China now faces the United States on the matter concerning illegal funding of its industries at the World Trade Organization .
On Wednesday, the Office of the U.S. Trade Representative stated that China had been appointing companies as “ demonstration bases” . These clusters of industry in China receive discounted goods and services from the government to finance exports. U.S. investigators found 179 of such bases are receiving the subsidies. U.S. says China paid $ 1 billion to the industries from 2010 to 2012 for assistance . The said industries that were receiving the finances were textile and clothing makers, advanced materials and metals companies, light industrial firms , medical product makers and agricultural firms. 16 of the 40 recognized bases that produce textile combined are able to export $ 33. 3 billion only in 2012 and on that same year, 6 seafood producer bases exported $3.6 billion which gives a total of 20% of China’s seafood export. U.S. says the aid violates WTO rules.
“If you’re a Chinese textile firm designated as a demonstration base, you might get subsidized IT services, subsidized product design services and subsidized training services for their employees, showing them how to use yarn spinning techniques and weaving technologies,” U.S. Trade Rep. Michael Froman said. “All of these services, provided for free or at a discount, undermine fair competition.”
The question started from an earlier inspection on a Chinese financial aid of auto and auto parts exporters. The motion had urged to make a formal case against China. The USA stated that it will try to come up with an agreement with China at the WTO but if it does not work , U.S. will ask WTO to take over.
Spokesman for the Chinese embassy in Washington, Zhu Haiquan, stated : “We hope the trade disputes can be properly dealt with under (the) WTO dispute settlement mechanism.”
The subsidies case is not just the only trade disputes between United States and China which stresses economic tensions between the world’s two largest economies. The Department of Commerce had reported that the U.S. trade shortage with China had increased to 23.9 % to $342.6 billion. This unfavorable balance of trade with China has been America’s biggest dificit since China in 2000 had outdone Japan with the same kind of racketeering