Fisheries subsidies in China: Quantitative and qualitative assessment ofpolicy coherence and effectiveness

Tabitha Grace MalloryThe National Bureau of Asian Research, 1414 NE 42nd Street, Suite 300, Seattle, WA, United States

a r t i c l e i n f o

Article history:Received 24 November 2015Received in revised form29 January 2016Accepted 30 January 2016

Keywords:ChinaFishery subsidiesPolicy coherenceFuel subsidiesRisk profile

a b s t r a c t

As the world's largest producer of wild catch, China's fishing activities have a significant impact on thesustainability of not only domestic but also global fish stocks. China also provides substantial subsidies toits fishing operations. In 2013, the Chinese central government spent RMB 40.383 billion (or $6.5 billion)on fisheries subsidies. Most of this amount—94 percent—was in the form of fuel subsidies. This studyasked whether China's subsidies policies align with the country's stated goals in fisheries managementby examining China's fisheries policy coherence, and found that about 95 percent of Chinese fisheriessubsidies were harmful to sustainability.

& 2016 Elsevier Ltd. All rights reserved.

1. Introduction

现在人工上涨、鱼资源下降、油价上涨、鱼货的涨价根本弥补不

了成本的上涨, 几乎整个行业捕鱼都是亏本的, 完全依赖政府的燃油补

贴生存。

– 业内人

Now labor is increasing, fisheries resources are decreasing, oilprices are increasing, and the price of fish basically cannot keep upwith the rising costs. Nearly the entire fishing industry is losingmoney, and is completely dependent on government oil subsidiesto survive.

– Industry insider in China [1]

1.1. Importance of this issue

According to the United Nations (UN) Food and AgricultureOrganization (FAO), 90 percent of global fish stocks are fullyexploited or overexploited [2]. Most of the top ten species, ac-counting for about 30 percent of the world marine capture fish-eries production, are fully exploited or overexploited [3].

The exhaustion of the world's fish stocks can be attributed tofour main factors commencing since the 1950s [4]. First, the rise ofmodernization theory in the mid-20th century led to an emphasison systematic production of large volumes while disregarding thenatural rhythms of fish stocks. Second, technological advance-ments meant better and more powerful fishing equipment. Third,

demand for fish, particularly from developed countries, soared.And fourth—last but not least—countries began to heavily sub-sidize their fishing fleets to develop domestic fishing industries[5,6].

Subsidies have led to overcapacity in the fishing industry. PavanSuhkdev, the head of the United Nations Environment Programme(UNEP) Green Economy Initiative, stated in 2010 that global fishingfleet capacity is 50–60 percent higher than it should be, thanks tofisheries subsidies [7]. With ever-bigger fishing fleets chasing ever-fewer fish, the world’s fish stocks may be depleted by 2048 [8].

As the world's largest producer of wild catch, China's fishingactivities have a significant impact on the sustainability of not onlydomestic but also global fish stocks. According to previous studies,China is also the world’s second largest subsidizer of fishing op-erations [9,10]. This study asks whether China’s subsidies policiesalign with the country's stated goals in fisheries management byexamining China’s fisheries policy coherence. This study alsocontributes to our understanding of China’s fisheries subsidies byanalyzing Chinese-language resources on the subject.

In 2013, the Chinese central government spent RMB 40.383billion (or $6.5 billion using an exchange rate of 6.21 yuan to theU.S. dollar) on fisheries subsidies. Most of this amount—94 percent—was in the form of fuel subsidies. About 95 percent of Chinesefisheries subsidies were harmful to sustainability.

1.2. Methodology and sources

This study aims to evaluate the consistency and effectiveness of

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Marine Policy

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E-mail address: tmallory@nbr.org

Marine Policy 68 (2016) 74–82

fisheries subsidies policies in China both quantitatively and qua-litatively. The study first elaborates on China's stated goals in itsfisheries governance by examining Chinese official policies. Thestudy then analyzes Chinese fisheries subsidies, categorizing themaccording to their impact on sustainability, and then discussessubsidies policies in the context of overall fisheries policycoherence.

This paper is primarily based on Chinese-language sources,including official policies in the form of laws, regulations, andgovernment-issued reports; the China Fisheries Yearbook seriespublished by the Ministry of Agriculture; and other academic andmedia publications.

1.3. Policy coherence

In the last 15 years, experts increasingly have examined policycoherence in addressing sustainable development problems. Pol-icy coherence refers to “an overall state of mutual consistencyamong different policies” whereby a given policy’s “objectives,within a given policy framework, are internally consistent andattuned to objectives pursued within other policy frameworks ofthe system—as a minimum, these objectives should not be con-flicting” [11]. Policy coherence is an important aspect of goodgovernance—policy incoherence may result in the inefficient use ofresources, and a loss of legitimacy or credibility for thegovernment.

In the realm of fisheries governance, the OECD came up with atypology to guide fisheries policy coherence. These four types are:

! Internal coherence: “Is the policy coherent within itself?” Forexample, this aspect might deal with whether subcomponentsof national fisheries policies are coherent with each other.

! Vertical coherence: “Is policy coherent at all levels from inter-national to local?” For example, are international trade policiesin line with local-level needs?

! Horizontal coherence: “Is fisheries policy coherent with othersectoral policies operating at the same level?” For example, thistype might concern whether fisheries policies are in line withenvironmental sustainability goals.

! Transnational coherence: “Is fisheries policy coherent betweennational and other international policy?” For example, thisperspective might examine whether national policies are co-herent with stated goals for international engagement withregard to fisheries, for example in bilateral treaties or commit-ments to multinational organizations like regional fisheriesmanagement organizations [11].

These fours aspects of fisheries policy coherence will guide thisstudy's analysis of China's fisheries policies and its use of subsidiesin the fishing industry. The study argues that China’s high fuelsubsidies in particular make fisheries policy incoherent in all fourareas.

2. China's fisheries

2.1. Overview

China's long coastline historically provided access to abundantfisheries resources in the Bohai, Yellow Sea, East China Sea, andSouth China Sea. China's four major rivers, their tributaries, andnumerous lakes hosted rich freshwater resources. Even thoughChina is believed to have the world's oldest fisheries conservationpolicies, most of China's coastal and inland fisheries resourcescurrently are heavily strained and in decline. Fishing intensitysignificantly exceeds sustainable levels.

China’s Bureau of Fisheries within the Ministry of Agriculturehas the authority to administer fisheries, though other govern-ment agencies have influence over natural resource policy, such asthe Ministry of Environmental Protection and the State OceanicAdministration (SOA) within the Ministry of Land and Resources.China has a total of 2969 fisheries administration and law en-forcement centers at both national and provincial levels [12]. In2011, China had a total of 35,912 personnel staffing its offices at alllevels [12].

As the largest producer of fisheries and aquaculture, China'stotal production in 2013 was 61.72 million tons according to offi-cial Chinese statistics, with aquaculture accounting for 74 percent[12]. According to FAO statistics, China was responsible for 36percent of world aquatic production of 158 million tons in 2012[2].

China is likely the world's largest producer of wild catch, ac-counting for 17.7 percent of the total global catch of 91.4 milliontons in 2012 [2]. Fisheries experts have evidence that China over-reports its domestic catch (for domestic political purposes) andunder-reports its DWF catch [13,14]. China is working with theFAO to revise its domestic data. According to Chinese officialsources on capture fisheries, of the 16.303 million tons of totalcatch in 2013, 12.644 million tons (78 percent) came from coastalfisheries; 2.307 million tons (14 percent) came from inlandfreshwater fisheries; and 1.352 million tons (8 percent) came fromdistant water fishing (DWF) [12]. Coastal fisheries include catchfrom the “near seas”: the Bohai, Yellow Sea, East China Sea, andSouth China Sea. DWF includes catch from outside the near seas—from coastal waters under the economic jurisdiction of othercountries and on the high seas. In 2012, the share of high seasfisheries in the DWF industry rose to 58 percent, with fishing inthe exclusive economic zones of other countries making up theremainder [15].

China's fishing and aquaculture industry is economically sig-nificant. In 2013, primary production was valued at RMB 904.874billion ($145 billion). Including the secondary and tertiary “value-added” sectors such as processing, the fisheries and aquacultureindustry was worth RMB 1.732 trillion ($279 billion). Seafoodprocessing is an important part of the economy, with 19.54 milliontons processed in 2013 and the capacity to process up to 27.45million tons at 9774 processing plants [12]. Per capita income forfishermen in 2012 was RMB 11,256.08, growing 12.43 percent fromthe previous year [15]. China exported $19.6 billion and imported$8 billion of fisheries products in 2013. With per capita con-sumption at 35.1 kg in 2013 (compared to a global average of18.4 kg), China's growing domestic consumption is slated to ac-count for 38 percent of global consumption by 2030 [2].

The majority of China's fisheries subsidies are fuel subsidies,which go to the world’s largest fishing fleet. In 2012 China had451,358 motorized fishing vessels (7.707 million in total tonnage),of which 194,240 (total tonnage 6.518 million) were marine fishingvessels and 257,118 (total tonnage 1.190 million) were inlandfishing vessels (these do not include aquaculture vessels) [15].

2.2. Historical context and policy development

Until China's opening and reform period began in the late1970s, fisheries management occurred within the framework ofChina's planned economy. China was just as influenced by themodernization approach to fisheries as was the rest of the world.Moreover, overfishing was exacerbated by Mao Zedong's de-structive utopian vision that entailed transformation of the naturalworld through the sheer size of its population [16,17]. China's fishstocks were showing signs of depletion as early as the 1950s [18].

By the 1970s and 1980s, some of China's commercial fish stockswere collapsing. In the early 1980s, the State Council issued two

T.G. Mallory / Marine Policy 68 (2016) 74–82 75

important documents—a report followed by a directive—thatmarked a policy shift in fisheries management. The move signaledthe initial change from the planned economy toward a market-based economic approach in managing fisheries; this shift was tolater accelerate in 1992 with Deng Xiaoping's affirmation of Chi-na's embrace of the market economy. The documents also an-nounced two major policy changes to address threatened stocks:the expansion of an aquaculture industry, and the launching of theDWF industry.

The 1983 “Report on a Few Issues in Developing Fisheries” wasthe outcome of a national conference on fisheries held that sameyear [19]. The report noted the severe depletion of coastal fisheriesresources, particularly commercial stocks, because of overfishing,increased fishing intensity, and growth of the fishing fleet. Thereport noted that while by 1982, total motorized fishing vesselshad doubled and total horsepower had increased by 43 percentfrom 1978, at the same time total catch had decreased by50,000 tons. Higher value species had also declined as a propor-tion of overall catch.

Because of these developments, the report set out a number ofpriorities to address, including increasing economic efficiency;developing aquaculture production; protecting and propagatingcoastal resources; opening up offshore fishing grounds; “firmlyorganizing” distant water fishing; and improving processing,quality, and market supply. In terms of coastal resources, the re-port called for increased enforcement of measures such as closedareas and seasons, fishing moratoria, protected areas for juvenilefish, mesh size limits, and minimum size requirements to preventthe removal of juveniles. To reach these new objectives, the reportcalls for increased funding from the Ministry of Agriculture andthe Ministry of Finance. At regional and local levels, relevantagencies were called on to provide required staffing. In particular,the Ministry of Public Security, the Ministry of Labor, and theMinistry of Finance were asked to provide the staffing and fundingfor increased enforcement of fishing regulations. The CentralPlanning Commission, Economic Commission, and Ministry of Fi-nance were called on to distinguish clearly between infrastructure,reform, and industry funding. The central- and local-level gov-ernments were to provide subsidies for pilot programs in coastalareas to experiment with propagation and ranching.

The report created some fiscal policies to encourage fishermento fish farther from Chinese shores. The report called for en-couraging offshore fishing by changing the capital depreciationrate from 2.8 to 5 percent; allowing fishermen to sell 10 percent oftheir catch on the foreign market; and supplying diesel, fixedshares of state purchasing, and capital credit to fishermen. Simi-larly, the report recommended encouraging the development of aDWF industry through policies like a five-year exemption for in-come tax and foreign exchange earnings, and called on relevantagencies in the area of diplomacy, trade, finance, banking, com-merce, and customs to support these policies. In 1985, the StateCouncil issued a policy directive that aimed to implement many ofthe objectives in the 1983 report [20].

In 1986, the Standing Committee of the National People'sCongress issued the Fisheries Law of the People's Republic of China—which was updated in 2000, 2004, 2009, 2013 and 2015—and isthe highest law governing China's fisheries resources [21]. As thefirst comprehensive law on fisheries, its purpose was to provideoverarching principles for fisheries development and managementwhile placing the various existing regulations into a larger legalframework. Article 1 states that the law “is formulated for thepurpose of enhancing the protection, proliferation, exploitationand rational utilization of fishery resources, developing artificialcultivation, ensuring lawful rights and interests of fishery workersand boosting fishery production.” The State Council approved andpromulgated the “Implementation Measures for the Fisheries Law

of the People's Republic of China” in 1987 as guidelines for en-forcing the Fisheries Law through specific regulations [22].

Over the course of the 1980s and 1990s, China's fisheriesmanagement incorporated more conservation-based principles. In1992, China sent a delegation to the UN Conference on Environ-ment and Development (UNCED) held in Rio de Janeiro. In ac-cordance with Rio's Agenda 21, China issued “China's Agenda 21:White Paper on China’s Population, Environment, and Develop-ment in the 21st Century,” which introduced the concept of sus-tainable development domestically in China [23]. Chapter 14 ofAgenda 21 addressed the marine living resources in a subsectionon “Sustainable Development and Conservation of Marine Re-sources,” calling for an administrative system on par with globalstandards to manage marine resources; prioritizing sustainableuse and conservation of fishery resources; ecosystem monitoringwith the purpose of protecting biodiversity; and establishingmarine reserves. The subsection also mentioned the policies ofencouraging aquaculture and DWF as a way of relieving pressureon domestic resources.

The State Oceanic Administration issued “China's Ocean Agen-da 21” in 1996 to develop the goals set forth in China's Agenda 21[24]. Not only did China’s Ocean Agenda 21 elaborate on the sus-tainable development of domestic marine industries and livingmarine resources, it addressed international marine issues, in-cluding calling for the conservation of high seas resources.

In 1995, the FAO issued the “Code of Conduct for ResponsibleFisheries,” which also influenced China’s fisheries policies [25].The Code of Conduct is a non-binding agreement that sets outprinciples and guidelines for the sustainable use of fisheriesresources.

China ratified the UN Convention on the Law of the Sea (UN-CLOS) in 1996. UNCLOS established exclusive economic zones(EEZs) to 200 nautical miles from coastal baselines, throughoutwhich a country has jurisdiction over natural resources, both interms of exclusive economic access to these resources and also theresponsibility to protect them. After ratifying UNCLOS, in 1998China issued a law establishing an EEZ in accordance with UNCLOSprovisions [26].

Since UNCLOS established EEZs at 200 nautical miles fromcoastal baselines, in areas where less than 400 nautical miles se-parate countries, agreements must be worked out on EEZ delimi-tation and the sharing of resources. In accordance with UNCLOSguidelines, China signed bilateral fisheries agreements with Japan,South Korea, and Vietnam, which entered into force in 2000, 2001,and 2004 respectively. The implementation of domestic restric-tions and agreements with neighboring countries negatively im-pacted China's fish production and the livelihood of its fishermen.The traditional fishing range shrank, catch decreased, remainingfishing grounds became crowded, and fishermen faced difficultiesas they transitioned to different industries.

Because China's Fisheries Law entered into effect before theadvent of UNCLOS and the Code of Conduct, China updated theFisheries Law in 2000 to reflect the new developments [27,28].The new amendment strengthened conservation principles in theFisheries Law, including increasing the severity of penalties fornoncompliance with sustainability regulations. Moreover, theamendment incorporated the new EEZ regime introduced byUNCLOS. While China had in place a fishing-vessel licensing sys-tem since 1979, the Fisheries Law amendment expands the areaunder the licensing system. The amendment also establishes botha quota system and logbook requirements. The amendment alsocreated a total allowable catch (TAC) system. Conservation mea-sures such as resource-use fees and seasonal moratoria, which hadbeen initiated prior to UNCLOS, were updated. The central au-thority implemented measures to control fishing capacity, such asvessel decommissioning and fishermen retraining programs. China

T.G. Mallory / Marine Policy 68 (2016) 74–8276

also introduced the concept of the ecosystem approach to fisheriesmanagement into various laws and regulations following the ac-cession to UNCLOS, and for example expanded the creation ofmarine protected areas in line with this principle.

The central authority has set goals for fisheries restoration andenhancement. In 2006, the State Council launched the “Program ofAction on the Conservation of Living Aquatic Resources” [29]. Inthe same year, China began issuing National Fisheries Five-yearPlans. The plans reflect concerns over the state of domestic fish-eries and the welfare of fishermen, and also outline aims to ex-pand global fisheries in line with the “going out” policy, a policythat encourages Chinese enterprises to seek economic opportu-nities abroad. The “National Fisheries Development Twelfth Five-year Plan (2011–2015)” (“Fisheries Plan”) identifies food supplyand safety as key priorities, along with the following targets:

! Disaster prevention: through better safety facilities and com-munications equipment. Increase the number of first-classfishing ports to over 200 (up from 111 in 2010). Aim to have 70percent (up from 33 percent) of fishing vessels near a shelterand resting place. Control the number of fishing related deathsto a maximum 300 (from 319 in 2010).

! Increase production to over 60 million tons in 2015 (from53.73 million tons in 2010), with aquaculture accounting for atleast 75 percent of the total (from 71 percent in 2010). Aim tohave stable aquaculture areas number 100 million mu (one-sixth of an acre), and complete the renovation and standardi-zation of 20 million mu of low-yield ponds (up from 10 millionin 2010).

! Improve the safety and quality standards of products and en-sure a quality pass rate of 98 percent or above for productionareas.

! Optimize the economic and industrial structure. Increase totalfisheries economic output to 2.1 trillion yuan. Increase pro-duction value for the second and tertiary industries to 53 per-cent of the total value (from 47 percent in 2010). Increase pro-cessing of aquatic products to 40 percent of the total value (from35 percent in 2010).

! Increase fishermen's incomes by 8 percent. Hold training pro-grams for 20 million people. Provide insurance subsidies for1.8 million people.

! Cap fishing capacity: the total number of motorized vehicles atthe level at the end of the eleventh five-year plan.

! Re-stocking: Release 150 billion fingerlings into an area mea-suring 5 million square hectares.

! Marine Protected Areas: Raise the number of national-levelmarine protected areas to 23. Raise the number of national-levelaquatic germplasm resource conservation areas to 300.

! Improve the contribution of science and technology.! Management and enforcement: increase the license issuance

rate for aquaculture to 100 percent in 2015 (from 68 percent in2010).

! Expand export-oriented fisheries: Maintain steady progress ofthe “going out” strategy for fisheries. Raise the total amount ofaquatic product exports to $18 billion in 2015 (from $13.828billion in 2010). Raise the total catch from DWF to 1.3 milliontons in 2015 (from 1.1 million tons in 2010). Raise the number ofDWF vessels to 2300 in 2015 from 1991 in 2010 [30].

3. Fisheries subsidies

3.1. Definition

The very definition of a fishery subsidy has proved a matter ofgreat debate. Even within the FAO, no single definition has ever

been agreed, however one FAO report defines fisheries subsidies as“government actions or inactions outside of normal practices thatmodify—by increasing or decreasing—the potential profits by thefisheries industry in the short-, medium- or long-term” [31].

Similarly, a number of studies have suggested frameworks forclassifying fisheries subsidies [32–34]. In this paper, fisheriessubsidies are classified as four types, based on the method inwhich they operate:

! Direct government payments, loans, or in-kind transfers ofgoods (such as subsidized fuel, ice, or bait) or services (such astraining) to fishermen or fishing enterprises.

! Indirect transfers in the form of goods, services, or activitiesfrom which fishers derive an immediate benefit (such as portinfrastructure, marketing and promotion programs).

! Tax rebates or other tax relief offered to fishermen or fishingenterprises.

! Direct programmatic spending on conservation and manage-ment of fisheries [35].

Finally, based on the effects that fisheries subsidies have on thesustainability of fish stocks, fisheries subsidies fall into threekinds: beneficial subsidies that contribute to the growth of fishstocks; harmful, capacity-increasing subsidies that have a dele-terious effect on fisheries; and ambiguous subsidies [9]. Beneficialsubsidies include support toward fisheries management programsand services, fisheries research and development, and the estab-lishment of marine protected areas. Harmful subsidies distorteconomic incentives, making fishing profitable where it may nothave been otherwise. Harmful subsidies include fuel subsidies,vessel construction and renovation programs; fishing port con-struction and renovation programs; price and marketing support,processing and storage infrastructure programs; fishery develop-ment projects and support services; tax exemptions; and foreignaccess agreements. Ambiguous subsidies are programs for which itis not clear whether the impact is beneficial or harmful, for ex-ample fishermen assistance programs, vessel buyback programs,and rural fishermen community development programs.

3.2. Fisheries subsidies in international context

In the early 1990s, studies began to more clearly delineate thenegative effect of subsidies on the sustainability of fisheries re-sources [36]. By the end of the decade, the matter appeared on theWorld Trade Organization (WTO) agenda. The declaration from theNovember 2001 Fourth Ministerial Conference of the WTO inDoha, Qatar, acknowledged that fisheries subsidies can be en-vironmentally damaging, and ministers agreed to clarify and im-prove WTO measures on fisheries subsidies.

China acceded to the WTO in 2001. China's very first proposalas a WTO member country was submitted to the WTO in June2002 about the matter of fisheries subsidies. The proposal calledfor distinguishing between the different types of subsidies thathave an adverse effect on trade, for example between aquaculturebreeding and high seas fishing, and treating these areas in ac-cordance with those differences; giving special and differentialtreatment to developing nations with regard to fisheries subsidies;and recognizing that some subsidies do not have adverse effectson trade and can in fact improve environmental protection andsustainable development [37]. This proposal was followed by an-other document in April 2003 regarding the classification of sub-sidies that reiterated China's desire to see different treatment ofbeneficial subsidies by establishing a “Green Light” category ofsubsidies that includes beneficial subsidies [38]. China also voicedsupport for establishing an effective system of notification.

At the 2005 Hong Kong Sixth Ministerial Conference, the

T.G. Mallory / Marine Policy 68 (2016) 74–82 77

ministers more specifically addressed fisheries subsidies:

[We] note that there is broad agreement that the Group shouldstrengthen disciplines on subsidies in the fisheries sector, in-cluding through the prohibition of certain forms of fisheriessubsidies that contribute to overcapacity and over-fishing, andcall on Participants promptly to undertake further detailedwork to, inter alia, establish the nature and extent of thosedisciplines, including transparency and enforceability. Appro-priate and effective special and differential treatment for de-veloping and least-developed Members should be an integralpart of the fisheries subsidies negotiations, taking into accountthe importance of this sector to development priorities, povertyreduction, and livelihood and food security concerns [39].

The chairman of the Negotiating Group on Rules was taskedwith drafting a document to serve as the basis for future nego-tiations on fisheries subsidies. The first draft of the text, which wascompleted in November 2007, met with controversy. In 2008, thegroup issued a roadmap to guide discussions, though the nego-tiations continue to unfold without any tangible commitments tolimit subsidies [40,41].

4. Chinese fishing subsidies

4.1. Other estimates

The Fisheries Centre at the University of British Columbia inVancouver, Canada, has conducted the most extensive research onfisheries subsidies, including quantifying subsidies for developingcountries [6,9,10]. Their 2013 analysis of China relied on estimatesfrom a 2000 APEC report, FAO data, Milazzo’s 1998 report, andother English resources [32–34]. The APEC report used mention ofChinese expenditures in provincial legal documents collected in avolume of China's fisheries laws and regulations from 1998 tocalculate subsidies. Based on the UBC analysis, China was esti-mated to have provided about $4.5 billion in subsidies to its fishingindustry in 2009 [10]. A recent article on Chinese fishing subsidiesaccounted for part of the subsidies but did not report the annualfuel subsidies to the fishing industry [42].

4.2. Government budgeting

This study uses Chinese sources to estimate Chinese fisheriessubsidies. The Ministry of Agriculture reports central governmentinvestment in fisheries in a fisheries yearbook series [12]. The stateclassifies these expenditures into three parts: basic infrastructureprojects, specialized financing programs, and fuel subsidies. In-dividual provinces also provide reports to the central government,which are included in the yearbook, and most of these reportsmention some subsidies data for their provinces, but with con-siderable variation in reporting style, clarity and the items in-cluded. These subsidies include both capture fisheries and aqua-culture subsidies. Subsidies to the aquaculture industry were re-corded but not used in the risk profile analysis.

Investment in basic infrastructure is mainly used for non-op-erational programs. These investments include the construction ofaquatic breeding farms (mainly supporting superior areas, super-ior species and specialty species found in Central and WesternChina); construction of county-level aquatic epidemiology stations(including epidemiology laboratories and pathogen libraries);fisheries administration costs, including fisheries law enforcement,disaster prevention and safety; building fishing harbors; estab-lishing marine protected areas wetland reserves; promoting fish-eries scientific research and development (mainly used for

strengthening capacity of immediate subsidiaries, including theChinese Academy of Fishery Sciences, the National Fishery Tech-nical Extension Center, the Fisheries Vessel Inspection Office, andthe China Fisheries Association); and comprehensive agriculturedevelopment (based on the current agricultural structural adjust-ment and the challenges after China's accession to the WTO, witha focus on fishery breeding establishment and fish farmindustrialization).

Specialized financing programs consist of two main sources:the Ministry of Agriculture funding and the central governmentbudget transfers. Ministry of Agriculture funds are mainly used forfisheries resource protection and fisheries management, includingecological protection (such as fishing reduction); data manage-ment; international communication and cooperation; wildlifespecies protection; disease monitoring and defense; quality con-trol systems; fisheries administrative management; fisheries pro-duction loss assistance; pilot projects on fisheries insurance; theAntarctic resources exploration program; fisheries assessmentsand exploratory catch programs; fisheries breeding quality pro-tection; and budgeting.

Special funds transferred from the central budget includeseeding; building ranching areas; vessel decommissioning, pro-duction restructuring, and fishermen retraining; support for theproduction of “food basket” items; and disaster relief.

The Ministries of Agriculture and Finance inaugurated dieselsubsidies in 2006 for both domestic and DWF vessels. In 2007, theMinistry of Agriculture issued “2007 no. 88” entitled “Notice ofSome Issues Related to Fisheries Diesel Subsidies,” wherein itformally included DWF enterprises as recipients for fuel subsidiesfor the first time [43,44]. Ministry of Finance “2007 no. 202 en-titled “Notice on Ministry of Finance Fuel Subsidy Reform Work”addressed the changes accordingly. Since 2009, the policy hasbeen extended to migrant fishermen from Hong Kong and Macau.

The central government issued a DWF vessel constructionsubsidy in 2006 but this subsidy funding has since largely shiftedto local governments.

Provincial-level governments are a source of subsidies, but re-porting on subsidies at the provincial level in the yearbooks islimited. While some provinces clearly report the amount of thecentral government transfers, other provinces are unclear as towhether the funding originated at the central or provincial level.Sometimes a total number is provided, but the source is identifiedas both the central- and provincial-level governments without apercentage breakdown. The reporting for Hubei Province in the2012 yearbook, however, featured a clear breakdown: total sup-port was RMB 726 million, the central government accounted forRMB 555 million, and the provincial level was RMB 171 million,meaning contributions of 76.4 and 23.6 percent respectively [12].

The subsidies provided by the Chinese central government tothe Chinese fishing industry in 2013 amounted to RMB 40.383billion, or $6.5 billion (using an exchange rate of 6.21 yuan perdollar as of December 2014). Most of this amount—RMB 38.133 or$6.14 billion—was through fuel subsidies.

The fuel subsidies for the period 2006 to 2013 are provided inTable 1. The 2013 and 2014 Chinese fisheries yearbooks did notreport the breakdown of fuel subsidies for domestic, DWF or HongKong and Macau fisheries.

In 2012, other central government subsidies spending totaledRMB 9.858 billion or $1.59 billion. In 2012, the government spentan unusually high amount on fisheries administration and harbors(including adding 543 new fisheries administration vessels): RMB4.364 billion, compared to RMB 238 million the previous year. Thegovernment also spent a comparable amount on fishing-vesselrenovation.

In 2013, central government expenditures amounted to RMB2.251 billion, or $362 million. This figure is comparable to

T.G. Mallory / Marine Policy 68 (2016) 74–8278

spending in 2011.

4.3. Tax relief

Tax relief in the form of exemptions or rebates has an effect onthe fisheries industry that is similar to direct monetary transfers.Tax relief is more difficult to calculate because the subsidy is morecomplex to quantify. Sometimes the necessary information tocalculate the effective subsidy is not available.

The Enterprise Taxation Law of the People's Republic of Chinastates that agricultural industries such as fisheries may be ex-empted from or allowed reduced income tax [45]. Provincialgovernments and provincial-level cities may apply this stipulationin their own tax regulation implementation.

The central government has promoted a number of tax reliefpolicies to encourage growth of its nascent DWF industry, in-cluding exempting DWF enterprises from paying income taxes orvalue-added tax on the importation of fishing equipment such asfishing vessels and refrigeration equipment [46,47].

DWF companies have also been exempted from paying China's“Agriculture Special Tax.” This meant that any catch from the highseas or in the EEZs of other countries according to bilateral

agreements would be seen as domestic production and not subjectto a special tariff levied on imported agricultural products [48].Because the amount of catch imported back to China is known, asis China's average tariffs on seafood, it is possible to estimate themonetary value of the tax exemption [15,49]. In 2012, China im-ported 722 million tons of catch from its DWF industry for a valueof $1.256 billion; with an average tariff of 11 percent, the monetaryvalue of the tax exemption is $138.14 million.

5. Risk profile of Chinese fishing subsidies

To carry out the risk profile of Chinese fishing subsidies, gov-ernment expenditures were collected from the China FisheriesYearbook 2012–2014. After capturing the data, China's fisheriessubsidies were categorized as to whether they are harmful, likelyto harm, ambiguous, likely to benefit, or beneficial (Fig. 1)[9,35,40]. Aquacultural subsidies were excluded. Aquaculturalsubsidies may be considered beneficial in that they relieve fishingpressure from the capture industry. However aquaculture also haspotential negative effects on wild fish stocks through pollutionand/or interbreeding.

Table 1Chinese fisheries fuel subsidies, 2006–2013 (in millions of RMB) [19].

2006 2007 2008 2009 2010 2011 2012 2013

Domestic 2890 5107.54 11,754.18 9.383 15.07 20.63 N/A N/ADWF 281 326.77 883.46 815 1.608 2.68 N/A N/AHK, Macau " " – 245 487 680 N/A N/ATotal 3171 5434.31 12,637.64 10,443 17,165 23,990 35,113 38,132.72

Fig. 1. Chinese central government expenditures, 2011–2013.

T.G. Mallory / Marine Policy 68 (2016) 74–82 79

Harmful subsidies include fuel subsidies, construction of fish-ing harbors, fisheries production loss assistance, fisheries in-surance, and exploratory catch programs. Subsidies that are likelyto harm include disaster relief and programs like “comprehensiveagricultural development.” Ambiguous subsidies include fisheriesadministration and harbors, capacity building, “supplementarybudgeting,” and support for the production of “food basket” items.These subsidies are ambiguous because it is unclear if they arehelpful or harmful; for example, fisheries administration includesfisheries law enforcement, and capacity building may includeeducation efforts. Subsidies that were likely to benefit includeprotected areas or reserves; quality control systems; fisheries ad-ministrative management; seeding and ranching projects; andvessel decommissioning, production restructuring, and fishermenretraining. Finally, beneficial subsidies include ecological protec-tion, statistics, international communication and cooperation, andwildlife protection expenses.

After categorizing China's fisheries subsidies in this manner, itbecomes clear that 95 percent of China's fisheries subsidies areharmful (Fig. 2). This is because most of the funding goes to fuelsubsidies. If fuel subsidies are excluded, the categories of subsidiesbecome somewhat more balanced (Fig. 3).

6. Discussion of policy coherence

To conclude we return to the four types of policy coherence forfisheries laid out at the beginning of the paper in order to assessChina's fisheries policy coherence with reference to the nation'sfisheries subsidies.

6.1. Internal coherence

“Is the policy coherent within itself?”Internal policy coherence concerns whether policies are effec-

tive for meeting stated goals. China's fisheries subsidies have somepolicy coherence, but are also incoherent in other regards. Thisdichotomy is a result of conflicting internal goals. As China'sfisheries law makes clear, on the one hand, the Chinese state re-cognizes the threats to coastal fisheries and the need for sustain-able fisheries management, while on the other hand, the state isalso concerned with employment and the livelihoods of fisher-men. Therefore, the harmful subsidies such as fuel subsidiesthreaten stock sustainability, however these subsidies assist fish-ermen. Fluctuations in fuel costs make fishing an unstable sourceof income, which the state seeks to offset with its fuel subsidyprogram [50,51]. Yet fuel subsidies undercut the long-term eco-nomic viability of the fishing industry.

6.2. Vertical coherence

“Is policy coherent at all levels from international to local?”China's local-level fisheries policies are sometimes at odds with

central-level policies. For example, the central-level governmenttends to emphasize conservation of fisheries resources, whereasthe local level must deal with economic and employment pres-sures, encouraging more short-term policies that are detrimentalto long-term sustainability. The central government may also bemore concerned with the negative diplomatic effects of over-fishing in China’s neighboring or host countries than local levelsare.

6.3. Horizontal coherence

“Is fisheries policy coherent with other sectoral policies oper-ating at the same level?”

Some of Chinese fisheries subsidies are incoherent with othersectoral policies. Capacity-enhancing fisheries subsidies are atodds with policies in other sectors or agencies that enhance en-vironmental protection. The fuel subsidies provided to Chinesefishermen through the Bureau of Fisheries negate the conservationefforts of the Ministry of Environmental protection and the StateOceanic Administration. As discussed in Section 2.2, capacity-en-hancing fisheries subsidies contradict some of the marine con-servation objectives set out in China's Agenda 21, China's OceanAgenda 21, and some of the polices that arose in the aftermath ofChina's ratification of UNCLOS creating some tension betweenagencies on marine management.

6.4. Transnational coherence

“Is fisheries policy coherent between national and other inter-national policy?”

While Chinese national fisheries policies are somewhat co-herent with overall sustainability goals, policy coherence breaksdown at the international level because of China's DWF industry.China has addressed the importance of fisheries conservation onthe high seas, but funds high seas exploratory programs. Thesubsidies given to the DWF industry lead to unsustainable prac-tices in the EEZs of other countries. For example, the state-ownedChina National Fisheries Corporation (CNFC) is a major player inWest Africa, where actual catch is estimated to be much higherthan reported catch. At the same time, subsidies to CNFCamounted to half of the company's net profit in 2008 [52].

In addition to the expansionary DWF goals mentioned in Sec-tion 2.2 above, China's Twelfth Five-year Fisheries Plan elaborateson China's means to further strengthen the industry:

Fig. 2. Risk profile of central government expenditures including fuel subsidies,2013.

Fig. 3. Risk profile of central government expenditures not including fuel subsidies,2013.

T.G. Mallory / Marine Policy 68 (2016) 74–8280

! Consolidate the expansion of EEZ fishing, vigorously develophigh seas fishing, combine national foreign aid building pro-jects, actively build multifunction overseas joint developmentbases, and form foreign logistical bases for post-landing whereproduction, processing, consumption and logistics supply arecollected into one system.

! Increase capital grants for building DWF vessels; promote therenovation of DWF vessels; improve the overall quality level ofequipment; build moderate-scale high seas pelagic resourcesurvey vessels; increase DWF resource surveys and expeditions;strengthen development support; expand the scope of Antarcticmarine living resource surveys and expeditions; strengthenresearch and development and market entry for Antarctic krill.

! Absorb DWF bases into national foreign aid plans; stabilize andexpand cooperative fishing relations with the relevant coun-tries; enhance the development potential of DWF; stabilize andraise international resource utilization competency [30].

Given the somber state of global fisheries, these plans contra-dict the commitments to sustainability China has made in itsparticipation in transnational organizations such as regional fish-eries management organizations (RFMOs).

Acknowledgments

The author would like to thank the World Wildlife Fund fortheir financial support for this research. The World Wildlife Funddid not have any influence over the results of this study.

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