BEIJING – China and the U.S. should combat protectionism as the global economic crisis worsens, Beijing said Tuesday, in response to a trade case by Washington that accuses China of unfairly promoting goods for export.
In a case filed Friday, the U.S. said China was violating global trade rules administered by the World Trade Organization in the way it operates a "famous brands" program to promote the sale of Chinese goods overseas.
"There are some different opinions between the two countries on trade and these differences should be solved through equal consultations," Foreign Ministry spokesman Qin Gang said at a news briefing.
"Under the current circumstances with the deteriorating financial crisis, we should be alert to trade protectionism in any forms," said Qin.
The United States could be cleared to impose economic sanctions against China if negotiations between the two nations fail to resolve the dispute and if a WTO hearing panel rules in favor of the U.S.
A notice on China's Ministry of Commerce said Sunday that China has always obeyed WTO rules and opposes protectionism. China will follow the rules of the WTO in dealing with the case, it said.
China's export-dominated economy is feeling the brunt of a drop of demand in its Western markets, with thousands of factories closing in its once-booming southern provinces. Critics say China is not doing enough to stimulate domestic consumption and is still trying to support its exporters, which could bring it into friction with the U.S. and other trading partners.
China also asked the WTO on Monday to investigate whether the United States is illegally taxing Chinese goods such as steel pipe and off-road tires. It is the first time Beijing has ever sought a WTO panel in a trade dispute.
In its case, the administration of President George W. Bush said China, in an effort to encourage worldwide recognition of Chinese brand names, has provided numerous types of subsidies at various levels of government. The allegedly illegal subsidies included: cash rewards to exporters, preferential government loans for exporters, research and development funds to develop new products for export, and payments to lower the cost of export credit insurance.
U.S. industry groups applauded the action.