China signed an agreement to remove 12 export subsidies

As requested by the United States, China will remove12 export subsidies by January 1, 2008.

While American companies are used to taking advantage of the low-priced labor and raw materials in China, the United States government is worried about their own competition against China.  

China’s exports have grown from $150 billion in 1996 to $970 billion in 2006 due to the implementation of various types of subsidies and tax rebates. However, this created a significant trade surplus and tensions with other trading partners. Early this year, the United States filed a complaint about the current situation in China with the World Trade Organization.  

With the additional subsidies removed, it will balance the imports and exports between the two trading countries. In addition, it will encourage Chinese companies to buy more local goods.