China's trade ministry said that a complaint by the United States and Mexico over Chinese tax breaks that led to a World Trade Organization investigation was based on a "huge misunderstanding" and had political purpose.
The WTO's Dispute Settlement Body on Friday accepted the complaint, targeting China's industrial subsidies that the two North American countries claim unfairly give Chinese products a competitive edge on the world market.
"The Chinese side thinks the suitors' actions are motivated by domestic politics," said a statement posted on the Commerce Ministry's website on Monday.
"They attempt to mix up the self improvement in China's tax laws and regulations with the fruits of the WTO's dispute settlement mechanism."
It said China would not be forced by the complaint to change its own pace of improving its economic laws and regulations, including tax policies.
Baghdad Bob is assisting the Chinese government with PR again. It is a subsidy. China will probably back down on this one and it will probably receive some consolation prize from the US government. There will be a face saving article: US was wrong but we changed law.
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