Sino-US trade ties face test amid global slump

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BEIJING, Dec 25 (Reuters): Trade frictions between Beijing and Washington are expected to grow amid a deepening world recession and as US interest groups demand President-elect Barack Obama put "tough on China" trade talk into action.
The US Trade Representative's office announced last Friday it had begun legal action at the World Trade Organisation (WTO) aimed at halting Chinese government subsidy programmes to boost the sale of Chinese-branded goods around the world.
The action, against a patchwork of cash grants, preferential loans and other incentives paid to Chinese exporters, follows recent US moves to put import duties on Chinese goods, including steel products, paper and off-road tires.
China, where millions of workers have been laid off in recent months amid slowing exports, has protested against the charge, casting incentives given by local governments to exporters as merely one-off, symbolic "rewards."
Obama, who has pledged to place more pressure on China over its export subsidies and managed currency, stands to inherit a long list of trade disputes that will test already thorny relations with its second-largest trading partner.
"The US has set a bad example to other members of the WTO in its anti-subsidy action," said Ren Yifeng, of WTO research group affiliated to China's Commerce Ministry.