China's steel industry has flayed the 'Buy American' clause in the US$787 billion US stimulus plan and said such a move would make the infrastructure projects funded by the program inaccessible to Chinese steel products, a senior industry official said.

The 'Buy American' clause in the bill introduced by US President Barack Obama recently requires that all public works funded by the stimulus package should use only made-in-US iron, steel and manufactured goods.

"Such a clause is a violation of the World Trade Organization rules," Luo Bingsheng, vice-chairman, China Iron and Steel Association said yesterday.

"It is a discrimination against steel products from not only China but also others like European countries, Japan and South Korea," he said.

The new US law is also raising concerns among trade partners around the world. Experts warned that such a move would hamper US' trade with the BRIC countries - Brazil, Russia, India and China.

Earlier this month, China's commerce ministry spokesman Yao Jian also said the country was against protectionism of any kind.

"We believe that trade protectionist measures will worsen the already bad conditions under the financial crisis," he said.

Luo said the US steel output alone would not be enough to sustain domestic demand.

"If the country uses only domestic steel it is expected to see a gap of between 20 and 30 million tons every year," he said.

According to the US Census Bureau, the country imported 432,494 tons of steel worth US$677 million from China in December. China is the third largest steel exporter to the US.

China's steel exports stood at 59.23 million tons last year, down 5.5 percent from a year earlier while the export value increased 43.8 percent year-on-year to US$63.44 billion, according to the General Administration of Customs.

Monthly steel export declined sharply after reaching a peak of 7.68 million tons in August.

The figure stood at 2.95 million tons in November, the lowest since 2007, and picked up slightly to 3.17 million tons in December.

(China Daily February 24, 2009)