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November 7, 2009

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Home » Business » Energy

Trade dispute heats up while Obama visit nears

CHINA blasted the United States yesterday for launching preliminary dumping duties on Chinese-made steel pipes and announced an investigation into imports of American-made autos as a trade conflict escalated a little more than a week before US President Barack Obama visits Beijing.

Yao Jian, spokesman for China's Ministry of Commerce, said higher pipe tariffs would have a serious impact on the Chinese steel industry and that "China strongly opposes such acts of protectionism."

Yao urged the US to follow promises made at last month's session of the China-US Joint Commission on Commerce and Trade to fight protectionism. He also said China will "take measures" to defend the interests of domestic enterprises.

"By not recognizing China as a market economy, the US is acting in a discriminatory manner," he said.

Market-economy status would give China more leverage in trade disputes.

"The Obama administration is adding pressure to cause China to compromise more on trade issues such as the foreign exchange rate and tax rebates during Obama's visit," said Sun Lijian, an economics professor at Fudan University.

In its preliminary decision, the US Commerce Department proposed duties ranging up to 99 percent on Chinese-made steel pipes used in oil and gas drilling. The duties still must be approved by the International Trade Commission.

Those charges would be on top of separate duties averaging 21 percent that were imposed in September to counter Chinese government subsidies, the US department said.

The products involved, valued at about US$3.2 billion, account for 46 percent of last year's Chinese steel exports to the US. More than 90 Chinese steel producers, including some state-owned companies like Tianjin Pipe (Group) Corp and Baosteel Group Co, would be affected.

The move was part of a growing list of actions against Chinese exports after the US imposed punitive tariffs on Chinese tires in September. China answered that with a World Trade Organization complaint.

On Wednesday, the US set preliminary duties ranging from 2 percent to 438 percent on Chinese steel wire.

On the auto issue, China's Ministry of Commerce said it will conduct anti-dumping and anti-subsidy investigations into imports of US-made sedans and sport-utility vehicles with engine capacities above 2 liters.

The probe, which could lead to additional duties on vehicles made by General Motors Corp, Ford Motor Corp and Chrysler LLC, was made in response to complaints from domestic car makers, the ministry said.

"China is making a gesture to show its hard stance on trade issues," said Tan Jijia of Pacific Securities Co. "Imported vehicles from the United States are not substantial, but the intensified conflict could hit market confidence in the recovering US auto industry."

Vehicles from the US account for around 14 percent of China's total auto imports, making America the third biggest country for vehicle shipments to China after Germany and Japan.

Most of the imported products are mid-to-high class sedans and luxury cars including General Motor's Cadillacs and Buicks, and Jeep and Dodge vehicles from Chrysler.


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