China's subsidies comply with WTO rules: Ministry

China's measures to offer subsidies to manufacturers in certain industries is in conformity with World Trade Organization rules and will help the country ship more quality products to the world market, the Ministry of Commerce said on Thursday.

The comment came after the Office of the United States Trade Representative challenged China at the WTO on Wednesday, claiming that the Chinese government offers subsidies for the exports of seven industries through "demonstration bases" that receive free or discounted services from suppliers. .

The US claimed China has paid the suppliers almost $1 billion over three years to provide computer and training services.

Given current global economic conditions, building model manufacturing bases and public service platforms to offer subsidies to cash-starved domestic companies is a practical way for them to seek and gain new market growth points, as well as improving the technical content and environmental protection standards of their products, the ministry said in a statement on Thursday.

The ministry expressed its regret over the matter and said all disputes will be resolved under the WTO rules.

Analysts said the US' chances of winning its complaint at the WTO over alleged Chinese export subsidies to seven domestic industries are mixed.

"This case continues the broader trend of the US and other trading partners challenging the subsidies and other preferential treatment that the Chinese government has provided to domestic enterprises through the WTO. Judging from its track record, the US has a reasonably good chance of winning this case as the WTO has upheld the US complaint in most subsidy-related cases it has filed against China since the country joined the WTO in 2001," Ka Zeng, professor of political science at the University of Arkansas, told China Daily in an e-mail. Zeng has written on China, trade and the US.

Zeng said the subsidies cited by the US resemble in part tax breaks that local, state and the federal governments hand over to American firms.

"While providing domestic companies with a competitive advantage just as tax breaks that US companies receive from federal, state and local governments, what raised the salience of these subsidies to the US is that they are often used as instruments of industrial policy to foster the growth of industries with strong ties with the state," Zeng said.

The seven sectors of the Chinese economy involved with the subsidies cited by the US complaint are textiles, apparel and footwear; advanced materials and metals (including specialty steel, titanium and aluminum products)； light industry; specialty chemicals; medical products; hardware and building materials, and agriculture.

Zeng did not think this case will directly affect negotiations for a Trans-Pacific Partnership since China is not a participant in the talks. TPP is a proposed free-trade deal covering the US, Canada and 10 countries in the Asia-Pacific region (not including China) that has been under discussion since 2005.

"However, the initiation of this case may help the Obama administration demonstrate its tough stand in trade negotiations in order to garner support for Congressional approval of the so-called fast-track negotiation authority that is sorely needed for TPP negotiations," she added.

Last year, the WTO sided with the US in at least two trade disputes. In June, the WTO found that China breached WTO rules by imposing extra duties on US cars and sport utility vehicles.

In August, the WTO found that China breached WTO rules by imposing duties and quotas on exports of rare earths, tungsten and molybdenum. Those export restraints promote China's own industry and discriminate against US companies using those materials, it said.