Amid a swathe of trade disputes between the two economic powers, the US Trade Representative said "significant questions have arisen regarding China's adherence to ongoing (World Trade Organization) obligations."

While lauding the "many impressive steps" China has taken to reform its economy in the nine years since it joined the WTO, the report paints a picture of a reform movement that ran aground in the middle of the last decade.

"The overall picture is complex, given a troubling trend toward increased state intervention in the Chinese economy in recent years," the 100-plus page report stated, listing a string of disputes.

"Problems can be traced to China's pursuit of industrial policies that rely on excessive, trade-distorting government intervention intended to promote or protect China's domestic industries and state-owned enterprises."

"This government intervention, evident in 2010, is a reflection of China's historic yet unfinished transition from a centrally planned economy to a free-market economy governed by rule of law.

The report also cited differences between China's central and local governments as a cause of difficulty in implementing reforms.

It comes a day after Washington asking the WTO to examine subsidies to the Chinese wind power sector.

Just weeks before President Hu Jintao's January visit to the United States, the US government said Wednesday it had asked the WTO to deal with allegedly illegal subsidies that favor Chinese manufacturing firms.

The United States alleges China offers multi-million-dollar grants to only companies making turbines and other equipment with Chinese parts, a violation of trade rules.

earlier related report
China tells local governments to curb land prices
Beijing (AFP) Dec 20, 2010 - China has ordered local authorities to rein in rapid rises in land prices and pledged to crack down on shady developers, as Beijing struggles to keep a lid on the country's red-hot property market.

In a statement posted on its website late Sunday, the ministry of land and resources highlighted the "complicated" situation in the sector and said high prices in some cities had triggered widespread public concern.

The move comes amid expectations that China will raise interest rates as it tries to rein in the property market while also looking to curb inflation after consumer prices jumped 5.1 percent in November, the fastest in over two years.

"Local land authorities should pay high attention to this... and firmly curb the overly fast growth in land prices," the ministry said, adding it would strengthen its crackdown on land hoarding and speculation.

Cities that have not allocated enough space for low-income housing are banned from selling land for high-end real estate projects for the rest of this year, it said.

Local authorities must inform the ministry of any land that is auctioned at more than 50 percent above the proposed price or that is sold at a record-high price, it added.

Developers that build high-end properties on land that was initially sold for affordable housing projects will see that land repossessed by the government and their income confiscated, it said.

Property prices in China remain stubbornly high despite a range of government measures to bring them down, such as hiking minimum down-payments on all property transactions to at least 30 percent.

In November, prices in 70 major cities were up 0.3 percent from October -- their third straight month-on-month rise -- and were 7.7 percent higher than a year ago, official data showed.

A top government think tank said this month that land disputes were the most volatile social problem in rural China, as forced official property seizures in the rush to cash in on the market boom have sparked growing unrest.

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