The United States and EU proposed to explore the scope of prohibited subsidies that were clearly stipulated in the WTO Agreement on Subsidies and Countervailing Measures in the recent WTO reform and the new round of FTAs. These initiatives and practices systematically superimpose the traditional trade remedy rules and competition rules, and tie the prohibited subsidies with China’s non-market economic orientation and state-owned enterprise to serve the strategy of suppressing China’s economic development model. China should make it clear that the revision and improvement of prohibited subsidies should be systematically promoted under the framework of trade remedies, while adhering to the damage assessment criteria. In any case, prohibited subsidies should not have ownership bias against state-owned enterprises. Based on these principles and considering the practice of anti-subsidy dispute settlement and the direction of domestic reform, China can judiciously add certain types of prohibited subsidies and restore the legal presumption of serious prejudice while optimizing its provisions.