The Obama administration, under congressional pressure to take a tough stance on Chinese trade policies, determined Tuesday that Beijing unfairly subsidized $514 million in aluminum products last year.
The Commerce Department stopped short of making a stronger ruling on claims by U.S. leaders and manufacturers that an undervalued Chinese currency gives Beijing's exporters a lopsided price advantage.
The preliminary finding means that some Chinese aluminum importers must post cash deposits or bonds at a rate set by U.S. officials.
It comes as the White House attempts to strike a delicate balance ahead of November congressional elections that will be dominated by the weak U.S. economy.
The Obama administration wants to address worries by lawmakers who say the United States is losing jobs because China's currency policy keeps the yuan undervalued against the dollar and makes Chinese products cheaper in the U.S. But it also wants to preserve good ties with a country seen as crucial to dealing with global economic and environmental issues and with nuclear standoffs with Iran and North Korea.
On the politically sensitive currency issue, the Commerce Department refused to investigate allegations that China's currency practices are an unfair subsidy. It said the claims didn't meet U.S. requirements needed to start such an inquiry.
The U.S. aluminum companies that requested the duties alleged that the Chinese industry benefited from its currency policy. If Commerce had chosen to investigate the issue and decided that the currency was a subsidy, that could have opened up a wider range of imports to penalty tariffs.
Sen. Chuck Schumer, D-N.Y., a regular critic of China, said the ruling was incomplete. "The Commerce Department made its finding while still managing to ignore the elephant in the room, which is China's currency manipulation. Once again, even when the opportunity is thrust into its hands, the administration has refused to take action," Schumer said in a statement.
Lawmakers have called for imposing stiff penalties on Chinese imports if China doesn't move more quickly to revalue its currency. The Obama administration, however, has so far focused on targeting individual Chinese industries.
The U.S. and China are also arguing over access to each other's markets for tires, steel, movies, music and other goods.
"What the administration is doing here is like a pressure valve for the Congress," said Derek Scissors, a specialist on Asian economies at The Heritage Foundation think tank. "It's a natural response to not wanting to infuriate the Chinese on currency but wanting to do something about the fact that China's a trade predator."
The Commerce Department in April launched an investigation into whether certain Chinese aluminum products were being dumped, or sold at improperly low prices, because of government subsidies or other aid. Commerce is set to make its final determination in the aluminum case in November.
The U.S. aluminum companies argued that Chinese aluminum exporters benefited from a range of government help, including tax breaks, low-interest loans from state banks and subsidized rents.
Wang Baodong, a spokesman for the Chinese Embassy in Washington, said American industry won't be helped "by imposing a high rate of punishment on the Chinese imports." He called for an "expansion of trade between the two countries instead of trying to take measures to restrain the imports of similar Chinese goods to the U.S."
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