The United States is alleging hat China is unfairly aiding exporters in seven industries in subsidizing payments by paying around US$1 billion in the last three years to avail of free or discounted services.

U.S. has challenged China at the World Trade Organization (WTO) on Wednesday regarding the issue, pointing out certain export companies that are being used by China as "demonstration bases" in order to get access to the discounted or free services.

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The seven industries being pinpointed include advance materials and metals companies, clothing makers, agricultural firms, light industrial films, medical product makers, specialty chemical manufacturers and textile makers. According to U.S., China's act of paying for the subsidies violates the rules of the WTO.

"If you're a Chinese textile firm designated as a demonstration base, you might get subsidized IT services, subsidized product design services and subsidized training services for their employees, showing them how to use yarn spinning techniques and weaving technologies," U.S. Trade Rep. Michael Froman explained. "All of these services, provided for free or at a discount, undermine fair competition."

Froman testified before the House Ways and Means Committee in Washington D.C. regarding the allegations against China. Chinese subsidies for car and carp parts exporters have been investigated in the past and Wednesday's challenge is the first move for a formal case being held against China.

The United States Trade Representative (USTR) will attempt to come up with a settlement in the issue but if they fail to reach an agreeable outcome, WTO will rule on the complaint.

Chinese embassy spokesperson Zhu Haiquan released a statement on Wednesday saying they are hoping the disputes and allegations will be dealt with properly by the dispute settlement mechanism of WTO. 

Tagsexport aid, WTO, U.S., unfair export practice, trade dispute