The US filed a trade case with the WTO, complaining that the Chinese government had provided export subsidies to Chinese car and auto part makers. Obviously, this case is nothing more than a political move aimed to drum up election votes for President Barack Obama, who vowed recently to create more jobs in the US automotive industry.
Specifically, the US has complained that the government helped create export bases in China for local manufacturers to ship their cars abroad. However, there is nothing wrong with establishing such bases if they are used to satisfy market demand.
Of course, some local Chinese governments provide subsidies to domestic vehicle and parts manufacturers. But most of these subsidies are used to fund research and development. Moreover, most of these subsidies are temporary, lasting between five and 10 years, again in line with the WTO's rules.
The author is Mei Xinyu, a researcher at the Chinese Academy of International Trade and Economic Cooperation of the MOFCOM.
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