By Jiang Wei (China Daily)
Updated: 2007-08-01 09:34

Allegations in the United States that China's iron and steel industry is being subsidized and aided by the government are groundless, according to an industrial body.

The development of China's steel industry is not a result of so-called government subsidies, China Chamber of Commerce of Metals Minerals & Chemicals Importers & Exporters (CCCMC) told China Daily yesterday.

The chamber of commerce made the comments over claims by US steel manufacturers that it is subsidies and government intervention that have created China's steel industry - the largest in the world.

"The development of China's market economy injects infinite vigor and vitality into the steel industry, which is exactly the 'market force' mentioned by the US side," CCCMC said.

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It argued that the subsidy claim made by US steelmakers is biased because it denies the achievements of the Chinese steel industry over the past three decades.

CCCMC pointed out that it is in fact the US government that has provided "long-term and all-round subsidies" as high as $100 billion to its steel industry over the past three to four decades.

The Chinese government mainly leverages economic rules and measures such as taxes in macro-regulation to adjust the market rather than intervening in individual operation of enterprises, CCCMC said.

"It's contradictory for the United States to accuse, on one hand, the Chinese government of intervening with the steel industry, and require, on the other, the Chinese government to adopt other administrative approaches such as licensing of steel exports," the industry body said.

The US iron and steel sector, led by the American Iron and Steel Institute, the Steel Manufacturers Association, the Specialty Steel Industry of North America and the Committee on Pipe and Tube Imports, has been complaining against "government subsidies and interferences" in China since last year.

The US industry has also asked the government to launch both anti-dumping and countervailing investigations against two kinds of steel products imported from China.

The iron and steel industry's claims partially led to the US complaint at the World Trade Organization saying China's state subsidies allow it to export its goods on the cheap and prevent US companies from competing fairly, both at home and in third markets.