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(China Daily)
Updated: 2007-09-04 09:11

Efforts by the United States and Mexico to push for investigations by the World Trade Organization (WTO) into China's alleged subsidizing of industrial exports are motivated by domestic political goals, the Ministry of Commerce said yesterday.

The two countries had lodged the lawsuit with a huge misunderstanding of China's policies, said a ministry spokesman.

On Friday, the WTO set up an expert panel to probe whether China was illegally subsidizing industrial exports as alleged by the United States and Mexico.

Related readings:  China's steel producers retort upon US accusation of subsidy  China blocks US, Mexican requests for subsidy probe  US to examine anti-subsidy duties on Chinese steel pipe imports  A possible subsidy charge on textile

The United States first filed the case to the WTO in February and was later joined by Mexico. The two countries complained that China was using tax breaks and other incentives to subsidize its exports in violation of WTO regulations.

"Their actions are motivated by domestic politics. They attempt to mix up the improvement in China's tax laws and regulations with the fruits of the WTO's dispute settlement mechanism," said the spokesman.

"China will not change its way of improving tax laws and regulations in accordance with the demands of its social and economic development," he said.

The United States and Mexico have also turned a blind eye to the progress made by, and actual conditions of, China's economic system reforms, he claimed.

"Some of the subsidies in their lawsuit have already been scrapped, and China's policies will also be in line with the WTO regulations after the Enterprise Income Tax Law comes into effect."

The Enterprise Income Tax Law will be effective on January 1, 2008.

The United States and Mexico have consistently made the requests for a WTO probe without acknowledging the progress made in consultations with China on March 20 and June 22 and China's sincere and constructive attitude, the spokesman added.