China denies export subsidy in US trade row

BEIJING, Dec 23 (Reuters) - China on Tuesday, December 24th denied it was subsidising exports of certain branded goods as alleged by the United States in a complaint at the World Trade Organisation last week.

The United States began legal action at the WTO on Friday to halt the Chinese government subsidy programmes.

The subsidies benefit a wide range of Chinese industrial sectors, including household electronic appliances, textiles and apparel, a range of light manufacturing industries, agricultural and food products, metal and chemical products, medicines and health products, the U.S. Trade Representative's Office said.

The subsidies include cash grant rewards for exporting, preferential loans for exporters and payments to lower the cost of export credit insurance, the USTR said. But China's official Xinhua news agency quoted an official with the national quality watchdog as saying this was not the case.

"Some local governments do give rewards to those selected enterprises, but these rewards are small, symbolic and one-off, not a long-term preferential policy," said Hui Boyang, deputy director of the quality management department of the General Administration of Quality Supervision, Inspection and Quarantine.

"In short, China gives no subsidies to help the export of 'famous brands,'" he said. "While policies like export tax rebates are based on all eligible products instead of certain brands."

China's Commerce Ministry said over the weekend that the country respected WTO rules, opposed trade protectionism and would deal with the case through the WTO.

The new case, which began with a formal request for dispute settlement consultations with China, comes just one month before the Bush administration leaves office on Jan. 20.

It will be up to the incoming administration of President-elect Barack Obama to decide whether to take the next step and request a dispute settlement panel, if the two sides cannot negotiate a solution in the next 60 days.

The U.S. trade deficit with China set a record $256.2 billion in 2007, and could surpass that this year even with the recent slump in world trade.