GENEVA China lost its bid to overturn U.S. legislation targeting unfair trade subsidies on Thursday, its second defeat in a World Trade Organization dispute within 24 hours.
A WTO dispute panel threw out China's claim that the U.S. "Public Law 112-99", signed by President Barack Obama in March 2012, broke world trade rules.
"The WTO panel's decision to reject China's challenge to our law is a significant victory for the United States," U.S. Trade Representative Michael Froman said in a statement.
"The WTO report preserves the ability of the United States to remedy unfair subsidies and dumping by China, for the benefit of American businesses and workers."
However, Froman said he was disappointed that China won another part of the case, in which the WTO ruled the United States had been wrong to punish some Chinese exports twice over - once for being subsidized and once for being "dumped", or sold at unfairly cheap prices.
"However, the panel's concerns relate to certain past determinations, and U.S. law now directs the Department of Commerce to investigate any possible overlap," Froman said.
China welcomed the panel's stance on the double counting in 25 U.S. trade investigations against Chinese exports between 2006 and 2012.
"The case has involved an annual export value of over $7.2 billion which implicates significant trade interests of China," China's Ministry of Commerce said in a statement.
The U.S. tariffs affected photovoltaic cells and modules used in solar power, various steel products, off-road tires and aluminum goods, as well as towers for windfarms.
China launched the complaint in September 2012, an apparent tit-for-tat move that came just hours after the United States lodged a complaint against China's support for car exports.
The U.S. "Public Law 112-99", also known as the "GPX fix", was rushed through after Chinese companies including GPX International Tire successfully argued at the U.S. Court of International Trade that the United States could not punish Chinese trade subsidies because China was not a market economy.
China's Commerce Ministry said it regretted the WTO's decision to uphold the retroactive U.S. law.
Both sides have 60 days to appeal the ruling, which came a day after China lost a WTO dispute over its restrictions on exports of rare earth metals, tungsten and molybdenum.
(Editing by Catherine Evans)