China's measures to offer subsidies to manufacturers in certain industries is in conformity with World Trade Organization rules and will help the country ship more quality products to the world market, the Ministry of Commerce said on Thursday.
The comment came after the Office of the United States Trade Representative challenged China at the WTO on Wednesday, claiming that the Chinese government offers subsidies for the exports of seven industries through "demonstration bases" that receive free or discounted services from suppliers. .
The US claimed China has paid the suppliers almost $1 billion over three years to provide computer and training services.
Given current global economic conditions, building model manufacturing bases and public service platforms to offer subsidies to cash-starved domestic companies is a practical way for them to seek and gain new market growth points, as well as improving the technical content and environmental protection standards of their products, the ministry said in a statement on Thursday.
The ministry expressed its regret over the matter and said all disputes will be resolved under the WTO rules.
Analysts said the US' chances of winning its complaint at the WTO over alleged Chinese export subsidies to seven domestic industries are mixed.
"This case continues the broader trend of the US and other trading partners challenging the subsidies and other preferential treatment that the Chinese government has provided to domestic enterprises through the WTO. Judging from its track record, the US has a reasonably good chance of winning this case as the WTO has upheld the US complaint in most subsidy-related cases it has filed against China since the country joined the WTO in 2001," Ka Zeng, professor of political science at the University of Arkansas, told China Daily in an e-mail. Zeng has written on China, trade and the US.
Zeng said the subsidies cited by the US resemble in part tax breaks that local, state and the federal governments hand over to American firms.
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