The United States is challenging China at the World Trade Organisation, alleging that Beijing unfairly subsidises exports in seven industries. The Office of the US Trade Representative (USTR) said on Wednesday that China had designated certain export companies as "demonstration bases" that received free or discounted services from suppliers. The US says China paid the suppliers almost US$1 billion over three years to provide those services. Getting help are textile and clothing makers, advanced materials and metals companies, light industrial firms, specialty chemical manufacturers, medical product makers and agricultural firms. The US says the subsidies violate WTO rules. "If you're a Chinese textile firm designated as a demonstration base, you might get subsidised IT services, subsidised product design services and subsidised training services for their employees, showing them how to use yarn spinning techniques and weaving technologies," US Trade Representative Michael Froman said. "All of these services, provided for free or at a discount, undermine fair competition." The challenge arose from an earlier investigation into Chinese subsidies for car and car parts exporters. The move is the first step towards bringing a formal case against China. The USTR said it would try to reach a settlement with China at the WTO. If that fails, the US can ask the WTO to rule on the dispute. A spokesman for the Chinese embassy in Washington said: "We hope the trade disputes can be properly dealt with under [the] WTO dispute settlement mechanism." The subsidies case is one of a number of trade disputes the US has with China. The US Department of Commerce reported last week that the US trade deficit with China set another record last year, rising 23.9 per cent to US$342.6 billion. The trade gap with China has been America's biggest deficit since China surpassed Japan in that category in 2000. The complaint comes as the Obama administration seeks congressional support for an ambitious trade agreement with 11 Pacific rim countries including Japan and Australia. The Trans-Pacific Partnership does not cover China.