China agrees to end program providing export subsidies

In a deal coinciding with global economic meetings in Washington, the trade representative’s office said that China has agreed to end a program known as its “demonstration bases-common service platform” in which it provides export subsidies on a range of products from metals to agriculture and textiles to Chinese companies in seven economic sectors.

It comes about a year after the United States filed a complaint with the World Trade Organization about the program, alleging “unfair, prohibited export subsidies to a large range of Chinese manufacturers and producers”.

The agreement is a step by Beijing to reduce trade frictions with the United States that range from steel and agricultural products to technology and banking.

US Trade Representative Michael Froman said that this agreement addresses all elements of the subsidy program. The agreement also ensures the necessary transparency to give them a solid basis to monitor closely and confirm whether the terms of the agreement are being met.

One source knowledgeable about the agreement said that it was not comprehensive enough to do much to help the US industry, given its focus was only on specialty products.

Last year, the US trade office estimated that suppliers of subsidised services to Chinese exporters received more than $US1 billion ($A1.3 billion) from the Beijing government over three years and some companies received at least $US635,000 in support annually.

The Chinese industries that have received the subsidies under the program include textiles, light industry, specialty chemicals, medical products, hardware, agriculture and advanced materials and metals, including specialty steel and aluminium products, the trade representative’s office said.