America and China are sparring over subsidies

AS TRADE TALKS continue between America and China, old fights are rumbling on. On October 28th China asked the World Trade Organisation (WTO) to allow it to retaliate against $2.4bn of imports from America, as part of a long-running dispute over American treatment of Chinese exports. The final sum will be set by an arbitrator, and will be small in the broader context of the two countries escalating trade war. But the symbolism will make it sting.The dispute concerns two of Americas biggest gripes: Chinas economic model and the WTOs inability to constrain it. America accuses Chinas government of bloating its private sector with subsidies, which spill over to affect businesses abroad. If state-owned banks make cut-price loans, or state-owned electricity companies sell cheap energy, Chinese exporters have an unfair advantage, it says. By last year America had imposed tariffs on almost 7% of Chinese imports, citing such subsidies and the need to defend itself.
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