Efforts by the United States and Mexico to push for investigations by the World Trade Organization (WTO) into China's alleged subsidizing of industrial exports are motivated by domestic political goals, the Ministry of Commerce said Monday.

The two countries filed the lawsuit due to a huge misunderstanding concerning China's policies, said a ministry spokesman.

On Friday, the WTO set up an expert panel to probe whether China was illegally subsidizing industrial exports as alleged by the United States and Mexico.

The United States first filed the case to the WTO in February and was later joined by Mexico. The two countries complained that China was using tax breaks and other incentives to subsidize its exports in violation of WTO regulations.

"Their actions are motivated by domestic politics. They are attempting to mix up revisions in China's tax laws and regulations with the fruits of the WTO's dispute settlement mechanism," said the spokesman.

"China will continue its current method of improving tax laws and regulations. This practice is in accordance with the demands of its social and economic development," he stated.

The United States and Mexico have also turned a blind eye to the progress made?as well as actual conditions regarding China's economic system reforms, he claimed.

"Some of the subsidies in their lawsuit have already been scrapped. China's policies will also be in line with the WTO regulations after the Enterprise Income Tax Law comes into effect."

The Enterprise Income Tax Law becomes effective on January 1, 2008.

The United States and Mexico have consistently requested a WTO probe without acknowledging the progress made through WTO consultations with China on March 20 and June 22. China has a sincere and constructive attitude, the spokesman added.

(China Daily, Xinhua News Agency September 4, 2007)