U.S. Puts Tariffs on Chinese Paper

In China, the administration's logic has provoked charges that the United States is simply ignorant of the ways of modern Chinese business -- misinterpreting, as illegal subsidies, temporary assistance that the government provides state-owned companies to ease their transition toward capitalism.

"Americans don't really understand China's economic operating rules," said Zhao Yumin, director of the Chinese Academy of International Trade and Economic Cooperation, which is affiliated with the Ministry of Commerce. "They are saying this is a matter of fair trade, but they got something wrong in the basic facts."

Given the degree to which the U.S. and Chinese economies have become intertwined, with firms in the United States relying on cheap products from China, Zhao predicted that the Bush administration's tactics would eventually provoke a backlash at home.

"They will not only harm China but also American interests," she said.

In Washington, some analysts suggested the tariff case reflects domestic politics, not the pursuit of genuine national interest. Grant Aldonas, a former Bush administration undersecretary of commerce for international trade, said U.S. companies doing business in China are chiefly interested in greater protection of copyrights and patents, combating rampant counterfeiting, and eliminating barriers to selling products.

"This is for consumption on Capitol Hill," Aldonas said. "I'm afraid the administration is being responsive to the wrong group."

Aldonas said the subsidy case would undercut the high-level dialogue between China and the Bush administration, led by Treasury Secretary Henry M. Paulson Jr., which is aimed at progress on major issues, such as persuading Beijing to reform its banking system to allow its currency to float with the market.

At least one of the Chinese companies targeted by the duties said it would fight the U.S. decision. Gao Junjie, a manager at the Shandong Chenming Paper Holdings, which would have a 10.9 percent duty imposed on its high-gloss paper, said the company had hired a team of lawyers.

Chenming sends about 10 percent of its paper to the United States each year. Its paper sells domestically for $850 a ton, but only $750 in the United States because it does not have to pay state taxes on its exports. The Chinese company also receives discounts on imported equipment and loans from state-owned banks, Gao said. He said the company does not think any of this assistance is illegal or unfair.

"The sanctions are completely unjustified," Gao said.

But that flow of credit explains why U.S. firms are crying foul.

"We can compete against Chinese wages, but competing against the deep pockets of the Chinese government is entirely different," said John Engler, president of the National Association of Manufacturers, in praising the Commerce Department's action.

Goodman reported from New York. Staff researchers Wang Juan and Crissie Ding contributed to this report from China.