The US complaint against Chinese aluminum subsidies is untrue, because the industry is highly competitive and market-oriented, said the Ministry of Commerce.
"Related loans to aluminum companies and their purchases of raw materials are fully market-oriented and commercialized", according to the ministry's announcement released on Friday afternoon.
"The so-called subsidy program is a misreading of the industry and a misunderstanding of the WTO rules."
The US government recently launched a complaint against Chinese aluminum subsidies at the WTO, charging that China has expanded its global market share by cheap State-directed loans and subsidized energy to the industry.
The ministry said the US request for consultations lacks a factual basis and is against WTO rules. Overcapacity is a global issue and the fundamental reason is the weak global economic growth, which needs to be address collectively by all countries.
"China is making efforts to increase the quality and performance of products in the aluminum industry as part of its supply-side reform, in the hope of adding more technological advantage to the products, rather than just price advantage," said Jiao Jie, aluminum analyst with Shandong-based bulk commodity information company Sublime China Information Group Co Ltd. In fact, China's aluminum export volume is very small compared with the domestic consumption. The US complaint is not going to have a substantial impact on Chinese aluminum enterprises' performance, Jiao added.
Regardless of rising tensions, China and the US would be unlikely to pursue a trade war, as the world's two largest economies are mutually beneficial and complementary, experts say.
