By on November 17, 2009

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As U.S. President Barack Obama landed in Shanghai for a weeklong visit to his largest creditor, China, the news awaited him that China’s Ministry of Commerce will investigate the U.S. government’s financing and rescue plans for the American auto industry, Shanghai Daily reports.

The move is part of China’s probe into possible dumping and subsidies on U.S.-made vehicles imported to China, the ministry said. Trade officials will be looking for dumping practices and for unfair government subsidies.

Ministry spokesman Yao Jian said China’s probe will look into 24 items which include the U.S. government’s rescue and restructuring plans for the auto industry as well as government subsidies on new-energy vehicles and its “cash-for-clunkers” incentive program.

The concerned U.S. automakers have the right to defend themselves with evidence presented to Chinese investigators by registering within 20 days after China started the probe of U.S. auto imports on November 6, and corrective action must be taken within 60 days after a case is registered.

The investigation applies to sedans and off-road vehicles with engine displacements of 2.0 liters or more, and the whole process of the probe and ruling is expected to be completed within 12 months.

The probe is widely seen as a tit-for-tat measure after Obama imposed punitive tariffs on Chinese tires and steel pipes. These investigation have become a common occurrence: The U.S. has carried out 13 investigations against Chinese products this year for alleged dumping and illegal subsidies.

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