US spars with China over who subsidizes its industries the most

The US and China sparred over industrial subsidies at the World Trade Organization on Friday, with Beijing asking to set up a dispute panel to review the Inflation Reduction Act’s tax credits and Washington responding by accusing China of hypocrisy.

China described the IRA — President Joe Biden’s flagship environmental and industrial policy — as perhaps the biggest subsidy program ever enacted, according to a Geneva-based trade official. For China, some of the act’s provisions that favor domestic over imported goods are against international trade law, the official said, adding that now isn’t the time to ignore the WTO principle of non-discrimination.

The US objected to the request to set up a dispute panel, saying the IRA is an essential strategy for mitigating the global climate emergency. Washington accused China of being hypocritical given its domestic support for clean-energy producers and use of non-market practices that threaten all WTO members, according to the official.

With the US’s objection, the establishment of the panel was blocked, the official said.

The WTO recently highlighted China’s “lack of transparency” on its industrial subsidies, saying that Beijing does not provide information on how much it spends in sectors from electric cars to semiconductors. The IRA contains some $374 billion in energy and climate provisions, including tax credits for electric vehicles and incentives for clean-energy projects, in what the White House described as the largest-ever single investment to address climate change.