These products will be exempt from extra tariffs starting February 1, even if imports exceed the set quotas, said a notice issued by the Ministry of Foreign Trade and Economic Co-operation (MOFTEC).

Industry insiders said the exclusion was widely expected because imports of some steel products had already reached up to half their quotas in the first month after the measures were adopted.

The original safeguard measures involve five categories of steel products: cold-rolled thin plate, hot-rolled thin plate, painted thin plate, non-grain oriented silicon steel and cold-rolled thin stainless sheet.

China imported 10.09 million tons of the five steel products in 2001, accounting for 58.61 per cent of the country's total steel imports of 17 million tons, according to official statistics.

Imports that exceed certain quotas will be levied extra tariffs of 10.3 per cent to 23.1 per cent as per the measures, which became valid on May 24, 2002, and run through May 23, 2005.

Also on Friday, US President George W. Bush rejected proposed quotas seeking to limit rising imports from China of mechanical devices known as pedestal actuators.

Chinese officials were not available for comment but trade experts saw the US decision as good news in a delicate stage of the World Trade Organization (WTO)'s free-trade negotiations.

In October, the US International Trade Commission voted 3-to-2 in favour of a request for relief by US manufacturer Motion Systems Corp of Eatontown, New Jersey. The commission recommended import quotas.

The US producer's appeal drew attention for being the first attempt to get import relief under special "safeguard" provisions that allowed China to join the WTO. The US Congress approved special safeguard relief from Chinese imports as a condition for the United States to grant permanent normal-trade-relations status to China, a key precursor of China's accession to the WTO.

Safeguard relief does not require evidence that a product has been sold at "less than fair value" or is produced with government subsidies as is required for traditional anti-dumping and countervailing import duties. Safeguard remedies are allowed in the event of a "market disruption," which the law defines as a rapid increase in imports that materially injures a domestic industry.

Bush said the overall impact of quotas on the US economy would be more damaging than any relief to Motion Systems.