16 of the PRC’s Securities Law. The GOC noted that Article 16 had been altered in 2019. It also stated that Article 12 of the Regulations on the Administration of Corporate Bond, requiring that the purpose of the raised funds needs to comply with the industrial policies of the State, is only a requirement for the issuer of the enterprise bonds, i.e., the enterprises, but not a requirement for the investors. Moreover, it only regulates the usage of the raised capital; it does not require any institutions to invest in the enterprise’s bonds.

(344)

Furthermore, the GOC once more argued that the BEV industry is not an encouraged industry, that financial institutions are not acting as public bodies and that credit ratings are reliable.

(345)

Following provisional disclosure, the GOC also argued that the Commission provided no evidence that ‘most of the investors are institutional investors, including financial institutions’, apart from a Bloomberg article ‘from two years ago’. And in any event, this article would only be capable of showing the composition of Chinese bonds investors in general, not the specific investors of the bonds issued by the sampled exporting producers. Following definitive disclosure, the GOC resubmitted its arguments and insisted that, in any event, a benefit should only be calculated for those specific bonds where the Commission could prove that they were invested by public bodies.

(346)

The Commission maintains its position following the provisional disclosure. The Commission acknowledged that Article 16 of the PRC’s Securities Law has been amended in 2019. However, the Commission disagrees with the GOC’s interpretation of Article 12 of the Regulations on the Administration of Corporate Bond. Indeed, the fact that the issuer of the bond has to comply with the industrial policies of the State in order to be able to have access to the bond market shows that such additional means of financing via the bond market is only available to certain encouraged enterprises and only for those uses encouraged by the State.

(347)

This fact, combined with all the other general findings of the Commission concerning preferential financing in this case, which have been extensively described in Section 3.5.1 of the provisional Regulation and confirmed in Section 3.5.1 above, such as the fact that financial institutions are acting as public bodies, and the fact that credit ratings are distorted, have been used together in the Commission’s assessment of preferential financing on the bond market.

(348)

Furthermore, the Commission noted that the so-called Bloomberg ‘article’ is in fact a 74-page report from 2022 on the Chinese bond market. Bloomberg’s core business being the analysis of data and trends on capital markets, the Commission believes that this study can be considered to be reliable evidence covering the IP. Furthermore, this report corroborates information collected during previous investigations and confirms that the situation had not changed during the investigation period.

(349)

To complement, the Commission draws the attention to some further recent reports, which confirm the findings of the Bloomberg report. Indeed, according to information available to the Commission, the investors’ structure on the Chinese bond market remains heavily dominated by financial institutions, which are also the underwriters of most bonds (56). Banks are also the largest holders of corporate bonds, followed by fund institutions (57). In addition, international investors held less than 3 % of the Chinese bond market in 2021 (58).

(350)

As to the bonds issued by the sampled exporting producers, the Commission found that a certain number of bonds were bonds issued on the interbank market, which per definition, is only open to institutional investors/financial institutions. It should also be recalled that except for EXIM bank, none of the financial institutions cooperated in this investigation.

(351)

In addition, the GOC disregards the facts highlighted by the Commission in recital (620) of the provisional Regulation, namely that the bonds issued by the sampled companies bear an interest rate close or below the LPR, meaning that the return of these bonds for the investors is close to or lower than the rate at which the financial institutions can obtain funds themselves from other financial institutions. In other words, these bonds are a loss-making operation for the banks. This clearly shows that the financial institutions are acting as public bodies which are taking into account other considerations than an investor operating in market conditions.

(352)

The GOC also disregards the specific evidence provided for the green bonds in recital (617) of the provisional Regulation, where the Commission noted that in line with the ‘Green Financial Evaluation Programme for Banking Financial Institutions’ of the PBOC, Chinese banks need to subscribe to green debt instruments in order to reach a given threshold in their financial asset base that will contribute to a positive assessment of their performance by the bank regulating authority. In addition, according to the PBOC’s ‘Monetary policy tool to support carbon emission reduction projects’, financial institutions have to provide financing in support of green industrial activities to companies at preferential interest rates close to the level of the country’s loan prime rate. In return, the PBOC proposes preferential refinancing rates to the banks for the green funds disbursed. Clearly again, this highlights that the financial institutions were acting as public bodies with reference to the green bonds issued by the sampled companies.

(353)

Finally, the GOC did not provide any evidence to substantiate its allegations that investors on the Chinese bond market are not mainly financial institutions.

(354)

Therefore, the Commission confirmed its conclusion that there is a significant overlap between the creditors providing capital on the bond market and those providing capital in the form of loans, and that as such, bonds are to a certain extent just another means to provide corporate loans. Thus, the Commission rejected these claims.

(355)

In the absence of any comments regarding the legal basis and the finding that financial institutions act as public bodies, the conclusions drawn in recitals (611) to (630) of the provisional Regulation were confirmed.

(356)

As far as bonds are concerned, the GOC noted that the so-called ‘green debt instruments’ were available to a number of industries. It also argued that these bonds could not be considered specific or limited to a number of industries because ‘the bonds cannot be issued without approval from government authorities’.

(357)

More generally, the GOC argued that Decision 40 on encouraged industries does not apply to bonds, as the word ‘credit’ in this Decision only refers to loans in a narrow sense. Following definitive disclosure, the GOC provided additional Chinese documents, where the term ‘credit’ was used alongside the term ‘bonds’. The GOC also claimed that the key laws and regulations which the Commission relied on to support its conclusion in Section 3.5.1 of the provisional Regulation apply to loans only but not to bonds. Additionally, the Geely Group claimed following the provisional disclosure that the Commission had failed to provide sufficient clarification regarding specificity.

(358)

On the subject of the green bonds, the Commission highlighted in recital (632) of the provisional Regulation that such bonds are specific as they can only be issued by companies active in certain industrial activities listed in the catalogue of green industrial activities. The fact that this catalogue includes more than one industry is irrelevant in this respect and does not contradict the Commission’s conclusion.

(359)

The Commission confirmed also its disagreement with the GOC’s narrow interpretation of the word ‘credit’ in Decision 40and continues to interpret this term rather as ‘financing’ in a broader sense. The GOC did not rebut the Commission’s observation in the definitive disclosure, namely the fact that Article 12 of the Regulations on the Administration of Corporate Bond makes the link with the industrial policies of the State, which are guided by Decision 40. Furthermore, the GOC chose to focus exclusively on Decision 40, and disregarded the additional evidence on specificity provided by the Commission in Section 3.5.1.5 of the provisional Regulation. For example, recital (435) of the provisional Regulation referred to the Energy-saving and New Energy Vehicle Industry Development Plan (2012-2020) which provides for ‘policy incentives through financial service support’, and which is clearly specific to the industrial sector at hand. Yet another example was cited in recital (444) of the provisional Regulation, where the Commission noted that the performance evaluation criteria of the NFRA for commercial banks take into account how financial institutions ‘serve the national development objectives and the real economy’, and in particular how they ‘serve strategic and emerging industries’.

(360)

These claims were thus rejected.

(361)

In the absence of any comments regarding specificity, the conclusions drawn in recitals (631) to (632) of the provisional Regulation were confirmed.

(362)

Following provisional disclosure, the SAIC Group alleged that not all bonds issued by some of the entities should be considered as ‘Green Bonds’. Indeed, according to China’s Green Bond Principles of July 2022 there are four core components related to green bonds as follows:

(363)

According to the SAIC Group, these four components drew a clear line between green bonds and corporate bonds in China, which is reflected in the disclosure documents of green bonds and which are generally available in the public domain, e.g. the websites of security exchange markets or regulators. However, whilst green bonds generally bear the ‘green’ label in their names non-green bonds are not allowed to have the green labels because they cannot meet the Green Bonds issuance requirements set by the People’s Bank of China. This means that not all bonds could be treated as green bonds by the Commission simply because the activities to which they were related appeared into the Green Bonds Supporting Project Catalogue (2021 Edition) mentioned in recital (263) of the provisional Regulation. Furthermore, for those bonds that were not green, the Commission should have allocated the amount of benefit on the total turnover of the company, rather than the PUI turnover.

(364)

The Commission did not dispute the fact that not all of the bonds in the SAIC Group were green bonds. However, the Commission would like to highlight that the use of the turnover of the PUI for the calculation of the benefit on bonds was not necessarily based on the qualification of a bond as ‘green bond’. Normal Bonds, when destined to all purposes were allocated on total turnover. Corporate bonds were also considered to be related to the PUI if a link was made in the issuance documents to areas which are specific to BEVs, such as for example financing of R & D for new technologies, which are more likely to benefit electric vehicles than combustion engines. When bonds were destined to BEVs, those bonds were allocated on BEV turnover. All green bonds were allocated to BEV turnover. The Commission also would like to recall that the vast majority of the benefit amount related to bonds concerned various financial companies in the group which had never provided a questionnaire reply, such as SFMH, VW Finance and GMAC. In the absence of verified information, which was not provided by the SAIC Group, the Commission used facts available. In particular, the calculation of the subsidy amount was based on the information regarding the amounts, start and end dates and interest rates of the bonds, found either in publicly available financial statements or in information issued to investors on stock exchanges. In some instances, they were classified as green bonds. Therefore, the claim was rejected.

(365)

As mentioned in recital (147) of this Regulation, the SAIC Group argued that Article 28 should not have been applied to attribute all the asset-backed securities (‘ABS’) issued by one non-cooperating entity to one of the producers and finally to the entire SAIC Group. First, the SAIC Group claimed that the entity in question was never required to provide a questionnaire reply. Second, the SAIC Group argued that it had no meaningful control over this entity, as it was part of a joint venture agreement. Third, if the Commission insisted on such attribution, it should have calculated which proportion of the benefit was attributable to this producer.

(366)

On the first argument, the Commission noted that all related companies providing financing to or on behalf of the producers should respond to Sections A and E of the questionnaire. The entity in question never provided a questionnaire reply, even though it clearly was involved in financing services on behalf of one of the producers, and the existence of such services only became apparent quite late in the procedure, just before the publication of the provisional Regulation.

(367)

On the second point, the related entity in question was fully owned by the joint venture partner of the SAIC Group and provided financial services for one of the producers in the SAIC Group, co-owned by SAIC and the joint venture partner. As such, there was no doubt to the Commission that this concerned a related entity which should have provided a questionnaire reply.

(368)

On the third point, in the absence of verified information, which was not provided by the SAIC Group, the Commission was entitled, where appropriate, to use available facts. According to the information at hand, the entity in question provided financial services for one of the producers in the SAIC Group, and other activities could not be determined. Therefore, the claim was rejected.

(369)

Following definitive disclosure, the SAIC Group resubmitted its comments concerning the non-cooperating entity which had issued ABS. The company claimed that the attribution of the ABS to the entity that provided financial services for one of the producers in the SAIC Group’s was not in line with the Commission’s practice. The SAIC Group specified that the Commission should rely on the shareholding percentage of the exporting producer in the recipient company, and that in line with WTO jurisprudence, the application of Article 28 is strictly limited to the missing information. i.e. in this case the amount of benefit and should not be extended any further than this. Indeed, in the case at hand, the shareholding structure of the recipient company was publicly available, and its relationship with the Group was clearly outlined in SAIC Group’s submissions.

(370)

SAIC group also stated that the ‘other activities’ of the recipient company were clear and available to the Commission and that the Commission’s attribution to a single producing entity in the Group would lead to double counting under certain circumstances.

(371)

The Commission disagrees with these claims. First, the Commission was missing information not only in relation to the amount of the benefit, but also with regard to which entity(ies) of the group this benefit should be attributed. The fact that the non-cooperating company was the first, direct recipient within the group of the preferential financing provided by external parties does not mean that it was also the only beneficiary within the group of this preferential financing. Therefore, the application of Article 28 for the determination of the attribution of the benefit was necessary.

(372)

Second, contrary to what was stated by the SAIC Group, this attribution was performed in line with the Commission’s past practice. Indeed, the example from past practice cited by the SAIC Group concerned a holding entity that provided financial services to its subsidiaries, which included the exporting producers. It was decided based on the factual situation in that specific case that the proportion of investment of the holding entity in its subsidiaries (which is linked to the amount of equity and thus shareholding in each subsidiary) was a reasonable proxy for the proportion of preferential financing benefiting each subsidiary, and thus an appropriate allocation key for the attribution of the benefit to the exporting producers. In the present case however, the non-cooperating company of the SAIC Group has no known subsidiaries. To the Commission’s knowledge, there is also no link between the formal organisational structure of the two joint venture partners and the actual proportion of financial services provided by the non-cooperating company to the various entities within the group.

(373)

Third, as highlighted in recital (368) above, since the non-cooperating company had not provided a questionnaire reply, it was not possible to determine the exact scope and structure of its financial activities. There is also no link as such between the owner of the collateral underlying the ABS issued, and the actual beneficiary of the funds raised via the ABS. Therefore, the Commission rejected these claims.

(374)

Following provisional disclosure, the Geely Group claimed that the producers did not benefit from ABS since the transactions remained between the financing entity and the retail borrower.

(375)

The Commission noted that, under these operations, the Geely Group benefited from preferential financing. As described in recital (619) of the provisional Regulation, ABS enabled the Group to substitute mid-term receivables on car loans with liquidities that were immediately accessible, thereby facilitating pre-financing of their loan operations on a highly advantageous basis. The benefits were allocated accordingly. The claim was therefore rejected.

(376)

The Geely Group objected the use of the same benchmark for bonds as the one applied to loans since bonds and loans are different financial instruments.

(377)

In this respect, the Commission pointed out that loans and bonds are similar financial debt instruments. In fact, a bond is a kind of a loan used by large entities to raise capital. Both loans and bonds are contracted/issued for a certain period of time and bear an interest/coupon rate. The fact that the financing through a loan is provided by a financial institution and that the financing through a corporate bond is provided by investors, which in most cases are also financial institutions, is irrelevant for the determination of the core characteristics of both instruments. Indeed, both instruments serve to finance business operations, bear the same kind of remuneration and have similar repayment term and conditions. Moreover, no alternative benchmarks were proposed, and no further publicly available information could be identified to provide a more accurate benchmark. Consequently, the claim was rejected.

(378)

In the absence of any other comments, the conclusions in recitals (633) to (635) of the provisional Regulation are hereby confirmed.

(379)

In the absence of any comments regarding the conclusion on other types of financing, the conclusions drawn in recitals (636) to (637) of the provisional Regulation were confirmed.

(380)

The subsidy rate established with regard to the other types of preferential financing during the investigation period for the sampled groups of companies amounted to:

Preferential financing: other types of financing

(381)

Following provisional disclosure, the GOC and SAIC Group claimed that specificity for grants received by Geely and SAIC lacked a case-by-case determination based on positive evidence. Similarly, the Geely Group claimed that the grants should have been allocated to total turnover (BEV and non-BEV), to correctly reflect that the grants related to the overall activities of receiving entities.

(382)

The GOC claimed that the Commission used facts available in a punitive manner when assessing grants received by Geely and SAIC and that the Commission gave unclear instructions which hindered a proper assessment by the sampled companies. According to the GOC, the Commission did not conduct a detailed assessment of all evidence on the record to select the most appropriate replacement facts and alleged subsidies should not be attributed to exporters who did not benefit.

(383)

As detailed in recital (364) of the provisional Regulation, the SAIC Group claimed that it was not essential to use ‘the individual amounts received per grant, time of receipt of the grants, description of the grants, corresponding government notifications specifying the nature of the grants and other necessary information’ and refused to provide such information so that the Commission was unable to determine the underlying subsidy schemes, the amount of grants received during the investigation period, as well as whether these grants related to fixed assets or not. Similarly, as explained in recital (372) of the provisional Regulation, none of the Geely Group companies provided complete information regarding the nature of the grant programmes under which they received support, as requested in the questionnaire so that the Commission was not in a position to determine the underlying subsidy schemes for the grant programmes in relation to the product under investigation.

(384)

Furthermore, as explained in Section 3.3.1.4 of the provisional Regulation, the GOC failed to provide any information in relation to the grants that were disbursed to the sampled groups so that the Commission could not fill the gaps with information that it would have obtained from another source. On the contrary, the Commission noted that the BYD Group provided the requested relevant information so that the Commission could assess the various aspects of the grants received and consider whether they were countervailable.

(385)

On this basis and in the absence of verified information pointing to the contrary, the Commission based its findings on facts available and considered that all grants received by these groups were specific and related to the product under investigation. On this basis, these claims were rejected.

(386)

Following definitive disclosure, the GOC reiterated that the Commission’s determination that the countervailed grants were specific is based on assumptions, and not on positive evidence, contrary to Article 2.4 of the SCM Agreement. It argued that the Commission had evidence that the alleged grants in question benefitted multiple products and thus applied facts available in a punitive manner. The Commission instead assumed that the grants received by those exporting producers were specific since the SAIC Group and the Geely Group did not provide the Commission with what it considered to be sufficient information. Further, the GOC argued that the Commission has failed to disclose sufficient facts underlying its determination that the grants were specific.

(387)

The SAIC Group also argued that it provided evidence to the Commission that the grants received from the GOC were intended for purposes beyond the product concerned and that the information in the Commission’s possession, including materials submitted by the SAIC Group and publicly available information, strongly indicates that the grants received were intended for BEVs and non-BEVs. Therefore, it cannot be argued that the Commission’s allocation of the grants received to the turnover of the product concerned has any factual foundation. Moreover, the SAIC Group argued that the Commission did not provide any evaluation or reasoning regarding the multiple facts on record – specifically, the audit reports, trial balance, and screenshots of accounts recording the grants – which suggest that the grants received were not solely for the product under investigation.

(388)

The Commission restated that the SAIC Group failed to provide complete information regarding the nature of the grant programmes under which they received support, as requested, so that the Commission was not in a position to determine which grant programmes related to the product under investigation. The Commission noted that the information was readily available to the companies but that they refused full access to it. The fact that a company would allow the Commission to view certain documents and provide screenshots without providing the relevant requested information can, in no case, be equivalent to the provision of the requested information in the form of an exhibit ensuring that the information has been duly verified. Neither does such information provide assurance that grants received prior to the investigation period did not benefit the production of BEVs during the investigation period. The Commission also repeatedly highlighted that information provided only in the form of screenshots including limited data or showing some examples would make the verification and reconciliation of essential figures unattainable.

(389)

In the absence of verified information pointing to the contrary, the Commission based its findings on facts available and considered that all grants received by these groups were specific and related to the product under investigation. On this basis, these claims were rejected.

(390)

Following provisional disclosure the SAIC Group argued that since the grants received were subject to corporate income tax, the taxable amount should be deducted from the total amount of grants received. The Commission considered that the SAIC Group had failed to provide positive evidence that the tax paid was directly linked to the grants received. Furthermore, Articles 6 and 7 of the basic Regulation do not provide for the deduction of corporate income tax as far as the calculation of the benefit or countervailable subsidy is concerned. Hence, this argument was rejected.

(391)

The subsidy rate of the SAIC Group and the Geely Group regarding grants was updated as a consequence of the correction described in recitals (652) and (654) of this Regulation respectively.

(392)

As a consequence, the methodology for determining the subsidy amount as described in recital (650) of the provisional Regulation is confirmed and was applied to the exporting producer granted individual examination.

(393)

Following definitive disclosure, Tesla Shanghai submitted that there were three payouts for one of the grants the company received, and one of these payouts occurred during the investigation period. The company submitted that, since the amount received during the investigation period concerns a grant related to fixed assets, whose payouts were made under the same scheme, the Commission should have depreciated the amount received by the company during the investigation period.

(394)

The Commission acknowledges that, based on the Guidelines for the Calculation of the Amount of Subsidy in Countervailing Duty Investigations (59), ‘[f]or non-recurring subsidies, which can be linked to the acquisition of fixed assets, the total value of the subsidy has to be spread over the normal life of the assets (Article 7(3) of Council Regulation (EC) No 2026/97 (60))’. However, the guidelines also provide that ‘As an exception to [the point above], non-recurring subsidies which amount to less than 1 % ad valorem will normally be expensed, even if they are linked to the purchase of fixed assets’. Given that the payout for the grant in question amounted to less than 1 % ad valorem, the Commission considered that the payment received during the investigation period was not significant and that it was reasonable to allocate it only to the investigation period. This allocation method is fully in line with the WTO report from the informal group of experts which provides that grants for which the purpose is for the purchase of fixed assets should be allocated while ‘it was deemed appropriate, primarily from the standpoint of administrative convenience, that very small subsidies be expensed regardless of type or other considerations. A level of less than 0,5 per cent of sales for any individual subsidy is recommended for this threshold’ (61). Therefore, the Commission dismissed this claim.

(395)

In the absence of any other comments, the conclusions in recitals (638) to (651) of the provisional Regulation are hereby confirmed.

(396)

The subsidy rate established with regard to all grants during the investigation period for the sampled exporting producers and for the individual examined exporting producer were as follows:

Grants

(397)

Following provisional disclosure, some interested parties such as the SAIC Group, the CAAM, the BYD Group, the GOC, and the Geely Group, claimed that the consumer was the ultimate beneficiary of this subsidy scheme. Specifically, it was argued that manufacturers advance the subsidies to consumers on behalf of the government when selling the vehicles by reducing the price to be paid by the customer. In this scenario, the customer was supposed to pay a reduced price for which the company was later reimbursed by the government.

(398)

Similarly, some parties claimed that the fact that the prices of BEVs did not increase after the removal of the subsidy does not prove the existence of a benefit. It was argued that market prices are influenced by several factors, including production costs, supply and demand dynamics, consumer expectations and substitution between old and new models. As a result, the prices of BEVs sold in different time periods may not be directly comparable.

(399)

Furthermore, it was argued that in cases where consumers did not meet the conditions for the subsidy, the producers reclaimed the subsidy from the consumers, thus questioning the benefit to the producers.

(400)

The Commission noted that no evidence was provided showing that the programme was designed to provide subsidies to consumers, using the BEV producers as a mere tool to channel those subsidies. In fact, the evidence showed the opposite. As described in recitals (666) to (671) of the provisional Regulation, the disbursements provided by the GOC to BEV producers in the form of direct cash transfers were a clear and tangible benefit to the BEV producers, as they constituted a direct transfer of monetary resources based on the economic activities of the producers. Although this already conferred a benefit by itself, the investigation further revealed that the subsidy did not influence final consumer prices. Despite a number of factors may have played a role, the analysis demonstrated that the price remained unchanged in the immediate period following the removal of the subsidy. This indicates that the subsidy did not have a discernible impact on the final price paid by customers so that the subsidy was kept the BEV producers. Consequently, these claims were rejected.

(401)

Regarding instances where producers may have reclaimed subsidies due to non-compliance, the Commission noted that, as described in recitals (665) to (670) of the provisional Regulation, producers set prices which allowed them to capture the full subsidy and consumers did not benefit in the form of lower prices, thus rendering the claim moot. Furthermore, this situation exemplifies the fundamental structure of the scheme, which places producers at the centre of the policy and prioritises their interests, with the ultimate aim of providing financial support to these entities. Similarly, if the intended beneficiary were the consumer, it would be the government that would be responsible for recovering the funds. No evidence was provided that in the relevant legal framework of this programme BEV producers are used by the government as a tool to provide or reclaim amounts paid by the government to the BEV producers. Consequently, the claim was rejected.

(402)

Following definitive disclosure, the CAAM reiterated that consumers were the ultimate beneficiaries of the subsidy scheme. It was argued that the stable prices BEVs after the subsidy removal do not indicate a benefit. It specifically mentioned that maintaining or even keeping prices unchanged for a period after the withdrawal of consumer subsidies is a common practice. Furthermore, they noted that even when the Chinese government reduced vehicle acquisition taxes for consumers, it was common for manufacturers to continue advertising subsidies for a period after the government incentives had expired.

(403)

The Commission noted that the CAAM arguments supported the Commission’s findings, as they provided additional argument that the pricing of vehicles by manufacturers is not influenced by the subsidy since the prices remain unchanged, i.e. the subsidy has no discernible impact on the final price paid by customers, thus the subsidy is kept by the BEV producers and no benefit is passed on to consumers. Consequently, the claim was rejected.

(404)

Following definitive disclosure, the GOC reiterated its claim that consumers are the ultimate beneficiaries of the subsidy scheme and emphasised that consumers are at the centre of the programme. In particular, the GOC claimed that this was stipulated in the legislation. The design of the programme, which involves the disbursements of cash directly to producers, takes into account the special market conditions in China. Furthermore, the GOC noted that if the conditions set out in the programme are not met, the amount of the payment will be reduced accordingly.

(405)

With regard to the GOC comments, and in the absence of any further substantiated information, the Commission reiterated its previous conclusion, as set forth in recitals (656) to (661) of the provisional Regulation and recital (400) above, that, having regard to the nature, design and operation of the scheme, the producers are the intended recipients of this subsidy. Regarding the reduction of disbursements in the event of non-compliance with the stipulated conditions, the Commission made reference to the aforementioned recital (401) of this Regulation. Furthermore, the Commission observed that the mere fact of non-compliance with the conditions in question does not imply a change of beneficiaries. The claim was therefore rejected.

(406)

Following provisional disclosure, after the imposition of provisional measures, the CAAM contested the treatment of consumption subsidies as production subsidies, claiming that the Union adopted a double standard to define China’s subsidies to consumers as subsidies to promote the automotive industry in a far-fetched manner.

(407)

The claim put forward by the CAAM was generic and unsubstantiated. Therefore, it was rejected.

(408)

Following provisional disclosure, Tesla (Shanghai) and the GOC claimed that the programme had already been terminated in December 2022 and, therefore, the Commission has no legal basis for imposing a provisional anti-subsidy duty for this scheme.

(409)

The Commission noted, as described in recitals (662) to (664) of the provisional Regulation, that Chinese BEV producers continued to benefit from this subsidy scheme during the entire investigation period and will continue to benefit from direct transfer of cash under this scheme for an extended period of time after the investigation period. Consequently, the Commission concluded that the conditions for countervailing this scheme are met. Therefore, these claims were rejected.

(410)

Following definitive disclosure, Tesla (Shanghai) reiterated that the scheme was terminated and should not be countervailed. As an alternative, the company submitted that the maximum amount the Commission can countervail for Tesla Shanghai is the amount that the company could (potentially) receive in the future. Furthermore, it was argued that the existence of local schemes similar to the national fiscal subsidy policy have no bearing in the assessment of the benefit to Tesla (Shanghai).

(411)

The Commission noted that the benefit countervailed is the actual amount of subsidies disbursed by the GOC to the exporting producers during the IP, and reiterated its previous conclusion, as set forth in recitals (662) to (664) of the provisional Regulation and recital (409) above. With regard to the non-assessment of schemes similar to the national subsidy, the Commission noted, as described in recital (664) of the provisional Regulation that the investigation revealed that local authorities, under the direct or indirect guidance of the GOC, have established a large number of similar programmes, some of which closely resemble the national scheme. These local initiatives have the common objective of incentivising the production of BEVs, which will result in continued support for Chinese BEV producers.

(412)

Following provisional disclosure, the Geely Group and Tesla (Shanghai) claimed that the funds received during the investigation period were associated with sales prior to the investigation period and, therefore, not subject to countervailing measures. Should this scheme be deemed to be countervailable, the basis for such a determination should be the sales directly related to the investigation period.

(413)

The Commission noted, as described in recital (672) of the provisional Regulation, that the temporal discrepancy between the sale BEVs and the disbursement of government funds, which producers cannot predict, creates uncertainty regarding the timing of disbursements. This uncertainty can extend up to four years. As a result, producers fully realize the benefit only upon receiving the disbursements. Therefore, these claims were rejected.

(414)

Following definitive disclosure, the SAIC Group claimed that the Commission did not address its comments concerning the period on the attribution of the program, nor did it respond to its proposal for an alternative calculation.

(415)

The Commission noted that the same comments were submitted by different parties and rebutted in recitals (412) to (413) above. These recitals provide the rationale for dismissing the proposed calculation methodology. Consequently, both claims were rejected.

(416)

Following definitive disclosure, Tesla (Shanghai) reiterated its claim that the basis for calculation of the benefit be the sales concerned during the investigation period and provided a methodology for it.

(417)

The Commission, in the absence of any further substantiated information, reiterated its previous conclusion, as set forth in recital (413) above. The claim was therefore rejected.

(418)

Following provisional disclosure, the GOC and Geely claimed that the benefits derived from this subsidy scheme, should not be allocated to exports on the premise that the subsidies were specifically provided for the production and sales of the product under investigation, limited to the Chinese market.

(419)

The Commission noted that, under this scheme, the producers benefited from a direct transfer of funds, which provided the companies with substantial resources in the form of cash that was fully at their disposal. The GOC payments were specifically based on the sales of BEVs under a programme designed to support the development of the BEV industry and addressed to BEV producers. Consequently, the allocation of these benefits was based on BEV total turnover. These claims were therefore rejected.

(420)

Tesla (Shanghai) submitted that, since the booked amount received by the company under this scheme is treated as taxable revenue, and thus subject to the corporate income tax of 15 % applicable to Tesla (Shanghai) in 2022, there would be double counting to the extent that this benefit is taken into account both under this programme and under the preferential income tax programme.

(421)

The company failed to provide positive evidence that the tax paid was directly linked to the reimbursement received under this scheme. Furthermore, Articles 6 and 7 of the basic Regulation do not provide for the deduction of income tax as far as the calculation of the benefit or countervailable subsidy is concerned. Hence, the argument that this would constitute double counting was considered moot.

(422)

Following definitive disclosure, Tesla (Shanghai) reiterated that the 15 % income tax should be deducted from the total benefit since it treated the revenue from the fiscal subsidy as taxable income, subject to the 15 % corporate income tax applicable during the investigation period (IP). Tesla argued that there was double counting, as this benefit was considered both under this program and the preferential income tax program.

(423)

The Commission noted that the requested deduction does not fall within any of the categories eligible for deduction from the subsidy calculation as detailed in Article 7 of the basic Regulation (62). Moreover, the income tax rate does not apply on the income but rather on the taxable income as provided by the EIT, i.e. ‘the total income of the enterprise in each tax year less non-taxable income, tax-exempt income, various deductions and permitted amount of losses in previous years made good’ (63). Such deductions include ‘Costs, expenses, taxes, losses and other reasonable expenditure incurred in relation to income received by an enterprise may be deducted when computing the taxable amount of income’ (64). In addition, certain expenses such as R & D expenses benefit an additional deduction under certain conditions. On this ground, a specific income such as the revenue from the fiscal subsidy cannot be isolated from the calculation of the taxable income that takes other elements into account. Furthermore, the Commission considered that the 15 % income tax rate only applied when there is a positive taxable income Consequently, the claim was rejected.

(424)

Following provisional disclosure the BYD Group submitted that the ratio of fiscal subsidy for BEVs to the total fiscal subsidy received during the investigation period used to allocate the prepayment to the BEVs should have been modified after the final settlement decisions of the Ministry of Industry and Information Technology (‘MIIT’) and the Ministry of Finance (‘MIF’). The Commission accepted this claim and revised the calculation.

(425)

The Geely Group claimed that some subsidies attributed to one of the companies in the group were already countervailed. The Commission accepted this claim and revised the calculation.

(426)

As a consequence, the methodology for determining the subsidy amount as described in recital (675) of the provisional Regulation is confirmed and was applied to the exporting producer granted individual examination.

(427)

In the absence of any other comments, the conclusions in recitals (652) to (676) of the provisional Regulation are hereby confirmed.

(428)

The subsidy rate of the SAIC Group and the Geely Group regarding the fiscal subsidy policy was updated as a consequence of the correction described in recitals (652) and (654) of this Regulation respectively.

(429)

The subsidy rate established with regard to this scheme during the investigation period for the sampled exporting producers and the for the individual examined exporting producer were as follows:

(430)

Following provisional disclosure, the GOC, the BYD Group, the Geely Group, and the SAIC Group disagreed with the Commission’s assessment that Chinese BEV producers have benefited from the provision of land for less than adequate remuneration.

(431)

The GOC alleged that the Commission merely stated that land in mainland China is state-owned or collectively owned, which does not prove the existence of financial contribution and benefit. Furthermore, contrary to the understanding of ‘collective’ noted by the Commission in recital (677) of the provisional Regulation, ‘collective’ does not mean that it is composed of villages or townships, but of working people.

(432)

The Commission provided in recital (677) of the provisional Regulation an introduction to the land use right system used in the PRC. Contrary to the comments from the GOC, this part is not meant to demonstrate on its own the existence of financial contribution and benefit. In any event, the GOC did not provide any evidence contradicting the statements made in recital (677) of the provisional Regulation, namely that all land in the PRC is owned either by the State or by a collective.

(433)

Following provisional disclosure the GOC alleged that only when it is established that prices in the country of provision of land use rights, are distorted because of governmental intervention, the Commission can resort to an out of country benchmark. According to the GOC, several of the legislative documents were not in force in the investigation period. Thus, the Commission has relied on an incorrect legal basis and did not base its ‘determination on positive evidence’.

(434)

First, the Commission noted that the GOC did not provide any evidence that the legislative documents mentioned were not effective during the investigation period. Second, the GOC did not either demonstrate that the substance of these documents that have allegedly been replaced has changed. Third, the GOC did not call into question the application of the Land Administration Law of the People’s Republic of China mentioned under recital (679) of the provisional Regulation.

(435)

Following definitive disclosure, the GOC alleged that it has provided the laws relied upon by the Commission were not in force during the investigation period. Therefore, the Commission’s assertions that the GOC did not provide evidence that those documents were not effective during the investigation period is factually wrong.

(436)

The Commission, however, maintains that no evidence was provided to demonstrate the texts in question were not in force. In any event, the Commission on its own initiative found evidence that the Property Law indeed was repealed in 2021 (65). However, the provisions therein were incorporated into Articles 205-462 of the Civil Code which entered into force in January 2021. The Civil Code did not introduce any substantial changes with respect to land use rights (see in particular Articles 246, 260-261 and 330-361 of the Civil Code). Thus, the argument made by the GOC was purely formalistic. Consequently, this claim was rejected.

(437)

Following provisional disclosure according to the GOC, no evidence was adduced by the Commission in previous cases that the auctioning system in mainland China was non-transparent and unclear and it relied on old cases and entirely different products without providing any explanation or evidence of the supposed distortion. The Commission allegedly has used the same statement and built a line of case law in the absence of evidence. The GOC also alleged that the Commission neither explained what it investigated as regards the land use rights market in mainland China, nor the changes that it found. In addition, the Commission’s statement that land use rights’ prices were set arbitrarily by the authorities was not supported by any evidence in general and with instances pertaining to the sampled exporting producers. For the GOC, the price eventually obtained in the bidding process reflects both demand and supply.

(438)

The Geely Group alleged that the provisional Regulation does not include any clear indication or reasoning as to why or how Chinese Taipei is a suitable benchmark except for noting that it has been used in certain prior investigations.

(439)

The Commission however noted that the findings made in previous and recent anti-subsidy investigations were adequately substantiated and relate to the same subsidy programmes as those mentioned in the present investigation. For instance, the Commission found in the AFC case that for the plots of land that were provided through bidding, there was only one bidder for the land in each case, and the price paid corresponded to the starting price of the bidding process. The Commission relied in each of these prior investigations on a similar legal framework governing land use rights in the PRC and notably on the fact that local authorities set land prices according to the urban land evaluation system and the government’s industrial policy. In recital (682) of the provisional Regulation, the Commission recalled that the current investigation did not show any noticeable change in this respect. The Commission also recalled that the GOC failed to provide evidence showing a discontinuation of this policy. To the contrary, the Commission found that for the BYD Group, the Geely Group, the SAIC Group, and Tesla (Shanghai) the LUR transactions corresponded to either: (i) free transactions, allocations or transfers, (ii) transaction prices corresponding to the bidding starting price (iii) transaction prices corresponding to the guarantee to be paid to take part in the bidding or (iv) specific investment agreements with the local municipality(ies) which included specific provisions on the allocation of land. Thus, on the basis of the information available in this investigation, the Commission rejected those claims.

(440)

The GOC argued that the Commission’s statement in recital (682) of the provisional Regulation that the sampled exporting producers obtained land use rights at the prices set by the local authorities in the bidding procedures, lacks factual basis.

(441)

However, as already mentioned in recital (438) of this Regulation, the Commission has evidence of this statement through the transaction documents of the BYD Group, the Geely Group, the SAIC Group and Tesla (Shanghai).

(442)

According to the GOC, there is a secondary land use rights market in mainland China that the Commission did not investigate.

(443)

The GOC, however, did not have any evidence that any alleged secondary land use rights market was used by the sampled companies.

(444)

The GOC considered that the Commission’s finding on specificity is incoherent because if the Commission’s specificity analysis were to be correct and only producers from some industries get land use rights at preferential prices, then the Commission should have used the land use rights prices of companies from other sectors to assess the existence of the alleged subsidy. In addition, the Commission failed to make a reasoned and objective assessment of specificity under Articles 4.2(a) and 4.2(c) of the basic Regulation because it did not establish how access to the alleged preferential provision of land use rights is explicitly limited to certain enterprises or sectors.

(445)

In this respect, the Commission notes that no party provided evidence of a benchmark for land use rights prices for sectors free from State intervention. Moreover, the Commission did provide the legislative framework according to which local authorities set land price according to the urban land evaluation system which is updated every three years, and the government industrial policy. Furthermore, the Commission could confirm this finding based on the transaction documents provided by the SAIC Group according to which ‘the industrial access condition belongs to the automobile manufacturing industry; it is in line with the encouraged and permitted projects in the Guidance Catalogue for Industrial Structure Adjustment’. Thus, documents available to the Commission confirm that belonging to the automobile manufacturing industry is a condition to participate in the bidding procedure for land use rights.

(446)

Following definitive disclosure, the GOC commented that it is for the Commission as the investigating authority to establish specificity, and not for the GOC and other interested parties to rebut a negative presumption. It also referred to Case C-559/12 P (66) and stated that the Commission is required to gather all information it requires to inform its assessment as to whether the alleged subsidy is specific.

(447)

Contrary to the allegations made by the GOC, the Commission did not make any negative presumption to establish the specificity of the scheme. As clearly stated in recital (686) of the provisional Regulation, the scheme is considered specific because the preferential provision on land is limited to companies belonging to certain industries, in this case, the BEV industry. Therefore, the claim was rejected.

(448)

Following definitive disclosure, the GOC also maintained that the Commission’s benefit analysis is unjustifiable and is based on an inappropriate benchmark. According to the GOC, the Commission is incoherent when confirming that the provision of land use rights is specific and, in the same breath, dismisses the argument that the Commission could have used in-country benchmarks emanating from land use rights prices of companies from other sectors that do not benefit from this alleged subsidy, of which there are plenty to choose from.

(449)

The Commission, however, fails to see the incoherence mentioned by the GOC. As stated in recital (445) above, the Commission simply stated that no party provided evidence of a benchmark for land use right prices for sectors free from State intervention. Apart from merely stating that there are plenty of benchmarks to choose from, the GOC failed to rebut the Commission’s findings. In addition, the GOC seems to confuse the Commission’s specificity analysis whereby the Commission demonstrated that the BEV industry is benefiting from land use rights for less than adequate remuneration and the benefit analysis under Article 6(d) of the basic Regulation whereby the Commission considered that the Chinese legislation regulating land uses is distorting the land use rights market and is not subject to market conditions. The fact that the land use rights system as a whole is not functioning as a free market does not prevent the GOC from providing specific industries with land use rights for less than adequate remuneration. Therefore, the claim was rejected.

(450)

The Comments of the GOC regarding the conclusion that the provision of land use right by the GOC should be considered a subsidy were addressed together with the comments on the findings of the investigation in recitals (437) to (442) of this Regulation.

(451)

Following provisional disclosure, the GOC alleged that the Commission’s assessment of Chinese Taipei being a suitable external benchmark is not based on positive evidence and that land prices in Chinese Taipei do not relate ‘to prevailing market conditions in the country of provision’. The GOC stated that the Commission merely lists certain indicators without any supporting data or evidence and requested the Commission to provide additional data concerning the level of economic development, the degree of industrial infrastructures, the density of population, and the similarities between the type of land and transactions used for constructing the relevant benchmark, in China and Chinese Taipei. It also mentions that the population densities in mainland China and Chinese Taipei are vastly different.

(452)

Concerning the level of economic development and the degree of industrial infrastructures the Commission found that most entities within the sampled exporting producer groups were located in the east part of the PRC, in developed high-GDP areas in provinces with a high population density surrounding Shanghai and Shenzhen, which were similar to those of Chinese Taipei.

(453)

Concerning the similarities between the type of land and transactions used for constructing the relevant benchmark, the Commission highlighted in this respect that in both cases, the transactions concern industrial land of a certain size located in industrial areas.

(454)

Concerning the population density, the Commission noted that the GOC compared population density figures at the level of the entire country. Looking closer at population density of the actual locations of the exporting producers, it appears that population density figures are actually quite similar or higher, for example for the Shanghai region where some of the entities of the sampled exporting producer groups and Tesla (Shanghai) are located, the density is over 3 900 inhabitants/square km (67) which is almost 6 times the population density of Chinese Taipei.

(455)

Following definitive disclosure, the GOC stated, first, that several entities within the sampled exporting producer groups are not located in the Eastern part of mainland China. For example, some are located in Xi’an and in Hunan. By picking Shanghai and Shenzhen, the Commission refers to two of the most developed cities in mainland China, which are not comparable to most provinces where BEV producers are located. Second, the GOC notes that all other provinces where BEV producers are located, apart from Shanghai, are significantly less densely populated than Chinese Taipei. The GOC also commented that there are vast differences between the price of LUR between specific provinces and cities in mainland China and that, apart from the issue of lack of comparability, one average benchmark price for land in Chinese Taipei cannot relate to the prevailing market in the entire mainland China.

(456)

The Commission, however, never claimed that all BEV producers were located in the East part of the PRC. Instead, the Commission explained that most entities within the sampled exporting producer groups were located in the East part of the PRC, in developed high-GDP areas in provinces with a high population density surrounding Shanghai and Shenzhen. For instance, out of seven production facilities of the Geely group, four are located in Zhejiang, and one in Jiangsu, two coastal provinces in the vicinity of Shanghai. Similarly, out of the eight production facilities of the BYD group one production facility is located in Guangdong, one in Jiangsu, one in Anhui, one in Shandong, and one in Fujian. Finally, at least three of the SAIC production facilities are located directly in Shanghai. Most of these provinces have a high GDP per capita and levels of density that are comparable to Chinese Taipei’s. The density of population of Jiangsu, Guangdong, Shandong are even superior to the one of Chinese Taipei. In addition, the Commission underlines that BEV production facilities are often located in cities which have much higher level of GDP per capita and density that the province’s average. Therefore, these claims are rejected.

(457)

The GOC and the Geely Group also alleged that Chinese Taipei is not an appropriate benchmark because, among others, in mainland China, only a land use right is transferred whereas in Chinese Taipei the actual ownership of the land is also transferred. In addition, according to the GOC, the Commission seems to acknowledge that population density and degree of industrial infrastructure are not entirely comparable between mainland China and Chinese Taipei. Thus, on average benchmark price for land in Chinese Taipei cannot and does not relate to the prevailing market in mainland China. In addition, the land prices used for Chinese Taipei used by the Commission includes both commercial and industrial land prices.

(458)

The SAIC Group argued that Chinese Taipei was not a suitable external benchmark for the land-use rights and proposed instead to use benchmarks in Malaysia and Thailand. The SAIC Group submitted that regarding Chinese Taipei:

(459)

The Geely Group alleged that the relevance of factors like physical proximity and shared demographics between China and Chinese Taipei for benchmark selection is unclear. In addition, the assertion that the economic development, GDP, and structure of Chinese Taipei are comparable to many provinces and cities in China lacks credibility due to significant differences between them, particularly concerning the cities where Geely Group’s exporting producers operate. Finally, according to the Geely Group, calculations did not take into account the significant price differences across different areas of Chinese Taipei and how that impacted benchmarking.

(460)

In this respect, the Commission noted that the selection of Chinese Taipei as a benchmark was based on the examination of several factors listed in recital (688) of the provisional Regulation. The Commission considered, however, that even if there were certain differences in the market conditions between land use rights in mainland China and sale of land in Chinese Taipei, these would not be of such nature to invalidate the choice of Chinese Taipei as a valid benchmark.

(461)

Following definitive disclosure, the GOC stated that the Commission ignored a critical distinction which affects comparability, namely that in mainland China, only the land use right is transferred for specific years whereas in Chinese Taipei, the ownership of the land itself is transferred. The GOC also commented that there is no evidence that the Commission considered (i.e., evaluated) these differences and their impact on land use rights’ prices.

(462)

The Commission, however, relied on the benchmark that was considered the most appropriate, even considering differences between the market conditions. The Commission could not identify during the course of the investigation any other adequate benchmark or adjustment method that would adequately reflect these differences in the market conditions. It also notes that the GOC was also unable to present a reliable benchmark that would reflect the difference between land use rights and property rights. Therefore, this argument was rejected.

(463)

The SAIC Group proposed instead to use the land prices of Malaysia or Thailand as alternative benchmark options given their suitability over Chinese Taipei for the following reasons:

(464)

After consideration of the claim the Commission considered that the choice of Chinese Taipei as a suitable external benchmark was based on the examination of several factors listed in recital (688) of the provisional Regulation which justified its choice as a valid benchmark. In addition, contrary to the statement made by SAIC, the Commission did not use 2013 prices, but instead actual yearly prices as of 2013. For the years prior to 2013, the Commission made an adjustment to the 2013 data based on economic growth in Taiwan. In contrast, SAIC data only cover a remote isolated year (2010) for Thailand and the year 2022 for Malaysia. The Commission needs historical data to assess land use right prices and cannot rely on a single year because all land use rights were not acquired over a single year. Finally, regarding the level of economic development, SAIC only compared Thailand, Malaysia, and China country wide. The Commission, instead, compared the industrial zones in Taiwan with the relevant industrial provinces in China. On this basis, this claim had to be rejected.

(465)

As a consequence, the methodology for determining the subsidy amount as described in recitals (687) to (689) of the provisional Regulation was confirmed and was applied to the exporting producer granted individual examination.

(466)

The subsidy rate of the SAIC Group and the Geely Group regarding the government provision of land use rights for less than adequate remuneration was updated as a consequence of the correction described in recitals (652) and (654) of this Regulation respectively.

(467)

The subsidy rate established with regard to this subsidy during the investigation period for the sampled exporting producers and for the company that received individual examination amounts to:

(468)

In the absence of any comments, the findings in recitals (691) to (695) of the provisional Regulation were confirmed.

(469)

The comments received by the GOC and the SAIC Group relating to non-cooperation and the use of facts available were addressed in Section 3.3.1.2. No further comments were received in this regard so that the conclusions drawn in recitals (696) to (700) of the provisional Regulation were confirmed.

(470)

Following provisional disclosure, the GOC submitted that no law or regulation requiring the supply of batteries or LFP at LTAR existed. Moreover, the GOC added that almost all documents cited by the Commission are non-mandatory plans which do not contain specific means for implementation, that the Commission took the content of GOC laws and plans, as well as news reports, out of context, and that there is thus no legislation or criteria to prove the existence of a countervailable subsidy. These claims were reiterated after definitive disclosure.

(471)

The Commission first recalled that, given the refusal from the GOC to cooperate on the relevant elements listed in Section 3.3.1.2 of the provisional Regulation, the Commission had to rely on facts available for its findings concerning input materials.

(472)

As already explained in detail in recitals (197) to (203) and in Section 3.7.2.1.2(a) of the provisional Regulation, the State and the CCP exert a decisive influence on the allocation of resources and on their prices, and is enabled to do so through full control over the legislative, executive, as well as judicial branches of the State apparatus (recital (201) of the provisional Regulation), and through an elaborate system of plans which set out priorities and prescribe the goals the central and local governments must focus on (recital (202) of the provisional Regulation). The claim of the GOC that almost all documents cited by the Commission are non-mandatory is in contradiction with the fact that the objectives set by the planning instruments are, indeed, of binding nature and the authorities at each administrative level monitor the implementation of the plans by the corresponding lower level of government, thereby driving resources to sectors designated as strategic or otherwise politically important by the government, rather than allocating them in line with market forces. As already explained in recital (202) of the provisional Regulation, the objectives set by the planning instruments are of binding nature and the authorities at each administrative level monitor the implementation of the plans by the corresponding lower level of government. The binding nature of plans is also extensively covered in Section 4.3.1 of the China Report (68); Article 89 of the Chinese Constitution (69) mandates that the State Council draw up and implement plans for national economic and social development and state budgets, while the Organic Law of the Local People’s Congresses and Local People’s Governments of the PRC (70) obliges said authorities to implement the Five-Year Plans (Article 11, 12, 50, 73, 76). Therefore, the claim that, for example, the 2017 Battery Action Plan is a mere development goal plan, and not a price control policy, was deemed factually incorrect, as the 2017 Battery Action Plan is first and foremost adopted to implement the ‘Notice of the State Council on Issuing the Development Plan for the Energy Saving and New Energy Vehicle Industry (2012-2020)’ (Guofa [2012] No 22) and the ‘Guiding Opinions of the General Office of the State Council on Accelerating the Promotion and Application of New Energy Vehicles’ (Guobanfa [2014] No 35), and also contains specific provisions on the pricing of batteries per kw/h (recitals (710) and (746) of the provisional Regulation).

(473)

The Commission disagreed with the GOC’s statement that it took the content of law, plans, and news reports out of context. The findings on public body and on entrustment and direction are the result of an in-depth fact-based analysis of extensive objective evidence, including legislation, regulations and other official policy documents published by the GOC, reports from international organisations, and other reliable independent sources, which were duly referenced and supported by quotes contextualising the content of the documents. The GOC claimed that the Mineral Resources Law and its Rules for Implementation are general requirements and only provide guidance to the GOC in formulating policies, but do not give the GOC unlimited power over its own resources; however, this contradicts the very own content of Article 3, which verbatim states that ‘The State Council represents the State to execute the ownership over mineral resources. The State Council authorizes the competent department of the State Council for geology and minerals to impose a unified control over the allocation of mineral resources in the whole country’ (71). In addition, the GOC claimed that the press statements given by the MIIT mentioned in recital (751) of the provisional Regulation has been taken out of context, as the GOC did not intervene in price setting, as it only endeavoured to address the peak in global lithium-ion prices by expanding upstream supply and combating unfair competition. However, as the GOC admitted itself in its submission, the goal to ‘jointly guide the lithium salt price to return to rational level’ is not a mere general guiding principle, but a price setting intervention meant to bring back lithium prices to ‘a rational level’, as the MIIT and other industry associations were reportedly fully involved in achieving this goal. Therefore, these claims were rejected.

(474)

Following definitive disclosure, the GOC submitted that that the Commission misrepresented its arguments, as in recital (473) of this Regulation, the GOC did not admit that the goal to ‘jointly guide the lithium salt price to return to rational level’ was price setting. The GOC stated that ‘in the context of the peak in global lithium-ion prices at that time, as well as the activities of unfair competition such as speculative buying, procurement for hoarding... the GOC endeavoured to address the problem by expanding upstream supply, and combating unfair competition, but did not intervene in price setting’. In addition, the GOC added that Commission has not cited any evidence to support its view that there was ‘price setting intervention meant to bring back the rational level’, and that the Commission did not cite any factual or legal basis to support its assertion that ‘the MIIT and other industry associations were reportedly fully involved in achieving this goal’ (recital (473) of this Regulation).

(475)

The Commission disagreed with these statements. As covered in recital (751) of the provisional Regulation, the MIIT, which is the department under the State Council responsible for the administration of China’s industrial branches and information industry (72), affirmed itself that ‘we will push [the prices of raw materials] back toward the reasonable level as soon as possible’, that ‘the ministry will help accelerate the development of local resources in China’ and that ‘the sector’s stable operation is facing great pressure that requires all relevant parties to cope with together’ (73) . Concerning the allegations that the Commission did not cite any factual or legal basis to support some of its assertions, the Commission recalled that all sources used in the provisional Regulation were duly referenced, and that the proof of involvement by the MIIT and other industry associations is mentioned in footnotes 310 and 311 of the provisional Regulation. Therefore, these claims were rejected.

(476)

Following provisional disclosure, the CAAM argued that battery and raw materials suppliers cannot be classified as ‘public institutions’, and that the Commission cannot impose high tariffs on the battery suppliers.

(477)

The Commission noted that, contrary to what the CAAM claimed, the duties imposed apply to Chinese BEV exporting producers, and not to their battery and raw material suppliers. Moreover, the claim by the CAAM concerning the fact that battery and raw materials cannot be classified as public bodies was generic and unsubstantiated. Hence, for the reasons mentioned in recitals (821) and (899) of the provisional Regulation, the claim was rejected.

(478)

Following definitive disclosure, the CAAM submitted that the Commission erroneously classified battery enterprises, raw material enterprises, and associations as public entities exercising governmental functions, adding that the Commission has erroneously concluded that the Chinese government intervenes in price setting, and that it erroneously inferred that the Chinese government exercises comprehensive control over industry associations and companies through party work organs.

(479)

The comments submitted by the CAAM were general and unsubstantiated, and therefore the Commission rejected them.

(480)

Following provisional disclosure, the GOC and the Geely Group contested the classification of inputs suppliers as public bodies. The GOC presented the following claims:

(481)

The Geely Group submitted that the evidence relied by the Commission failed to demonstrate that the CBIA and the CIAPS are vested with governmental authority and that the Commission incorrectly concluded that all their members are likewise vested with governmental authority. In addition, the Geely Group submitted that, since not all battery suppliers are members of associations, it cannot be concluded that these suppliers are vested with governmental authority. Lastly, the Geely Group submitted that partial state-ownership of certain battery suppliers does not demonstrate that these companies can be considered public bodies.

(482)

The Commission disagreed with the claim by the GOC that industry associations are autonomous organisations acting freely on the market. As already established by the Commission in recital (779) of the provisional Regulation, while the NDRC Opinions formally foresaw a separation between industry associations and the government, they also ensured not only a continued financial dependency of industrial associations on the government authorities but also the continued full CCP control over them through party building work bodies within the social organisations. The analysis carried out by the Commission in recitals (780) to (785) of the provisional Regulation also confirmed such CCP presence in the decision-making and day-to-day operations of the industry associations, as enshrined in the Articles of Association of CBIA and CIAPS. No information was provided by the GOC or any other party contradicting these findings. Moreover, the research carried out by the Commission after provisional stage also confirmed that industry associations do not operate independently as free market operators but are under the full control of the CCP and implement government-mandated policies. This is exemplified by the latest statements of Ge Honglin, the Party Secretary and Chairman of China Nonferrous Metals Industry Association (‘CNMIA’) (74), which also contains a sub-association on lithium. As already covered by recital (94) of Commission Implementing Regulation (EU) 2023/1618 (75), the CNMIA is an industry association where the CCP intervenes into operational decision making. While the CNMIA, which also contains a subsection on the lithium industry, was not an industry association analysed by the Commission at provisional stage, its latest statements contradict what the GOC alleges. In this ‘social organization’, like in several industry associations, the party building organisations are embedded within its structure (76). According to its Party Secretary, ‘although industry associations are social organizations, the requirements for Party building are consistent with those of the Central and State Organs’, and that the CNMIA has ‘thoroughly implemented the decisions and arrangements of the CPC Central Committee and the State Council, and cooperated with relevant departments to formulate, publish and interpret industrial policies such as the “Guidelines for Industrial Structure Adjustment”, “Work plan for stabilizing growth in the nonferrous metals industry”, and “Mining Rights Transfer Income Collection Methods”’. Moreover, both the CBIA and the CIAPS are under the management of the State Council. Hence, this claim was rejected.

(483)

On the second point raised by the GOC, as noted in recital (864) of the provisional Regulation, the Chinese market has been deemed distorted due to the national and sector-specific policies enacted by domestic battery suppliers, particularly those pertaining to pricing structures. Consequently, notwithstanding the fact that certain battery or LFP suppliers may charge different prices, all battery acquisitions by the sampled companies during the investigation period are regarded as impacted by the State policies and measures in place pursuing the stated policy objectives. This assessment arises from the understanding that all suppliers operate domestically, within the same market conditions. The power that the associations hold over their members and over pricing policies has already been presented in depth in Section 3.7.2.1.1(b) of the provisional Regulation. Moreover, the GOC did not submit any evidence to substantiate its claim. Therefore, the claim was rejected.

(484)

Concerning the third point, the claims raised by the GOC were general, and the party did not provide any evidence to prove the point raised. The Commission recalls that extensive research has been done on the Chinese industry associations and their members, and the price control mechanisms in place, as covered by recitals (748), (751), (792) – (799), and (807) – (809) of the provisional Regulation. Therefore, the claim was rejected.

(485)

The claim put forward by the Geely Group on the governmental authority of industry associations and their members was unsubstantiated, and therefore rejected. On the third claim submitted by the Geely Group, the Commission recalls that, as stated in recital (767) of the provisional Regulation, neither the CBIA nor the CIAPS publish the full list of their members. The Commission recalls that, as already covered in recital (282) of the provisional Regulation, the GOC alleged that it had no control over the CBIA, which is not formally affiliated with the GOC. This was disproved by the findings in recitals (777) and (778) of the provisional Regulation, which shows that the GOC exercises full control of the CBIA. First and foremost, the association in under the direct management of the State Council (recital (777) of the provisional Regulation), and the GOC remains in charge of the administration of the association and the appointment of key individuals in charge of its work (recital (780) of the provisional Regulation). During the verification visit at the GOC, the Commission requested a list of all members of the CBIA, which the GOC refused to provide. In the absence of information provided by the GOC as well as of official public data covering the full list of members of the CBIA and the CIAPS, the Commission drew inferences that even more battery suppliers could be members of these associations. Moreover, membership in the battery associations is one of the several elements assessed by the Commission. The evidence collected showed a situation whereby the GOC exercises its influence over the market of batteries and LFP. Moreover, concerning the last claim put forward by the Geely Group on partial state-ownership, the Commission recalls that the relationship between the input suppliers and the GOC is only one of the several elements it analysed, i.e. the legal and economic environment prevailing in the PRC, the GOC’s policy objectives to develop the BEV industry, and the core characteristics and functions of the input suppliers. Therefore, these claims were rejected.

(486)

Following definitive disclosure, CATL submitted that the Commission failed to demonstrate that the GOC possess any ownership in, or exercises any meaningful control over CATL, beyond the normal influence of the government in any country, that CATL is undisputably a privately-owned company, and the partnerships CATL entered into with State Owned Enterprises are merely for commercial purposes. CATL also stressed that the cooperation agreements it entered with local governments, or the creation of the National Engineering Research Centre for Electrochemical Energy Storage Technology do not suggest any influence by the GOC in CATL. The company also added that its price setting for batteries is entirely market based and devoid of any government influence.

(487)

CATL also submitted some comments on the industry associations, arguing that CATL’s membership in any association was not relevant to the BEV investigation, and that such membership cannot be considered as it being bound to implement any decisions by the association. The company also added that the Commission did not point to any evidence that would point to CATL being forced to do under threat of sanctions.

(488)

The claims raised by CATL were general and unsubstantiated. The Commission highlighted that the relationship between the GOC and CATL has been extensively covered in recitals (786) – (788) of the provisional Regulation, and that several provincial documents exist that explicitly support the development and show how this is linked with the undertaking of national key tasks (recitals (731), (732), (803), (804) of the provisional Regulation). On pricing, the Commission recalled that this was already covered in recitals (802) and (805) of the provisional Regulation, and recital (484) of this Regulation.

(489)

On the claims on membership of the associations, the Commission recalled that extensive research was carried out on the industry association and their members, and that CATL did not submit any evidence to substantiate their claims that it should not be considered as ‘public body’. Moreover, the Commission already addressed similar claims in recital (482) and (485) of this Regulation. On the last point raised by CATL, the Commission recalled that recital (834) of the provisional Regulation already covered the evidence showing that members must abide by the directions of the association aimed at regulating the economic behaviour of their members in order to comply with GOC policies, in order to avoid repercussion inflicted upon them by the CBIA. Therefore, these claims were rejected.

(490)

Following provisional disclosure, the Commission collected additional information on LG Chem Nanjing New Energy Solutions (‘LG Nanjing’), a foreign-owned battery producer in China which supplies several of the investigated exporting producers. Concerning LG Nanjing, the Commission found additional evidence corroborating its findings that battery producers in China are public bodies, showing that the construction of LG Nanjing served the purpose of providing batteries at low prices for the benefits of BEV producers. The company was established in 2015 by LG Chem, the chemicals subdivision of LG Corp. and the parent company of LG Nanjing (77). In 2014, South Korea’s LG Chem signed a memorandum of understanding on cooperation with the Nanjing Municipal Government. The factory established in Nanjing received ‘various assistance from the Nanjing Municipal Government, so the batteries produced [would] have price advantages’ (78). Moreover, LG Chem established in 2014 a joint venture with two Chinese state-owned partners (i.e. Nanjing Zijin Technology Incubation Special Park Construction Development and Nanjing New Industrial Investment Group), to build the first phase of the battery factory in Nanjing, thus showing that the State was involved in the setup of the factory, and that LG’s supply of batteries at lower prices for the benefit of carmakers was one of the stated goals of such endeavour.

(491)

Following definitive disclosure, and on the basis of a further examination of the actual market share of Chinese imports in the EU and US markets, as well as the effects of GOC’s overarching policies in favour of the BEV industry in the export markets, the Commission amended recital (813) and (814) of the provisional Regulation as follows:

(492)

The BMI data presents monthly lithium-ion battery cell price assessments for the Chinese, European, Asian (excluding PRC) and North American markets expressed on an ex works basis. As far as the investigation period is concerned, it shows that the ex-works NMC cell price per kW/h was at least 10 % and up to 30 % higher in the EU, North American or Asian markets than on the Chinese market regardless of the specific NMC chemistries (111, 523, 622 or 811). In the absence of publicly available cell price assessment for LFP cells and in the absence of cooperation by the GOC, the price difference between the Chinese and other markets was also considered valid for LFP cells. Such comparison should be seen against the background that the market share of Chinese battery producers in the EU was close to 40 % in 2023 (79). The Commission could not find granular-enough data on the market share of Chinese battery producers in North America. However, US customs data (80) shows that in 2023, the United States alone directly imported 13,1 USD billion in lithium-ion batteries from China, accounting for 70 % all US li-ion battery imports in 2023. Moreover, the European Union and North America are the top two destination for Chinese li-ion exports. Given the evidence above, the Commission could not exclude that Chinese battery producers would also constitute a significant percentage of the North American market share. This is also confirmed by BMI data that shows that the EU and also the North American markets were dependent on imports in the investigation period as domestic supplies accounted respectively for only 26 and 34 % of the demand. In parallel, the PRC had sufficient battery oversupply to fill such gap. In the absence of elements pointing to the contrary, the Commission considered that PRC battery imports could fill such gap and had a market share of up to around 70 % on these two markets. While this price comparison shows that the prices on non-Chinese markets are systematically higher, the Commission also considered that this analysis was made on a conservative basis since the price quotations were made on ex-works basis so that shipping costs from the PRC to these markets were not taken into account. Should shipping costs be included and considering the market share of Chinese battery producers on these markets, the price difference would be even higher.

(493)

As for CATL, in the absence of more precise data, the Commission analysed the annual reports of CATL for the period 2021-2022. The reports showed a deterioration of profitability on the Chinese domestic market which was compensated by higher profits recorded on the export side. While the company reported high gross profit margins both on the domestic and on the overseas market for batteries in December 2021, this trend was reversed in June 2022, when the company started to lose profitability on the Chinese domestic market, while it increased its profit margin on the export side. In the absence of cooperation by CATL either through the non-cooperation of the GOC or CATL’s refusal to provide a questionnaire reply in its quality of related supplier of batteries to two sampled groups, the Commission relied on facts available and inferred that the decrease in profitability on the domestic Chinese market for batteries was the reflection of the governmental policies aiming at the provision of batteries to BEV producers on the domestic market for less than adequate remuneration. In contrast, in the export markets, CATL was capable of charging higher prices and obtain higher profits, while still benefiting from the support received by the GOC. The difference in the profitability levels in the export and domestic market clearly shows that CATL was unable to maximise its profits in China and take rationale business decisions as a normal market player operating in an open market economy. Instead, CATL was forced by the GOC policies to supply batteries at cheaper prices to the domestic BEV industry. Such practice is also confirmed by the provisions contained in CATL’s Articles of Associations and Related Transaction Management System, as explained in recital (801) of the provisional Regulation, which provide that prices of any kind of transactions with related entities shall be set by the State.

(494)

Hence, in comparison to recitals (813) and (814) of the provisional Regulation, the Commission amended the percentage of market share of Chinese battery producers in the EU and North American markets, focusing mostly on the analysis of the EU market (recital (492) of this Regulation), and the analysis of the profitability of CATL on the domestic vs export markets (recital (493) of this Regulation).

(495)

In the absence of further comments and in view of the additional findings by the Commission, the conclusions drawn in recitals (702) to (821) of the provisional Regulation were confirmed.

(496)

Following provisional disclosure, the GOC and the Geely Group contested the finding that the battery and LFP suppliers were entrusted or directed by the GOC. In particular, the GOC submitted that:

(497)

The Geely Group submitted that (a) membership in the associations is insufficient to demonstrate that battery suppliers are entrusted or directed by the GOC; (b) there is no evidence that battery suppliers that are foreign-owned and/or not members of the CBIA or the CIAPS or state-owned are entrusted or directed by the government to provide batteries at LTAR; (c) the evidence relied by the Commission on entrustment and direction does not support the finding that the GOC entrusted or directed the CBIA and CIAPS or their members to provide batteries at LTAR.

(498)

At the outset, the Commission recalled that its findings were based on facts available pursuant to Article 28 of the basic Regulation as the GOC refused to supply the necessary information and engage in discussions on this issue.

(499)

On substance, concerning the first claim raised by the GOC, the Commission recalled the findings in Section 3.7.2.1.1 of the provisional Regulation, and highlighted that under point (1) (recitals (760) to (789) of the provisional Regulation), covering the relationship between the input suppliers and the GOC, the Commission established pervasive presence of the GOC in the day-to-day management in both industry associations and private companies. On pricing, domestic prices do not only differ from export or international ones but were also found to be consistently lower than export prices due to the sectoral policies put in place by the GOC in China (see recitals (816) and (920) of the provisional Regulation for the findings on the differences between Chinese domestic and export prices). The difference between Chinese domestic prices and worldwide prices, excluding China, is covered in recitals (858) to (860) of the provisional Regulation.

(500)

On the translation of Article 46 of CATL’s Articles of Association, even by adding ‘where’ in the sentence ‘the pricing of related party transactions are stipulated by the State’, this does not affect the content of the findings by the Commission. Indeed, the text unequivocally contains provisions that there are certainly cases where the pricing of related party transactions are stipulated by the State. Furthermore, the GOC did not contest the wording of Article 22 of CATL’s Related Party Transaction Management System which contains a similar provision. Moreover, the GOC alleged that this price-setting pertain to five different scenarios, but no evidence to support this statement was submitted. In any event, the findings are based on facts available since the GOC refused to cooperate, and a comment on a specific translation element taken out of context of the rest of the elements and evidence relied upon by the Commission cannot invalidate the findings on this point. Therefore, the claim was rejected.

(501)

The claims raised by the Geely Group were general and unsubstantiated. The Commission recalls that extensive research has been carried out on the industry association and their members, and that the Geely Group did not submit any evidence to substantiate their claims that battery producers are not entrusted and directed by the GOC. Moreover, the Commission highlights that the CBIA and CIAPS did not publish the full list of members (recital (767) of the provisional Regulation) and therefore, as also already explained in recital (485) of this Regulation, even more battery suppliers could be part of these association. In addition, being a foreign-owned enterprise does not preclude it from being a public body (if they are vested with public authority) and, in the alternative, entrusted and directed by the GOC. As covered in recital (485) of this Regulation, also foreign-owned battery producers displayed the same behaviour as Chinese-owned battery makers. On this basis, these claims were rejected.

(502)

Following definitive disclosure, the GOC submitted that it disagreed with the analysis carried out by the Commission in recitals (499) to (501) above, citing that (a) the Commission failed to provide evidence of the pervasive presence of the GOC in the input suppliers’ day-to-day operations; (b) the fact that domestic prices of inputs are lower than export prices is the result of full competition in the Chinese market, which has larger demand for those inputs; and (c) in the translation of Article 46 of CATL’s Articles of Association and Article 22 of CATL’s Related Transaction Management System, the word ‘where’ is essential to the correct understanding of the content of this provision. In this regard, the GOC submitted that the term ‘stipulated by the State’ should be understood as existing in a hypothetical situation, and not as an indication that state pricing exists, submitting the Price Law of the People’s Republic of China (81) and the Central Pricing Catalogue (82) as evidence of that to highlight that batteries are not included in the scope. CATL also submitted comments on this, explaining that Article 46 of CATL’s Articles of Association and Article 22 of CATL’s Related Transaction Management System prescribes the circumstances where no approval for related party transactions by the Shareholders’ meeting is needed, and the fact that the Shareholders’ meeting would not need to approve price-setting for related party transactions if those are based on a state-stipulated price does not imply that the latter actually happens, let alone that in a way relevant to the BEV investigation. The company added that the Commission failed to demonstrate that there has been any actual instance of government driven price setting.

(503)

The Commission disagreed with these claims. Concerning the first and second claims, both comments were general and unsubstantiated, and the Commission stressed that such comments were already both addressed in recital (499) of this Regulation as well as recital (751) of the provisional Regulation. With regard to the third one on CATL’s Articles of Association, the Commission analysed the evidence submitted by the GOC. While the Central Pricing Catalogue submitted by the GOC does not explicitly contain provisions on batteries, this does not invalidate the body of evidence collected by the Commission. First and foremost, there would be no reason why such a provision would be necessary if there were no instances of the State-fixing prices in this industry and/or State influence in it. Second, government interference in price-setting has already been extensively covered in Section 3.7.2.1.1(b) of the provisional Regulation. Third, evidence of government influence in price setting is evident not only from a wide body of evidence in the provisional Regulation, but also from other sources, such as Fujian’s NDRC ‘Implementation Opinions on Accelerating the High-Quality Development of the Lithium Battery, New Energy and New Materials Industry’ (83), where CATL is headquartered, which provide that the relevant departments and affiliated institutions of the government shall ‘achieve continuous reduction in product costs [of lithium batteries, new energy, and new materials]’. The Commission recalled that, while this constituted additional evidence of controls on costs, recital (751) of the provisional Regulation already covered government control of batteries raw materials prices. Therefore, the Commission rejected these claims.

(504)

The GOC previous comments on public body in recital (474) of this Regulation and the comments above in recital (502) of this Regulation as well as their rebuttals also apply to LFP suppliers acting as private bodies entrusted or directed by the GOC.

(505)

In the absence of further comments, the conclusions drawn in recitals (822) to (840) of the provisional Regulation were confirmed.

(506)

In the absence of comments concerning benefit, the findings drawn in recitals (841) to (855) of the provisional Regulation were confirmed.

(507)

Following provisional disclosure, the Geely Group alleged that the provision of batteries is not specific to BEV manufacturers, arguing that there is no limitation to whom the batteries could be sold to, as they remain available for purchase across industries and markets, and that the Commission did not examine whether the subsidy scheme is based on objective criteria or conditions in the sense of Article 4(2)(b) of the basic Regulation. Lastly, the Geely Group submitted that production of batteries is not exclusively or primarily targeted at the NEV/BEV industry.

(508)

The Commission first recalled that the GOC’s set of measures were directed to benefit only certain industries, including the domestic BEV industry. Indeed, even though the distortions on batteries also benefit products other than BEVs, the benefit is explicitly limited as it is available only to certain industries in China, being only those in the battery value chain. The measures are, therefore, specific under Article 4(2)(a) of the basic Regulation. Moreover, the Geely Group did not indicate any elements nor provide any evidence showing that the conditions under Article 4(2)(b) of the basic Regulation and Article 2.1(a) of the SCM Agreement would be met in the case at hand. As the set of measures by the GOC fulfilled the requirements of Article 4(2)(a) of the basic Regulation, the claims were rejected.

(509)

Following definitive disclosure, the Geely Group submitted that the Commission’s analysis was contradictory and lacked sufficient evidence, since (a) the Commission did not have access to the complete set of information on the membership of companies in the CBIA and the CIAPS; and (b) in establishing de jure specificity, the Commission did not provide a reasoned and adequate explanation of its findings, and that in its conclusions, the Commission explicitly recognized that the battery supply distortions also benefit the BEV producers, and did not contest that the batteries remain available for purchase across various industries and markets. For the above reasons, the Geely group submits that the Commission could have not properly concluded that the provision of batteries is de jure specific, and there is no evidence demonstrating that the granting authority, or the legislation pursuant to which the granting authority operates, explicitly limits access to a subsidy as suggested by the Commission.

(510)

Concerning the first claim put forward by the Geely Group, the Commission highlighted that as acknowledged in recital (485) of this Regulation, during the verification visit at the GOC, the Commission requested a list of all members of the CBIA, which the GOC refused to provide. In the absence of information provided by the GOC as well as of official public data covering the full list of members of the CBIA and the CIAPS, the Commission drew inferences that even more battery suppliers could be members of these associations. Moreover, the Commission performed a detailed analysis of companies’ participation in the industry associations, despite the lack of cooperation from the GOC and the lack of transparency from the industry associations; as explained in recital (767) of the provisional Regulation, the Commission was able to ascertain companies’ participation in the CBIA, CIAPS, and other industry associations by looking at their annual reports and other information available online, such as the list of members of their executive bodies. With regard to the second claim raised by the Geely Group, the Commission already addressed it in recital (508) of this Regulation. Therefore, both claims were rejected.

(511)

In the absence of further comments, the findings made in recitals (856) to (857) of the provisional Regulation were confirmed.

(512)

Following provisional disclosure the GOC submitted that the benchmark should not exclude Chinese market prices, based on the fact that:

(513)

Regarding the claim by GOC and Geely, whose comments are summarized below in recital (515) of this Regulation, that the benchmark used should relate to the prevailing market conditions for the goods in question in the country of provision, the Commission noted that, in its analysis of public body and entrustment and direction, it took into account the relevant sectoral policies, especially on prices, in Section 3.7.2.1.1 of the provisional Regulation, and in particular under point (3)(b). Furthermore, additional research supporting the evidence of government price control is covered in recitals (541) to (542) of this Regulation. In light of the findings in Section 3.7.2.1 and recitals (846) and (918) of the provisional Regulation the Commission established that the applicable sectoral policies in place in China distort the prices of batteries on the entire domestic market. As a result, the Commission established that the terms and conditions prevailing in China could not be adjusted, on the basis of actual costs, prices and other factors available in that country, by an appropriate amount which reflects normal market terms and conditions. Hence, the Commission had to resort to world market benchmark prices, pursuant to Article 6(d)(ii) of the basic Regulation.

(514)

Moreover, contrary to what the GOC claimed in its second point, the NMC battery price was not used for LFP battery price. As explained in recitals (847) and (859) of the provisional Regulation, the BMI data allowed the calculation of benchmarks for the investigation period per chemistry, namely LFP and NMC. Even more, as noted in the same recital, in terms of chemistries, the weight of the different sub-chemistries of NMC batteries (111, 523, 622, 811) was also taken into account. Second, as explained in recitals (843) to (855) of the provisional Regulation, Chinese domestic prices were considered distorted by the Commission, pursuant to Article 6(d)(ii) of the basic Regulation. In any event, the Chinese average prices reported in BMI are sourced from the Chinese market players. For this reason, as explained in recital (859) of the provisional Regulation, Chinese average prices were excluded from the benchmark price in BMI. Consequently, the BMI benchmark used reflected worldwide average prices per kw/h of cells for LPF and NMC respectively. If the Commission would rely on benchmarks including (also) Chinese prices affected by the distortions due to the GOC intervention, these benchmarks would by definition not be appropriate to calculate the benefit. Finally, the GOC did not provide any evidence, on how China battery purchase quantity and conditions may be different from the one reported in BMI. Consequently, the claim was rejected.

(515)

The Geely Group submitted that:

(516)

Concerning the other claims raised by Geely, the Commission highlighted that:

(517)

On the claims raised on the adjustments, first, as noted in recitals (858) and (859) of the provisional Regulation and Geely Group’s specific disclosure, the Commission analysed the information on file relating to transfer price in order to determine whether battery purchase transactions could be considered as made at arm’s length. However, the information on file i.e. submitted price agreements and contracts by Geely group did not include any information in this regard, that could have shown the prices charged by the related suppliers to Geely Group and other independent customers. Thus, the Commission was not in a position to determine that the prices paid to related suppliers were at arm’s length or to use such prices. As a result, the Commission replaced those related prices with the price paid per kw/h for similar battery type to unrelated suppliers. Although the Geely Group asserted that it provided a contract example for the purchase of batteries between related Geely entities that referenced the market price of raw materials, such contract did not show that the prices paid between these related entities for the acquisition of batteries were at arm’s length, nor did it include any independent valuations of these market prices.

(518)

Second, in relation to the purchases by Geely Group from related supplier CATL, given the existence of joint ventures between the Geely Group and CATL, these two companies were considered related in the framework of this proceeding, therefore purchases made by Geely from this supplier were considered transactions between related parties.

(519)

Third, the assertion that the Commission merely substituted the prices for related suppliers with the price per kilowatt-hour (kW/h) paid to unrelated suppliers is inaccurate. As per recital (859) of the provisional Regulation, the prices between related parties within the Geely Group were replaced with the price paid per kW/h for comparable products from unrelated suppliers. This means that the price paid by a specific Geely entity to its own unrelated supplier was utilized for the appropriate battery chemistry (LFP and NMC) and battery type (cell, module, or pack). In instances where the same Geely entity did not procure from any unrelated supplier, as stated in recital (859) of the provisional Regulation, the weighted average price per kW/h for similar products at the Geely Group level was used. This approach was consistently applied on a kW/h basis, taking into account both the battery chemistry (LFP and NMC) and the battery type (cell, module, or pack).

(520)

Fourth, the Commission did not limit itself to using an average benchmark price across all battery types. When the Geely Group reported battery purchases with varying kW/h capacities (e.g., 143/120/88 kW/h), the Commission considered the highest capacity, which was the most conservative approach. Furthermore, neither the different sub-chemistries of NMC batteries (111, 523, 622, 811) nor the battery forms (e.g., pouch) were systematically reported by the Geely Group companies, nor were such details provided in the provisional comments. Consequently, the Commission could not apply these specificities to the Geely Group. In any case, the assertion that NMC batteries (type NCM111) and pouch batteries are not used in Geely Group’s BEVs destined for the EU and should have been excluded from the calculations is irrelevant. As the provision of batteries at less than adequate remuneration benefited the entire production of BEVs and not only exports to the Union, the benefit calculated for the purchase of batteries is expressed on the BEVs produced by the group, regardless of their destination, in accordance with Article 7(2) of the basic Regulation.

(521)

Fifth, regarding the claim that some of the batteries have not been used in the production of BEVs or not in BEVs for export to the Union, hence should have been excluded, the Commission noted that the sampled exporting producers were instructed to report all of their battery purchases for the production of BEVs. Specifically, in addition to detailing each purchase transaction, the exporters were required to indicate the BEV model for which each battery was utilized. Consequently, all battery purchase transactions were considered, and the benefit calculated was expressed based on the total number of BEVs produced, irrespective of their destination. The SAIC Group submitted that in line with Article 28(3) of the basic Regulation, the information concerning battery purchases that it submitted in summary form should not have been disregarded by the Commission, which instead relied on information provided by another exporting producer as facts available.

(522)

As mentioned in recital (348) of the provisional Regulation, the Commission considered that the SAIC Group deliberately withheld information that was readily available and therefore caused undue difficulties for the Commission to arrive at a reasonably accurate finding. Furthermore, as noted in recital (349), the Commission had concluded that the accuracy of the limited information provided by the SAIC Group with regard to value or quantity could not be verified. For these reasons, and in accordance with Article 28(3), the Commission could not rely on the information provided by the SAIC Group. This claim was therefore rejected.

(523)

The SAIC Group also claimed that the conclusions asserted at recital (700) of the provisional Regulation had not been properly justified as the Commission did not explain the reasons why it was reasonable to use the information of another exporting producer group regarding battery purchases. More specifically, it referred to recital (811) of the provisional Regulation where the Commission concluded that the information relating to the Geely Group ‘was not considered by itself sufficient to draw meaningful conclusions with regard to the effect of governmental control over power battery industry association on battery prices charged to BEV producers’. As a result, the SAIC Group considered that this subsidy scheme resulted in the highest subsidy margin calculated for a single subsidy scheme for the SAIC Group having severe potential financial consequences.

(524)

As mentioned in recital (318) of the provisional Regulation, the SAIC Group provided only partial information relating to its purchases of batteries, whose accuracy both in terms of value and quantity could not be verified by the Commission. Consequently, the Commission informed the SAIC Group of its intention to apply facts available within the meaning of Article 28 of the basic Regulation and invited the SAIC Group to provide comments. The Comments submitted by the SAIC Group were not of a nature to change the Commission’s assessment so that the Commission had to resort to facts available.

(525)

In this regard, the Commission used information that was available on the file; i.e. information from another non-integrated group of exporting producers that purchased similar batteries and manufactured similar BEV models. This was the only non-integrated sampled group that purchased batteries and that had significant domestic and export BEV sales in the investigation period. The fact that the information relating to the Geely group with regard to the effect of governmental control over power battery industry association on battery prices charged to BEV producers was not considered by itself sufficient does not disqualify the use of the information on the Geely group’s battery purchases in terms of prices and corresponding benefit calculation as being relevant facts available on file. In particular, recital (811) of the provisional Regulation concerns the different issue of establishing the effect of government control over prices of batteries. The only conclusion in that recital was that in view of the lower market share and volume of battery sales of the Geely Group it was not possible to establish such control on that basis only. This recital did not deal with the reliability of battery prices of the Geely Group, let alone concluding that such battery prices were not representative of the Chinese domestic market prices of batteries. As a matter of fact, these battery prices from the Geely group were the most appropriate benchmark on file given the level of integration of the group and the types of batteries involved, in accordance with Article 28 of the basic Regulation. Furthermore, as mentioned in recital (860) of the provisional Regulation and to mirror the situation of the SAIC Group, the Commission excluded certain batteries destined to BEV models that were not similar to those sold by the SAIC Group from the calculation of the benefit.

(526)

In addition, the SAIC Group was made aware, at the beginning of the investigation and in the course of the exchanges regarding the possible application of facts available, that, following the application of facts available, the result of the investigation may be less favourable to the party than if it had cooperated. In any case, the SAIC Group did not propose any alternative source of information in this regard. On this basis, this claim was rejected. Based on the above and on the provisions contained in recitals (700) and (860) of the provisional measures, the Commission considered that the information concerning the Geely Group amounted to a reasonable replacement of the necessary information in order to make findings for the SAIC Group and it had explained the reasons why it was reasonable to use the information of another exporting producer group regarding battery purchases.

(527)

In its comments following the publication of the provisional Regulation, Tesla (Shanghai) argued that no benefit existed concerning the provision of batteries and their key inputs, due to specific procurement situation which for confidentiality reasons could not be disclosed in the Regulation. For the reasons explained in a specific disclosure to this exporting producer, the claim was rejected.

(528)

Following definitive disclosure, Tesla Shanghai submitted comments on the allocation of the benefit for batteries. These comments were partially accepted and addressed in a company-specific disclosure.

(529)

Several cooperating exporting producers made claims concerning the subsidy amount based on the BMI data used by the Commission, including the methodological choice and the existence of clerical errors. Further to these claims, the Commission analysed the relevant data available in BMI more closely, as well as the methodology used to determine the appropriate benchmark to quantify the subsidy amount arising from this programme.

(530)

In particular, the Commission found that, according to BMI data, during the IP, Chinese local demand for battery cells was much lower than the Chinese production on the market. In fact, China’s surplus amounted to 43 % during the IP. Such Chinese excess supply of Chinese batteries was the result of the specific policies and GOC interventions as detailed at Section 3.7.2.1 of the provisional Regulation, resulting in overproduction and the need to export at low prices to allocate such an overproduction in other markets covering the deficits in that input. In fact, a more detailed analysis of the datasets available in BMI, namely the supply and demand data of battery cells in different geographical areas, showed that during the IP there was a deficit of around 300 % in Europe and of around 200 % in North America (i.e. in those markets the demand for battery cells was much higher than the actual domestic supply). This deficit was filled by Chinese exports (85) of part of their surplus production which was even greater than the deficit of all geographical areas. From a detailed analysis of the BMI supply and demand data in the different geographical areas, it appears that the Asia-Pacific market (excluding Chinese data) (APAC (ex China) data) had the smallest deficit, i.e. 9 % during the IP. Furthermore, the data in that market showed a surplus of 24 % in 2022 and a deficit of 21 % in 2023. The analysis further showed that the prices in the other regions where there was significant presence of Chinese exports were much lower than in APAC (ex China) region. This suggests that the higher the percentage and presence of Chinese market battery surplus batteries in the regional markets, the lower the prices of the corresponding datasets for such markets in the IP.

(531)

Therefore, the Commission found it appropriate to use the data from the APAC (ex China) market as opposed to data from all markets, which is tainted by the Chinese subsidised exports. In particular, in view of the lack of cooperation by the GOC and the Chinese battery producers and absent other reliable information, the Commission used the BMI prices in the APAC (ex China) region. The benchmark used contained the actual prices for the last quarter of 2022 given the surplus observed in that year. In contrast, bearing in mind that in 2023 the market conditions showed a deficit in that market, for the first three quarters of 2023, the benchmark prices in the BMI were adjusted by the price difference between the APAC (ex China) region and China for the last quarter of 2022 amounting to 12 % on average.

(532)

Moreover, the Commission indicated at recital (813) of the provisional Regulation that the benchmark used at provisional stage was calculated on a conservative basis because BMI prices were quoted on an ‘ex works’ basis and thus did not include transport costs. This finding is confirmed on a country wide basis, where evidence on file shows that most of the purchased batteries are made on an ex-work basis. However, where applicable, the Commission added the actual shipping costs borne by the exporting producers that purchased batteries on the basis of delivery terms other than ex works.

(533)

Following re-disclosure, Tesla Shanghai disagreed with the rationale behind the revised BMI benchmark data. In particular, Tesla disagreed with the Commissions conclusion, namely, the higher the percentage and presence of Chinese market battery surplus batteries in the regional markets, the lower the prices of the corresponding datasets for such markets in the IP, claiming that the BMI price and demand data does not confirm this assumption.

(534)

The Commission however re-confirmed its conclusion based on the BMI data. In the investigation period, the deficit for batteries in Europe and North America was around 200 % – 300 %, and the average price of the NMC battery in these regions was around 130 – 134 USD/kWh. Conversely, the deficit for batteries in the APAC (ex-China) region was only around 9 %, and the average price was higher than that in Europe and North America. The company misinterpreted the rationale of the Commission by asserting that ‘the data contradicts that the price differential between regional prices and China prices would be smaller whenever there is a deficit’. The Commission’s determination to utilize data from the APAC (excluding China) market, rather than data from all markets – which is compromised by Chinese subsidized exports – was not predicated on the price differential between Chinese prices and those of other regions. Furthermore, the price differential between the Chinese market and the European or North American markets during all available periods is deemed unreliable, as it has been significantly affected by substantial deficits in battery supply and the resultant increased presence of Chinese exports.

(535)

Tesla Shanghai also disagreed with the Commissions adjustment of the prices in APAC (ex-China) region during the first three quarters of 2023 (the Commission considered these prices were already affected by the market conditions, that showed a deficit in that market during this period). The company claimed that the adjustment should have been applied upward on the battery prices in China.

(536)

The Commission disagreed with such suggestion, as throughout its analysis in this investigation, it consistently affirmed that Chinese battery prices were substantially subsidized and, consequently, could not serve as a reliable foundation for such an adjustment.

(537)

The Commission identified the actual price of the battery in the APAC (excluding China) region, during the final quarter of 2022 as the most reliable benchmark upon, which the adjustment was based, given the surplus observed in this region in 2022. The arguments of the company were therefore dismissed.

(538)

The subsidy rate established with regard to this subsidy during the investigation period for the sampled exporting producers and for the company that received individual examination amounts to:

Provision of batteries for less than adequate remuneration

(539)

As explained in recital (470) of this Regulation, the comments submitted by the GOC on input suppliers acting as ‘public bodies’ pertained to both battery and LFP producers. The Commission addressed these comments in recitals (471) and (472), (480), and (482) to (484) of this Regulation.

(540)

Following provisional disclosure, the BYD Group submitted that the analysis on LFP suppliers lacked factual evidence, and that no document showed that the suppliers of LFP sold the products to the BYD Group for realizing the policy objectives. The BYD Group re-submitted the purchase ledger for LFP as support evidence. The BYD Group added that the investigation did not show that associations direct their members to adopt their economic decisions for the benefit of the BEV industry. According to the BYD Group, the Commission failed to present evidence that the State has specifically ‘vested power’ in the association. Based on this, the BYD Group argued that there is thus no well-established evidence to conclude that LFP suppliers act as ‘public bodies’ and their supplies of goods fall under the umbrella of goods at LTAR, and there is thus no ground to not accept in-country prices.

(541)

As noted in recital (864) of the provisional Regulation, the Chinese market has been deemed distorted due to the national and sector-specific policies in place and related measures, particularly those pertaining to pricing structures. Consequently, all LFP acquisitions by the BYD Group during the investigation period are regarded as impacted. This assessment arises from the understanding that all suppliers operate domestically according to the policies and other forms of GOC interference, within the same distorted market conditions. Therefore, the prevailing market conditions in China were deemed distorted, and the application of Article 6(d)(ii) was warranted. Moreover, the Commission recalls that, due to the non-cooperation from the GOC (Section 3.3.1.2 of the provisional Regulation), the Commission did not receive any information on the characteristics of the Chinese domestic market of inputs and had thus to resort to facts available. Moreover, the price differences between the BYD LFP suppliers have no bearing on the assessment of the Commission; as it was already acknowledged in recital (891) of the provisional Regulation, the LFP prices supplied to the BYD Group followed completely different trends than the Chinese export prices during the investigation period (recital (920) of the provisional Regulation). Therefore, the claim was rejected.

(542)

As already covered in point (a)(3)(b) of Section 3.7.2.1.1 and recitals (744) to (757) of the provisional Regulation, the Commission found that the provision of batteries and their inputs is regulated by the GOC with the goal to lower prices for the benefit of the BEV industry. Additional evidence of price controls mandated by the GOC on the battery inputs is available in the ‘MIIT Work plan for stabilizing growth in the nonferrous metals industry’ (86) published in September 2023. In fact, one of the main goals is to ‘strengthen the supply and price stability of key products’ through ‘build[ing] an upstream and downstream supply and demand docking platform, guid[ing] non-ferrous metal resource development and smelting enterprises to sign long-term procurement agreements with downstream users, and stabilize the supply of key products such as copper, aluminium, and lithium [and] improv[ing] the “red, yellow, and blue” early warning mechanism for the supply of bulk raw materials, strengthen expectation guidance, and prevent large price fluctuations and malicious speculation […] support[ing] key enterprises to carry out commercial reserves, and scientifically and orderly regulate the relationship between market supply and demand’ (87). Cooperation between upstream and downstream actors to stabilize supply and demand, supervision of supply and price control fluctuations are all instruction already contained in previous plans, such as the 2017 Battery Action Plan and the Notice on the battery industry (see recitals (746) to (750) of the provisional Regulation). This not only confirms that the GOC has exercised its control over prices already since 2017, but also that these efforts continue to be sustained throughout the investigation period and beyond.

(543)

In addition to the central plans confirming pricing controls exercised and mandated by the GOC already covered in point (2) of Section 3.7.2.1.1, and in particular recital (751) of the provisional Regulation, the Commission found additional evidence of industry associations formulating industrial policies and undertaking government tasks such as stabilizing supply and demand expectations and control price fluctuations. This is exemplified by the latest statements of Ge Honglin, the Party Secretary and Chairman of China Nonferrous Metals Industry Association (‘CNMIA’) (88). As already covered by recital (94) of Implementing Regulation (EU) 2023/1618, the CNMIA is an industry association where the CCP intervenes into operational decision making. In this ‘social organization’, like in several industry associations, the party building organisations are embedded within its structure (89) (as covered by recital (779) of the provisional Regulation). The CNMIA has ‘thoroughly implemented the decisions and deployments of the CCP Central Committee and the State Council, and cooperated with relevant departments to formulate and publicize and interpret industrial policies such as the “Guidelines for Industrial Structure Adjustment”, “Work plan for stabilizing growth in the nonferrous metals industry”, and “Mining Rights Transfer Income Collection Methods”; […] in response to the ups and downs in the prices of strategic metal varieties such as lithium and silicon, assisted government departments in strengthening communication with upstream and downstream enterprises and striving to stabilize market expectations; […] signed strategic cooperation agreements with more than ten local governments such as Anhui, Jiangxi, Gansu, and Guangxi, effectively promoting the rational layout of regional industries and regional coordinated development, and strongly supporting the transformation and upgrading of local industries’. [emphasis added]

(544)

Following definitive disclosure, the GOC submitted that the statement of the CNMIA that the Commission relied on in recital (543) of this Regulation is irrelevant, as it relates to a completely different association, and is in any case inconsistent with evidence on record. In addition, the GOC argued that Commission did not respond to the comments on the raw material suppliers as public bodies through their participation in the industrial associations. The GOC reiterated that the participation of these suppliers in the industry associations does not make them public bodies, and that the Commission has not explained how these associations control and intervene in price setting.

(545)

The Commission recalled that the quote from the CNMIA was used to support of the Commission’s findings that industry associations are not independent bodies free from State control, and thus relevant for this investigation. With regard to the allegations from the GOC that the Commission did not respond to its comment on public bodies, the Commission had already explained in recital (539) of this Regulation, that the comments submitted by the GOC on input suppliers acting as ‘public bodies’ pertained to both battery and LFP producers. The Commission addressed these comments in recitals (471) and (472), (480), and (482) to (484), of this Regulation. Therefore, the claims were considered moot.

(546)

Following definitive disclosure, the BYD Group resubmitted its comments stating that the Commission analysis lacked factual evidence to demonstrate that commercial operations of LFP suppliers and their market behaviours were structured and developed for materializing the policy objectives of the GOC, adding that being a member of an industrial association or having a party organisation within a company does not mean that LFP suppliers would have lost their independent decision-making abilities, corporate powers, and general financial authority, which are all granted by the applicable Chinese laws. Moreover, the BYD Group stressed that the fact that the prices of LFP supplied to the BYD Group followed completely different trends as compared to export prices is irrelevant, as different markets have different prices. Lastly, the BYD Group argued that the fact that LFP prices varied based on the supplier indicated that price-setting works in function of market demand and supply and has no bearing with GOC policy objectives.

(547)

The Commission already addressed part of these comments at definitive disclosure in recitals (541) to (543) of this Regulation. Concerning the allegations on the independent decision-making of LFP suppliers, this is refuted by the evidence contained in the provisional Regulation (recitals (779), (786), (787), (877)), while the trends in LFP domestic vs. export prices has been addressed in recitals (905) and (920) of the provisional Regulation, which confirms that LFP suppliers are not acting as free market operators in the Chinese domestic market and are not taking economically rational decision. Therefore, the Commission rejected these claims.

(548)

Following provisional disclosure, the Commission found additional evidence of Hunan Yuneng New Energy Materials Co., Ltd. and its subsidiaries implementing national policies and acting as public bodies, as covered in Section 3.7.2.2.1(a) of the provisional Regulation. First, recent statements by the Xiangtan Municipal People’s Government (90) confirm that Hunan Yuneng New Energy Materials is considered not only managed as a partially state-owned enterprise (see recital (881) of the provisional Regulation), but also as an enterprise carrying forward the development of Xiangtan and, ultimately, the State. Under the section focused on ‘[o]ptimization and integration of state-owned enterprise platforms’, the Xiangtan Government strives to ‘[i]ntegrate the Industrial Investment Group and the Electrochemical Group to form the Electrochemical Industrial Investment Group, actively build a first-class market-oriented enterprise holding two listed companies, and strive to become a leader in China’s new energy battery materials. In February [2023], Hunan Yuneng New Energy Company, in which the Electrochemical Group invested and held a stake, was successfully listed on the Shenzhen Stock Exchange’s Growth Enterprise Market’ (91). Xiangtan Electrochemical is a municipal state-owned enterprise under the management of the SASAC of Xiangtan. Moreover, the development of Hunan Yuneng and its state-owned shareholder, the Xiangtan Electrochemical Group, are linked with Xiangtan Government’s goals to build a group of enterprises with an operating income of 10-billion, through ‘implement[ing] “one enterprise, one policy”, and focus on supporting Hunan Yuneng New Energy Battery Materials Co., Ltd. Company, Harbin Electric Wind Energy Co., Ltd. and other enterprises to reach the 10 billion level [of operating income]’ and to ‘support […] Xiangtan Electrochemical Group Co., Ltd. and other leading enterprises in the industry to expand related businesses and broaden their business scope, [and] integrate upstream and downstream resources through mergers, acquisitions and reorganization’ (92).

(549)

In Kunming province, where Yunnan Yuneng New Energy Materials Co., Ltd, a subsidiary of Hunan Yuneng, is located, the Anning City government negotiated with Yunnan Yuneng for the establishment of an investment project of over 1 billion CNY. According to Anning City government, the management of the city ‘combines party building with industrial development, focusing on promoting party members and cadres to fulfill their responsibilities, and fully serving enterprises and projects’ (93). In particular, the Yunnan Yuneng New Energy Battery Materials project is considered to be ‘a vivid manifestation of the self-breakthroughs of party organizations at all levels and the majority of party members and cadres’ (94) [emphasis added]. The deep links between party building committee at the central and local levels and enterprises, is confirmed by the evidence that ‘[t]he Party Working Committee of Anning Industrial Park guided Yunnan Yuneng to establish a party branch. […] In May [2023], the company’s party branch also joined the park’s new energy battery material industry chain party committee. Through exchanges on the party building platform, it reached a hydrogen peroxide procurement cooperation with Yunnan Yuntian Petrochemical Co., Ltd., an enterprise located in the park, to solve the past problem of high cost of purchasing hydrogen peroxide from outside the province’ (95). Party building thus plays a pivotal role in the development of enterprises and thus advance development of national policies mandated by the GOC. An example of such is provided by the Kunming government, which reports that the party building committees in Anning Industrial Park helped establish purchase agreements between companies located in the park, and financial service agreements between banks and companies, ‘tied by the “red line” of party building in Anning Industrial Park’ (96). The role of party building on private entities has been extensively covered in recital (787) of the provisional Regulation, and the evidence above confirms that the CCP exerts influence over all types of companies in China, and that it can use party building work units within businesses and in local governments to exert its influence. As already covered in recital (885) of the provisional Regulation, the development of Anning Industrial Park in also meant at achieving the goals contained in the Yunnan Action Plan. The findings above thus confirm that one of the biggest market players in China for LFP, Hunan Yuneng New Energy Materials, is a state-owned enterprise whose development is deeply linked with the achievement of local and national goals (recital (548)), and it further adds to the body of evidence that LFP suppliers abide to and implement the GOC’s policy objectives and thus perform governmental functions.

(550)

Following definitive disclosure, the GOC submitted that the evidence covered above in recitals (548) and (549) of this Regulation does not support the conclusions of the Commission, as:

(551)

The Commission disagreed with these claims. The formation of the Electrochemical Industrial Investment Group is meant to ‘actively build a first-class market-oriented enterprise holding two listed companies’. The Commission recalls that, not only the Electrochemical Group invested in Hunan Yuneng New Energy Materials, but the latter company was also listed on the Shenzhen Stock Exchange in February 2023, and that the development of Hunan Yuneng New Energy Materials serves Xiangtan Government’s goals to build a group of enterprises with an operating income of 10-billion, while the evidence on file concerning Yunnan Yuneng New Energy Materials Co. explicitly links the company achievements with party organization achievements. Therefore, these claims were rejected.

(552)

In the absence of further comments and in view of the additional findings by the Commission, the conclusions drawn in recitals (861) to (912) of the provisional Regulation were confirmed.

(553)

As explained in recital (496) of this Regulation, the comments submitted by the GOC on entrustment and direction pertained to both battery and LFP producers. The Commission addressed these comments in recital (498) of this Regulation.

(554)

Following definitive disclosure, the BYD Group argued that the fact that during the investigation period purchase prices varied among LFP suppliers contradicts the Commission findings on entrustment and direction, as it must be shown by the Commission that price setting is a response to the policy goals set by the GOC.

(555)

The Commission pointed out that claims on price control had already been addressed in recitals (541) and (542) of this Regulation. A price variation is irrelevant if those prices are below market terms and such a level is the result of the GOC’s intervention on the market. Therefore, these claims were rejected.

(556)

Following provisional disclosure, the BYD Group argued that the Commission calculated the benefit twice for some inter-company purchases of battery packs. The claim was accepted, and the calculations were revised accordingly.

(557)

The GOC submitted that the use of China’s export FOB price as the external benchmark does not ensure that the resulting benchmark related or refers to, or is connected with, prevailing market conditions in the country of provision, and that it consequently overestimates the normal domestic market price, given that the global production of LFP is concentrated in China, the quantity of LFP exported from China is limited, and such exports are not necessarily for the production of power batteries.

(558)

In light of the findings in Section 3.7.2.1 and recitals (846) and (918) of the provisional Regulation the Commission established that the applicable sectoral policies in place in China distort the prices of both batteries and LFP on the entire domestic market. As a result, the Commission established that the terms and conditions prevailing in China could not be adjusted, on the basis of actual costs, prices and other factors available in that country, by an appropriate amount which reflects normal market terms and conditions. As recalled in recital (924) of the provisional Regulation, given the existing dominant conditions on this specific type of lithium, and the lack of any other reasonable benchmark, the Commission had to resort to Chinese export prices to the rest of the world.

(559)

The GOC comments on the external benchmarks covered in recital (512) of this Regulation covered both battery and LFP suppliers. The Commission addressed these claims in recital (513) of this Regulation.

(560)

In the absence of further comments, the conclusions drawn in recitals (913) to (929) of the provisional Regulation regarding benefit, specificity and calculation of the subsidy amount were confirmed.

(561)

The subsidy rate established with regard to this subsidy during the investigation period for the sampled exporting producers amounts to:

Provision of lithium for the production of batteries for less than adequate remuneration

(562)

In the absence of comments, the Commission confirmed its findings with regard to the legal basis, financial contribution and benefit of this programme as provided for in recitals (931) to (940) of the provisional Regulation.

(563)

Following provisional disclosure, the GOC argued that the EIT reduction for High and New Technology Enterprises and the preferential pre-tax deduction of research and development expenses programs are not limited to a sufficiently discrete segment of the Chinese economy in order to qualify as ‘specific’ within the meaning of Article 2.1(a) of the SCM Agreement. In this regard, it referred to the fact that not all BEV producers benefited from the alleged tax reduction for high and new technology enterprises (HNTEs).

(564)

The GOC also argued that the Commission had failed to establish specificity in an objective manner based on factual evidence, as the legal basis on which it relied for one exporting producer was unclear; i.e. the Commission did not indicate whether the benefit stemmed from a regional subsidy within the meaning of Article 2.2 of the SCM Agreement and Article 4(3) of the basic Regulation due to the location of this exporter or from Article 4(2)(a) as mentioned in the provisional Regulation due to its status as HNTE.

(565)

The GOC also argued that this alleged subsidy program was not specific as the legislation pursuant to which the granting authority operates, establishes objective criteria or conditions governing eligibility, and the amount of the tax reduction, and that eligibility is automatic and that the qualification criteria and conditions are strictly adhered to. More specifically, the GOC argued that the lower tax rate is available to all enterprises which meet the conditions and does not favour certain enterprises over others because companies from all sectors, covering the entire economy are eligible to obtain a HNTE certificate.

(566)

In the same vein, the GOC argued that the Commission had relied on de jure specificity by analysing the ‘legislation pursuant to which the granting authority operates’ without assessing the eligibility conditions of the subsidy and whether the limitation on access to the subsidy to certain enterprises is express, unambiguous or clear from the relevant legal instrument or statements of the granting authority (97). The GOC also argued that the Commission had singularly focused on BEV producers that supposedly benefited from the alleged preferential tax treatment without investigating, ‘all enterprises or industries eligible to receive that same subsidy’ (98).

(567)

The Commission disagreed with these claims as it considered the tax schemes described in Sections 3.8.1 to 3.8.2 of the provisional Regulation specific under Article 4(2)(a) of the basic Regulation, which provides that ‘where the granting authority, or the legislation pursuant to which the granting authority operates, explicitly limits access to a subsidy to certain enterprises, such subsidy shall be specific’. Indeed, the subsidy schemes at issue have their legal basis in Chapter IV ‘Tax Preferences’ of the EIT. By its name and content, this chapter explicitly provides for specific preferential treatment which ‘explicitly limits access to a subsidy to certain enterprises’. More specifically, as indicated in recital (934) of the provisional Regulation, Article 93 of the Implementation Rules for the Enterprise Income Tax Law clarifies that ‘The important high and new technology enterprises to be supported by the state [shall satisfy certain] conditions’, such as ‘1. Complying with the scope of the Key State Supported High and New Technology Areas’. As is clear from the above, all enterprises or industries are not eligible to benefit from the same preferential tax treatments. Consequently, the subsidies provided under these tax schemes were considered specific under Article 4(2)(a) of the basic Regulation.

(568)

In addition, as mentioned in recital (942) of the provisional Regulation, certain companies benefitted from a reduced income tax rate on the basis of criteria related to their physical location, in particular if an enterprise is located in the Western region. In such case, the Commission considered that the tax scheme was specific under Article 4(3) of the basic Regulation as it was limited to certain enterprises located within a designated geographical region. Consequently, the subsidies provided under these tax schemes were considered specific under Article 4(3) of the basic Regulation.

(569)

As far as the reference to certain companies that did not benefit from the reduced income tax rate is concerned, the Commission considered that certain conditions needed to be fulfilled in order to be eligible for the HNTE certificate. The fact that certain BEV producers did not fulfil all conditions or did not request the HNTE certificate does not show that this scheme is non-specific.

(570)

Following definitive disclosure, the GOC also claimed that the Commission had not addressed the GOC’s argument that the income tax reduction for HNTEs is not limited to a sufficiently discrete segment of the Chinese economy in order to qualify as ‘specific’ within the meaning of Article 2.1(a) of the SCM Agreement.

(571)

The Commission highlighted that it addressed the same comment on specificity in recitals (567) and (568) of this Regulation.

(572)

In the absence of further comments regarding the specificity, the Commission confirmed its findings in recitals (941) to (943) of the provisional Regulation.

(573)

Following the definitive disclosure, the SAIC Group argued that a subsidy rate had been unduly reported for this subsidy scheme. This claim was accepted.

(574)

In the absence of other comments, the Commission confirmed its findings with regard to the calculation of the subsidy amount for this programme as provided for in recitals (944) and (945) of the provisional Regulation.

(575)

The subsidy rate established with regard to this subsidy during the investigation period for the sampled exporting producers amounts to:

Enterprise Income Tax (‘EIT’) reduction for High and New Technology Enterprises

(576)

In the absence of comments, the Commission confirmed its findings with regard to legal basis as provided for in recital (949) of the provisional Regulation.

(577)

Following provisional disclosure, the SAIC Group indicated that it rejected the Commission’s assumption that all research and development projects and the related tax exemptions relating to one of its entities concerned only the PUI. The SAIC Group claimed that no information or explanation was given with regard to the application of Article 28 and how the calculation of the subsidy amount was subsequently calculated with respect to the SAIC Group itself.

(578)

The SAIC Group argued that the entity at stake submitted a R & D expenses and company tax agent report as an exhibit during the verification visit and that the tax agent report did not mention that the R & D expenses incurred were specific to the product under investigation. The SAIC group recalled that the share of ICE vehicles in the turnover of this entity should have been reflected in the calculation of the subsidy margin.

(579)

The Commission disagreed with the SAIC Group’s claim and noted that the company at stake had only provided part of the requested information, although readily available. Hence, it did not provide a complete copy of the requested tax agent report containing information relating to the R & D expenses and projects to which the deduction referred. More specifically, the SAIC Group refused to provide the requested information as noted in the jointly signed list of documents that were not provided in the course of the verification visit.

(580)

Also, contrary to the SAIC Group’s claim, the Commission provided the necessary explanation in the specific pre-disclosure documents, explaining that, in the absence of verified information pointing to the fact that the R & D expenses and projects related to other products and did not relate to the product under investigation, it had allocated the benefit on the BEV turnover. Consequently, the Commission considered that it had provided sufficient information regarding the underlying reasons on why and how it had applied facts available. The claim was therefore rejected and the findings as presented in recital (950) of the provisional Regulation are hereby confirmed.

(581)

In the absence of comments, the Commission confirmed its findings with regard to benefit as provided for in recital (951) of the provisional Regulation.

(582)

Following provisional disclosure the BYD Group contested the Commission finding in recital (952) of the provisional Regulation that the tax offset for R & D constitutes a preferential tax treatment based on the fact that the legislation itself limits the application of this measure only to enterprises that incur R & D expenses in certain high technology priority areas determined by the State, such as the BEV sector. The BYD Group argued that in the case of R & D expenses incurred by an enterprise when it conducts R & D activities, an extra 100 % of the amount of R & D expenses actually incurred shall be deducted before tax payment, and that all legal person enterprises within China can benefit from the offset.

(583)

Following definitive disclosure, the BYD Group and the GOC reiterated that the income tax reduction for preferential pre-tax deduction for R & D expenses schemes are not specific within the meaning of Article 2.1(b) of the SCM Agreement as the eligibility criteria for the income tax reduction for HNTEs are based on objective criteria which are automatic and strictly adhered to so that the limitations spelled out in Chapter IV of the EIT are non-specific. Both parties also argued that, in the light of Article 30 of the EIT, Article 95 of Implementing Regulation of Enterprise Income Tax Law, and also Article 4 of Notice on Improving Reduction of R & D Development Expense this scheme is applicable to all types of manufacturing industries.

(584)

The Commission did not agree with the GOC and the BYD Group’s reading of the laws and implementing measures, which show that the programme is limited to certain sectors and enterprises supported by the GOC on the basis of criteria that do not appear objective or neutral, such as that they comply with the scope of the ‘Key State Supported High and New Technology Areas’. As already stated in recital (941) of the provisional Regulation, this subsidy is specific within the meaning of Article 4(2)(a) of the basic Regulation, as it applies only to enterprises operating in certain high technology areas, such as the BEV industry. Moreover, Article 30 of China Enterprise Income Tax Law provides that R & D expenses incurred by enterprises in the field of development of new technologies, new product and new techniques may be additionally deducted at the time of calculating taxable income, Article 95 of the Implementation Rules for the Enterprise Income Tax Law explains what the deduction consists of, while Article 4 of the Notice on Improving Reduction of R & D Development Expenses lists the industries for which the pre-tax deduction is not applicable (such as tobacco manufacturing, lodging and F&B, wholesale and retail, real estate, leasing and commercial services, entertainment and any other industries stipulated by the Ministry of Finance and State Administration of Taxation). The Commission recalls that (a) it already analysed the Implementation Rules for the Enterprise Income Tax Law for its assessment of specificity in recital (934) of the provisional Regulation and recital (567) of this Regulation; (b) the evidence contained in the specific Articles and documents submitted by the BYD Group does not alter the findings of the Commission on specificity, and actually reinforces the fact that this scheme is not applicable to all industries. In particular, Article 30 of China EIT Law and Article 4 of the Notice on Improving Reduction of R & D Development Expenses show that this subsidy is specific, as it is applicable only to a certain number of industries, i.e. those operating on the development of new technologies, new product and new techniques, and not all companies can benefit from it. The Commission therefore considered this subsidy as countervailable. This claim was therefore rejected.

(585)

Consequently, in the absence of additional comments, the Commission confirmed its findings with regard to specificity as provided for in recital (952) of the provisional Regulation.

(586)

The subsidy rate of the SAIC Group regarding the pre-tax deduction of research and development expenses was updated as a consequence of the correction described in recital (652) of this Regulation.

(587)

In the absence of any further comments, the Commission confirmed its findings with regard to the calculation of the subsidy amount as provided for in recital (953) and (954) of the provisional Regulation.

Preferential pre-tax deduction of research and development expenses

(588)

In the absence of comments, the Commission confirmed its findings with regard to the legal basis as provided for in recitals (956) and (957) of the provisional Regulation.

(589)

Following provisional disclosure, the GOC, the Geely Group, and the SAIC Group argued that there was no financial contribution in terms of revenue foregone because pursuant to Article 10(1) of the EIT law of China, income from equity investments paid to investors such as dividends and bonuses shall be deducted when calculating the taxable income in order to avoid double taxation. Consequently, the tax exemption in question does not constitute government revenue foregone and there is no subsidy within the meaning of Article 1.1 of the SCM Agreement. In addition, the GOC indicated that the Commission had not addressed this factual matter in its analysis. In parallel, the Geely Group also indicated that China’s tax system is designed to stop double taxation and align with international norms.

(590)

Although the Commission agreed that the elimination of double taxation is an internationally recognised tax practice, it does not apply equally across all countries. The GOC failed to show how the deduction in question avoids double taxation specifically (namely, by showing that the dividends subject to the exemption are taxed elsewhere and the rule only captures situations of double imposition). Also, the Commission also already concluded in recital (959) of the provisional Regulation that this scheme was a subsidy under Article 3(1)(a)(ii) and Article 3(2) of the basic Regulation because there is a financial contribution in the form of revenue foregone by the GOC equal to the reduction in tax perceived, which confers a benefit to the companies concerned. The benefit for the recipients is equal to the tax saving.

(591)

Following definitive disclosure, the GOC reiterated its claim that there was no revenue foregone and pointed to its questionnaire reply and Article 10(1) of the EIT where it indicated that ‘dividends and bonuses paid to investors cannot be deducted from the taxable income’ and that ‘the subsidiary has already paid the corresponding enterprise income tax’ before distributing the dividends. On these grounds, the GOC argued that ‘in order to avoid double taxation, dividend, and bonus income is not subjected to corporate income tax for a second time’ as ‘the dividends and bonuses are distributed by resident enterprises after the tax on profits has already been paid.’

(592)

After further analysis, the Commission confirmed its assessment that a subsidy exists in the form of a revenue foregone. In this regard, it reverted to Article 6(4) and 7 of the EIT. Whereas Article 6(4) of the EIT provides that dividends, bonus issues or other returns on equity investment are part of the total income of an enterprise, Article 7 does not list gains from dividends, bonus issues or other returns on equity investment as being part of non-taxable income according to the EIT. Therefore, the avoidance of double taxation is not automatic; i.e. dividends are part of the taxable income unless the provisions of Chapter IV ‘Tax incentives’ which defines the eligibility criteria for such exemption are applicable. On this basis, the Commission considered that Article 26 of EIT leads to the existence of a revenue foregone for the GOC and rejected this claim.

(593)

Consequently, the Commission confirmed its conclusion described in recital (958) of the provisional Regulation.

(594)

In the absence of comments, the Commission confirmed its findings with regard to benefit as provided for in recital (959) of the provisional Regulation.

(595)

Following provisional disclosure the GOC and the SAIC Group argued that the Commission had not established that the alleged subsidy was limited to certain enterprises. It also argued that this alleged program was not specific as the criteria for the eligibility to the program are objective and apply horizontally with regard to all resident enterprises irrespective of the industries/products or geographical locations involved. The GOC and the SAIC Group reiterated that the Commission erroneously correlates Articles 25 and 26(2) of China’s Enterprise Income Tax Law but, as also explained in the GOC’s questionnaire response, Article 26(2) operates independently of Article 25. The SAIC Group objected to the findings mentioned in recital (960) of the provisional Regulation stating that the dividends exemption between qualified resident enterprises was de facto specific and therefore the subsidy scheme was not de jure specific. It also argued that Article 83 of the Implementation Regulations for the Corporate Income Tax Law clarifies that this program is open to all enterprises, as long as these gains are derived by a resident enterprise through direct investment in another resident enterprise. Following definitive disclosure, the GOC reiterated the same claim and indicated that that the program does not meet the specificity requirement of Article 2.1 of the SCM Agreement on the grounds that companies do not need to meet the requirement of Article 25 of the EIT.

(596)

The SAIC Group also claimed that the case-law of the United States Court of International Trade had confirmed that the dividend exemptions between qualified resident enterprises program is open to all enterprises and industries who have investment gains derived from investing in other resident enterprises and is not expressly limited to a list of companies (99).

(597)

The Commission disagreed with the GOC and SAIC Group’s claims and maintained that Article 26(2) of the EIT is part of Chapter IV ‘Tax Preferences’, which provides for a number of preferential tax treatments that are exemptions to the general taxation rules. Furthermore, as explained in recital (957), Article 25 of the EIT, which stands as a chapeau for Chapter IV ‘Preferential Tax Policies’, provides that ‘The State will offer income tax preferences to Enterprises engaged in industries or projects the development of which is specially supported and encouraged by the State’. In addition, Article 26(2) specifies that the tax exemption is applicable to income from equity investments between ‘eligible resident enterprises’, which appears to limit its scope of application to only certain resident enterprises. Therefore, the Commission considered that such preferential tax policy is limited to certain industries, which are specifically supported and encouraged by the State, such as the BEV industry, and is therefore specific within the meaning of Article 4(2)(a) of the basic Regulation. This is also confirmed by the English copy of the income tax return (form A107010, line 3) submitted by several sampled Groups which reads ‘(II) Dividends, bonuses and other equity investment income between qualified resident enterprises is exempted from enterprise income tax (4 + 5+6 + 7+8)’ in the Chinese version of the tax declaration, in this respect.

(598)

As far as the reference to the United States Court of International Trade is concerned, the Commission rejected such refence on the grounds that such jurisdiction is not part of the EU legal order. The Commission also noted that further to such publication, the US DOC still continued to find Article 26(2) of the Enterprise Income Law both de jure and de facto specific (100).

(599)

On this basis, these claims were rejected and the conclusions drawn in recital (960) of the provisional Regulation were confirmed.

(600)

The subsidy rate of the SAIC Group and the Geely Group regarding the dividends exemption between qualified resident enterprises was updated as a consequence of the correction described in recitals (652) and (654) of this Regulation respectively.

(601)

In the absence of any further comments, the conclusions drawn in recitals (961) and (962) of the provisional Regulation were confirmed.

Dividends exemption between qualified resident enterprises

(602)

In the absence of comments relating to this scheme, the conclusions drawn in recitals (963) to (967) were confirmed.

(603)

Following provisional disclosure in a general comment regarding technology transfer revenue deduction, the GOC indicated that the Commission did not provide the GOC with the opportunity to submit any information or comments on this programme during the investigation and verification phases of the procedure.

(604)

However, the Commission does not consider this deduction as a new subsidy scheme. It is one of the tax deductions envisaged in the EIT Law for high and new technology enterprises. All the tax deductions under the EIT Laws were part of the investigation process as they were covered by the Notice of Initiation and the Initiation Document and memorandum.

(605)

In the absence of comments, the conclusions drawn in recitals (969) to (971) of the provisional Regulation are confirmed.

(606)

Following provisional disclosure the GOC claimed that the Commission did not specify the basis on which it considers this subsidy to be specific as Articles 4(2)(a) and 4(4)(a) of the basic Regulation invoked, establish completely distinct criteria of specificity.

(607)

The GOC indicated further that this subsidy cannot be considered export subsidy withing the meaning of Article 4(4)(a) of the basic Regulation and Article 3.1(a) of the SCM Agreement as it is not contingent upon and tied to exportation of the goods being investigated.

(608)

Furthermore, the GOC argued that the Commission had provided no evidence that the deduction in question was limited to specific enterprises or certain industries. Following definitive disclosure, it added that this program was neither de jure nor de facto specific as enterprises involved in transfer of technologies across the entire Chinese economy are eligible.