China said that domestic politics had driven US and Mexican complaints about its tax regime, and a World Trade Organization investigation would find Beijing’s policies already met global rules.
The World Trade Organization (WTO) launched a panel to investigate China’s tax regime. Mexico and Washington have argued that tax refunds, reductions and exemptions discriminate against imported products, or subsidize Chinese exports.
Beijing robustly rejected the allegations. “The two parties that brought the complaints have seriously misunderstood the relevant policies, and have ignored progress and realization of reform to the Chinese economic system,” the Commerce Ministry said in a statement.
Once a new tax law had been fully implemented, China’s policies would fully comply with WTO rules, it added.
Although China eliminated one subsidy program challenged by Mexico and the United States, it also passed a revised income tax law that the two say appears to give new unfair subsidies.
The Commerce Ministry said the Mexican and US complaint was aimed at domestic audiences, and politicians there hoped to attribute China’s independent progress in reforming its tax policies to the case they had brought.
Chinese trade is a highly sensitive issue in the United States, where many lawmakers blame Beijing’s state subsidies and exchange rate policies for the huge US trade deficit with the fast-growing Asian exporter. (Reuters)