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October 30, 2009

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China probes US auto imports

CHINA'S commerce minister yesterday said the country is carrying out a probe of some imports of American-made autos as Chinese auto makers have requested for it.

"China must protect its industries and companies based on China's laws and World Trade Organization rules," Chen Deming said, while pledging the probe would be transparent and fair.

His confirmation comes after an industry trade group, the American Automotive Policy Council, said United States officials had informed auto makers about the probe that could lead to higher tariffs on imports of autos made by General Motors, Chrysler and Ford.

US Trade Representative Ron Kirk said the US side was "intrigued" by the timing of an announcement that China plans to investigate dumping allegations against the minuscule vehicle exports to China by the three big Detroit auto makers.

Steve Collins, president of the AAPC, said on Wednesday that US officials have told the three Detroit auto makers that China is expected to begin an investigation under anti-dumping laws into their business practices as soon as next week.

If the investigation concludes that the companies receive government subsidies, or sell products in China at below-market prices, China could slap tariffs on US auto imports.

The move is the latest trade dispute between the two countries, which are already fighting over steel pipes, chicken products, and pirated movies and music. The spats worsened after the Obama administration last month announced up to 35 percent duties on Chinese-made tires, to be imposed for over three years.

The US auto makers export only about 9,000 cars to China annually, Collins said. GM manufactures and sells more than a million cars a year in China, though those sales wouldn't be affected. Mercedes-Benz, BMW and Nissan also export cars to China from plants in the US, but those won't be included in the investigation, Collins said.

GM and Chrysler have received billions of dollars in aid from the government's US$700 billion bailout fund, though Ford has not.

US trade officials, including Kirk and Commerce Secretary Gary Locke, are now in Hangzhou for high-level economic talks. President Obama will make his first visit to China on November 15-18.

Yet if China does impose tariffs, it's not likely to hurt the auto makers much. GM and Ford sell hundreds of thousands of vehicles in China, but most are made here. GM so far this year has sold 1.3 million cars and trucks in China, most of them built here in a joint venture with Chinese auto maker SAIC.

Ford also builds most of the vehicles it sells in China at factories here, but has only a 2 percent market share. Last month it announced plans to build a new assembly plant in China to make the next-generation Focus compact car.


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