Plot Thickens: China Calls US "Bluff"

♠ Posted by Emmanuel in , at 3/07/2007 10:33:00 PM
Party mouthpiece the People's Daily reports that China has acceded to US requests for bilateral consultations at WTO headquarters in Geneva over alleged subsidies (case 358). It further claims that not only will Japan participate as a third-party observer, but also Mexico, Australia, and the EU. The article suggests that China is calling America's "bluff":

Chinese experts said that the US had not put forward evidence on China's industrial subsidies, and the United States and other developed countries granted much higher subsidies, such as export tax rebates, to their own industries.

However, it is doubtful that the other parties would have joined if this case had such limited merit as the article implies (we should be wary of self-serving bluster from any state publication, no?), or that the US Trade Representative would bring forth weighty accusations without substantive evidence. I still see Chinese movement on this front; they will give in some. After all, China is supposedly keen on removing incentives like tax breaks extended to foreign firms in the past that have benefited them at the expense of local firms. Perhaps China is trying to lower the high cost of prosperity.

Update (March 9): China has decided to end discounted loans of up to 10% to exporters in important sectors. I don't enjoy gloating but...see, I told you so ;-)