China accused of illegal bike subsidies Europe's bicycle manufacturers have accused their Chinese competitors of benefiting from illegal government subsidies, opening an acrimonious chapter in a long-running trade dispute. In a confidential complaint filed last month, the European Bicycle Manufacturers Association, an industry trade group, claims the Chinese government has lavished an array of unfair competitive advantages on its bikemakers, from preferable loan terms to favourable tax treatment. European companies, including Germany's Derby and the Netherlands" Accell, are demanding that the European Commission launch an investigation into the alleged subsidies. The Chinese embassy in Brussels could not immediately be reached for comment, although the country's manufacturers have rejected previous accusations of unfair conduct. The complaint marks the latest potential trade irritant between the China and the European Union, which have recently clashed over China's restrictions on the export of rare earth materials and EU proposals to exclude foreign companies from government procurement contracts. The EU, the world's most lucrative bicycle market, and China, its biggest producer, have clashed over bikes for nearly two decades. Under heavy lobbying from domestic manufacturers, Europe has maintained tariffs on Chinese bikes since 1993 for "dumping," or selling goods below their production cost. In a closely watched decision, the commission last year chose to extend the 48.5 per cent duty to 2016 - although it has since launched a separate review. The ruling left Chinese manufacturers fuming. Thanks in part to those tariffs, China has gained only a 3.3 per cent share of the €5bn EU bike market, even as it has dominated the US and Japanese markets. This latest complaint can also be seen as an attempt by European manufacturers to ward off future challenges to the 48.5 per cent tariff. It opens a new front in the dispute because European manufacturers are for the first time alleging the separate offence of illegal government subsidies. Under EU rules, the European Commission must decide within 45 days whether to pursue the case. A spokesman for Karel De Gucht, the trade commissioner, would neither confirm nor deny that the complaint had been filed. Mr De Gucht has sought to encourage companies to file more anti-subsidy cases against China since his appointment as trade commissioner in 2009. His aides argue that such cases expose unfair practices, such as the granting of loans below market rates and free real estate, that they believe are propelling Chinese exporters" success. In a landmark decision, the commission last year imposed anti-subsidy duties against Chinese makers of coated paper - the first time the bloc had punished China for state subsidies. That strategy has also opened the EU up to criticism because of its own record lavishing subsidies on favoured industries. In their complaint, EU bike manufacturers argued that China's share of the market was far higher than 3.3 per cent because exporters were increasingly re-routing bicycles through third countries, such as Sri Lanka. The trade group's chairman, Brian Montgomery, also cast his members as innovators of high-tech alloys and advanced manufacturing techniques that the crisis-hit EU is desperately trying to promote. "EU bicycle production is a vibrant "green" sector, featuring innovative fine mechanical precision technology, and it must not be allowed to go the way of the US bicycle sector, with substantial production swept away by imports from China," Mr Montgomery said in a statement provided by his lawyer.