The U.S. recently filed a complaint to the World Trade Organization accusing China of unfairly subsidizing a number of industries. China’s minister of commerce, Gao Hucheng, called the complaint groundless, suggesting the action was part of a rising tide of protectionism, an article from the Wall Street Journal explains.
The latest complaint follows from a long stride of trade disputes, which the U.S. opened last month. The complaints focused on the country’s broad program to subsidize export businesses ranging from textiles to seafood. American officials requested consultations with China over the subsidy program, which gives Chinese companies small but crucial advantages in exports, conflicting with the rules of the World Trade Organization.
“China always respects the WTO rules…and we will appropriately handle the case through the WTO dispute settlement mechanism,” Mr. Hucheng said.
Source: http://www.wsj.com/articles/china-calls-u-s-complaint-on-subsidies-groundless-1425705996
I know that China is acting in an interest to help its economy slow its slide, but this makes me wonder how it will effect the overall trade with China. Personally, I don’t think it will have that great an effect. I also think that we are seeing such a drop in trade with China because of a combination of the China’s recent actions but also the recent appreciation of the dollar around the world especially in Asia over the past year.
US trade law is written so as to make a guilty finding likely, including clauses that in effect make it particularly hard for China. Standard price discrimination across markets (charging a higher price in the rich US) can trigger a finding. I’ve had a hand in a couple anti-dumping cases, one for steel and another for minivans….though in both cases the primary targets were Japanese firms.