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China denounces U.S. shipbuilding probe as politically motivated 'mistake'

Ships are built at Guangzhou Longxue Ship Building Conglomeration's massive dockyard in Nansha, a major city in Southern China's Guangdong Province in October of 2013. Five labor unions in the United States have accused China of employing non-market practices for years in its effort to dominate the shipbuilding industry. File Photo by Stephen Shaver/UPI
Ships are built at Guangzhou Longxue Ship Building Conglomeration's massive dockyard in Nansha, a major city in Southern China's Guangdong Province in October of 2013. Five labor unions in the United States have accused China of employing non-market practices for years in its effort to dominate the shipbuilding industry. File Photo by Stephen Shaver/UPI | License Photo

April 18 (UPI) -- China late Wednesday called on the United States to end its investigation into its shipbuilding industry, denouncing the probe as a politically motivated "mistake."

The official statement from China's Ministry of Commerce was issued hours after U.S. President Joe Biden discussed the investigation during a speech he gave Wednesday at the United Steelworkers headquarters in Pittsburgh, Pa.

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"China strongly opposes and is firmly against this move," China's Ministry of Commerce said. "We urge the U.S. to respect facts and multilateral rules, immediately cease its erroneous actions and return to the rules-based multilateral trading system."

The investigation was launched Wednesday by U.S. Trade Representative Katherine Tai after reviewing a petition filed by five national labor unions on March 12 that accuses China of employing non-market policies far more aggressive and interventionist than employed by any other country to dominate the global shipbuilding, maritime and logistics sector.

"The American commercial shipbuilding industry is a shell of its former self," the petition states. "The biggest obstacle to the industry's recovery is the unfair trade practices of the world's largest shipbuilding nation: China."

The unfair practices alleged include policy loans from state-owned banks, equity infusions and debt-for-equity swaps, the provision of steel from state-owned steel producers at below market value, tax preferences, grants and "lavish financing from China's state-owned export credit agencies," among others. The 134-page petition includes 150 exhibits.

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The investigation was launched under the Trade Act of 1974, Section 301, which is designed to address unfair foreign practices affecting U.S. businesses and arms the U.S. Trade Representative to take action if violations are confirmed.

In launching the Section 301 investigation, Tai said the petition presents "serious and concerning allegations" against China employing unfair, non-market policies and practices in order to achieve its goal of dominating the maritime, logistics and shipbuilding sectors.

"The allegations reflect what we have already seen across other sectors, where the PRC utilizes a wide range of non-market policies and practices to undermine fair competition and dominate the market, both in China and globally," Tai said in a statement, referring to China by the initials of its official name, the People's Republic of China.

"I pledge to undertake a full and thorough investigation into the unions' concerns."

China's commerce ministry rebuked the investigation, stating the petition is full of unfounded allegations that unfairly blame Beijing for the U.S. shipbuilding industry having lost its "competitive advantage years ago."

It also accused the United States of hypocrisy for blaming it of adopting non-market practices when it provides subsidies to its own industries.

"In reality, the development of Chinese industries is the result of technological innovation by enterprises and active participation in market competition, rendering the U.S. accusations groundless," it said.

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"Launching a new 301 investigation against China for domestic political reasons is compounding one mistake with another."

Biden announced the investigation along with several other measures his administration was taking to protect the United States from China's policies, including threatening to impose triple tariffs on Chinese steel and aluminum.

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