Reuters quoted the Ministry of Commerce said China has launched an investigation into US and Russian imports of some steel products, escalating a trade dispute during US Treasury Secretary Mr Timothy Geithner first visit to Beijing since taking office.
The Chinese investigation comes 10 days after a US trade panel gave its unanimous approval to a government probe that could lead to steep US duties on some Chinese steel imports.
The Chinese ministry said in a statement that "The trade remedy measure is only to correct unfair trade affairs and the Ministry of Commerce will protect the interests of domestic enterprises via a trade remedy investigation."
The Chinese Commerce Ministry statement said it had launched an anti-dumping case into US and Russian imports of grain-oriented flat-rolled electrical steel and was investigating subsidies for the steel product in the United States.
The investigation was prompted by the Wuhan Iron and Steel Group, a company executive said. Wuhan has annual production capacity of 120,000 tonnes of grain-oriented electrical steel and 960,000 tonnes of non-oriented electrical steel.
The executive, who asked not to be named as he was not authorized to speak to media, said that "Imports had seriously hurt Chinese mills' profits. Due to the price war, domestic prices have fallen to CNY 25,000 a tonne this year from CNY 45,000 in the previous years."
The executive declined to comment on the production cost of the product in the mill. The investigation also reflects Beijing's worries that shrinking exports and climbing imports will hinder the recovery of the country's steel industry, which is struggling to break even and pushing for a price cut of at least 40% in annual talks on iron ore prices.
Analyst Mr Henry Liu at Macquarie Bank said "The problem is China has started to import some normal steel products, such as hot-rolled steel sheets, this year. Previously, most of the imports were high-end products that China cannot produce itself."
Customs data showed that China was a net importer of nearly 900,000 tonnes of crude steel in April, the second month running that inflows have exceeded outflows for the country, which had been a net steel exporter since 2005.
In April, a Chinese newspaper quoted a senior industry official as saying China would retaliate if the United States decided to investigate the complaint.