BEIJING - China is disappointed the European Union has decided to launch an anti-subsidy investigation into imported Chinese coated paper, Ministry of Commerce spokesman Yao Jian said on Saturday.

"China will closely follow this issue and reserves its right to take necessary measures in accordance with WTO rules," Yao said.

He said the coated paper probe is the EU's first anti-subsidy investigation into Chinese products.

The EU on Saturday opened an inquiry into whether Chinese manufacturers of coated fine paper receive trade-distorting subsidies and, if so, whether it is damaging to Europe's paper industry, according to the EU's Official Journal.

The move comes two months after the EU launched an investigation into below-cost or "dumped" sales on Chinese coated paper, a product used in the publication of books and brochures.

The latest inquiry stems from a March 4 complaint by the European Association of Fine Paper Manufacturers on behalf of producers who account for more than 25 percent of the EU's output of coated fine paper, said the European Commission, which did not identify any companies.

The same industry group filed a dumping complaint covering the same product in January, prompting the European Commission to open an initial trade probe the following month.

Yao said on Saturday increased trade protectionism is a major threat to world economic recovery. "To create a win-win situation, China and the EU should settle trade disputes cooperatively," he said.

Ministry of Commerce data shows the EU initiated seven anti-dumping investigations against China in 2009. The EU is China's largest trade partner, with bilateral trade volume exceeding $360 billion last year.

Xinhua - Bloomberg

(China Daily 04/19/2010 page3)