CINCIN­NATI/GENE­VA-Pres­i­dent Barack Oba­ma on Mon­day said the Unit­ed States was chal­leng­ing Chi­nese au­to and au­to-parts sub­si­dies that threat­ened Amer­i­can jobs as he cam­paigned in Ohio, an au­to man­u­fac­tur­ing state that could be de­ci­sive in the No­vem­ber pres­i­den­tial elec­tion. Bei­jing fired back with a com­plaint against US du­ties on many Chi­nese ex­ports, in the lat­est ex­am­ple of trade ten­sion be­tween the world's two largest economies.

US trade of­fi­cials said their World Trade Or­gan­i­sa­tion case goes af­ter Chi­nese gov­ern­ment grants and oth­er sub­si­dies that have helped the Asian gi­ant rise to the fifth-largest au­to and au­to parts ex­porter in 2011, from 16th in 2002. "These are sub­si­dies that di­rect­ly harm work­ing men and women on the as­sem­bly lines in Ohio and Michi­gan and across the Mid­west," Oba­ma told a cam­paign ral­ly. "We are go­ing to stop it. It is not right, it is against the rules, and we will not let it stand."

Re­pub­li­cans, in­clud­ing pres­i­den­tial nom­i­nee Mitt Rom­ney, who has ac­cused Oba­ma of not be­ing tough enough with Bei­jing, cast the move by the De­mo­c­ra­t­ic White House as a bla­tant ef­fort to sway votes in an elec­tion bat­tle­ground state. "Cam­paign-sea­son trade cas­es may sound good on the stump, but it is too lit­tle, too late for Amer­i­can busi­ness­es and mid­dle-class fam­i­lies," Rom­ney said in a state­ment. This was the sec­ond time in re­cent months that Oba­ma has an­nounced a trade ac­tion against Chi­na while in Ohio.

This year, the Unit­ed States has al­so pur­sued an­ti-dump­ing and coun­ter­vail­ing du­ty cas­es against Chi­nese-made so­lar pan­els and wind tur­bine tow­ers in re­sponse to in­dus­try pe­ti­tions. The new case fol­lows pleas from US steel­work­ers and oth­er union groups for ac­tion to stop what they said was a flood of un­fair­ly sub­sidised Chi­nese au­to parts.

It tar­gets cash grants, be­low-mar­ket loan in­ter­est rates, pref­er­en­tial tax treat­ment and oth­er ex­port-con­tin­gent sub­si­dies pro­vid­ed to Chi­nese au­to and au­to-parts man­u­fac­tur­ers in gov­ern­ment-des­ig­nat­ed re­gions known as "ex­port bases." Those bases pro­vid­ed at least US$1 bil­lion in sub­si­dies to au­to and au­to-parts ex­porters in Chi­na dur­ing the years 2009 through 2011, US of­fi­cials said.

"Chi­na's ex­ports of au­to parts went from rough­ly US$7 bil­lion in 2002 to al­most US$70 bil­lion to­day," a se­nior ad­min­is­tra­tion of­fi­cial said. "The gist of what we're do­ing is to make sure Chi­na does not dis­tort the glob­al mar­ket...by frankly flood­ing the world with cheap au­to parts."

Reuters