China blasts U.S. duties ahead of Obama visit

It also called for Washington's swift recognition that China is a market economy, which would make it harder for the United States to declare Chinese products are dumped.

China's calibrated response may be an attempt to avoid a tense atmosphere in the hope of concessions during Obama's visit.

"China does not want bickering to spoil the visit. That's a priority," said Wang Yong, a professor at Peking University who specializes in China-U.S. economic ties.

"Obama may, say, announce progress on recognizing China as a market economy during the visit, and so before that he needs to show people at home that China must play by the rules."

The United States on Thursday slapped preliminary anti-dumping duties on $2.63 billion in Chinese-made pipes used in the oil and gas industry, in the biggest U.S. trade action against China to date. That follows countervailing duties on the pipes, announced in September.

"China resolutely opposes the abuse of protectionist measures," China's Commerce Ministry said on its website.

Obama will visit China for several days from November 15 and trade disputes are likely to feature prominently.

China's investigation would target sedans with engine capacity of 2 liters and above, as well as sports utility vehicles, the Commerce Ministry said, issuing a long list of incentives and tax breaks granted by the U.S. federal government and the state of Michigan.

"We hope that the U.S. will set aside its biases and as quickly as possible recognize China's market economic status, thoroughly overcoming its double standards and giving equal and fair treatment to Chinese firms," it added.

MARKET ECONOMIES

In trade meetings with U.S. officials last week in the city of Hangzhou, the Chinese side pressed for recognition as a market economy, before the 2016 deadline negotiated when it entered the World Trade Organisation.

"We hope that the U.S. will abide by the principles of free trade and non-discrimination in trade under WTO rules in handling this issue," said vice minister of commerce Yi Xiaozhun.

Washington promised to set up a panel to consider the issue.

"The U.S. should give objective consideration to the fact that the fundamental problem of the concerned U.S. industries is the fall in consumption demand brought on by the financial crisis, and thereby make a just, fair and reasonable final determination" on the steel pipe duties, the ministry said.

SUVs and other imported luxury cars have become more common on the streets of Beijing in the past year, while Chinese car stimulus measures have helped boost domestic sales of the family cars made in China by Chinese and foreign manufacturers.

MARKETS

As long as China has no recognition as a market economy, trade partners can compare its products with those of other nations with different cost structures for labor or transport, when assessing whether products have been dumped.

Export-dependent Chinese industries are dominated by private firms, which cut margins to the bone by competing with each other at home and for export markets. Entrepreneurs pile into any promising industry, creating overcapacity that destroys profits.

Pipes that can carry highly corrosive oil and natural gas presented a new opportunity for Chinese steel processors moving up the value chain. Exports to the United States, their biggest market, tripled to $2.63 billion in 2008 compared with 2007.