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Trade Dispute Unlikely to Spark Sino-US Trade War
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The trade dispute between China and the United States is unlikely to lead to trade war as the two countries share overlapping interests, said Li Xiangyang, the Deputy Director of the Institute of World Economics and Politics (IWEP) of Chinese Academy of Social Sciences.

The US government Friday filed a complaint with the World Trade Organization (WTO) in Geneva, alleging that China is providing companies with improper subsidies to help its companies compete in world markets.

US Trade Representative Susan Schwab said China's government support for steel, wood, information technology and other industries hurt US firms and prevent them from competing fairly but did not elaborate.

This is the fourth time that Washington complained to the WTO about China's trade policies. The previous three related to China's auto parts import regulation, brown paper and semi-conductor sectors.

"There is no new or strong evidence that could prove China has launched improper trade policies", said Li. "We hope both sides could settle the dispute through a consultation."

The United States tried to team up with other powers including Japan and the European Union in filing a WTO complaint against China over its industrial subsidies before, but invitations were not accepted.

The United States has asked to open a consultation process which is the first stage of the dispute settlement procedure of the world trade body at WTO over China's industrial subsidies.

The consultation will usually last two months. If it fails, a WTO panel of experts will be formed to handle the dispute.

"The government should brace for the upcoming consultation with US and figure out how to settle trade disputes under WTO multilateral regulations", said Jin Bosheng, an expert from the Chinese Academy of International trade and Economic Cooperation.

"As the world's third largest trader, China needs to understand how to win the battle under the multilateral rules", said Jin.

"My judgment is that the complaint is probably a reflection of the power struggle inside the US government," said Li Xiangyang.

The Bush administration might use this complaint to cater to the trade protectionists of Congress in exchange for the renewal of his fast-track trade promotion authority which was set to expire on July 1, in an attempt to rekindle the stalled Doha Round of trade liberalization talks, he said.

America's free trade agreements negotiations with Malaysia, Thailand and the Republic of Korea may also count on the extension of the trade promotion authority, Li added.

Wang Yong, director of the Political and Economic Research Center of the Beijing University, said that China should caution against aggravated trade protectionist force in the United States.

"A worry is that Bush administration might choose to sacrifice its trade relationship with China," he said.

While China's trade surplus surged to record high US$177.5 billion, the country was subject to 86 anti-dumping and trade protection probes in 2006, a year-on-year increase of 37 percent.

The investigations were launched by 25 countries and regions, involving a combined value of US$2.05 billion, and 48 cases reached adjudication in 2006, of which 21 ended without taking measures.

(Xinhua News Agency February 7, 2007)

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