A Chinese paper company hit by U.S. protectionist duties said on Friday that Washington has turned it into a scapegoat as part of a "trade containment strategy" directed at China and it vowed to fight the duties.

The United States imposed the duties on Chinese coated paper last week, citing "unfair" subsidies. It marked a policy shift that could open the way for other U.S. producers to demand action against Chinese exporters that they say enjoy state backing in violation of trade rules.

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The decision reversed a decades-old policy against applying such countervailing duties on goods from so-called "non-market" economies, such as China.

But one of the targeted companies, Gold East Paper, a subsidiary of multinational Asia Pulp and Paper (APP), denied it owed its trade share to unfair government backing.

It said the duties were "implementing a meticulously planned strategy of trade containment directed against China under the incitement of the Department of Commerce."

Washington had "made a totally political decision that completely ignores the facts," Gold East said in a statement provided via the China office of APP.

Gold East, based in eastern China's Jiangsu province, owed its competitiveness to cheap labor, advanced equipment, and cheap wood from Southeast Asia, the emailed statement said.

"We will certainly use every channel and adopt every legitimate means to resist this to the very end," it said of the duties.

CALM URGED

Washington announced a preliminary countervailing duty of 10.90 percent against Shandong Chenming Paper Holdings and 20.35 percent against Gold East Paper in a case brought last year by NewPage Corp., a Dayton, Ohio, manufacturer.

A preliminary rate of 18.16 percent will apply to all other imports of glossy paper from China.

Glossy paper imports from China have risen to $224 million in 2006, from $29 million in 2004.

In further signs of trade tensions, Washington sought consultations at the World Trade Organisation in February about what it says are illegal Chinese subsidies for steel, computers, clothing and other industries.

The U.S. paper duties drew a chorus of denunciations from Chinese officials and companies, fearful that their goods will face rising barriers to lucrative overseas markets.

Chenming also promised to fight the duties.

China's former chief WTO negotiator urged calm.

Trade frictions with major trading partners were inevitable now that China had such a large volume of trade, Long Yongtu told reporters in Beijing on Friday.

"We should take it as a part of the normal relations between China and the rest of the world, especially with the major players," he said. "So we should not overreact to this kind of trade measure -- we should treat it as a part of life."

Long said he thought China and the United States could avoid serious damage to trade relations if they resolved such frictions through consultations.

The US commerce department will make its final duty determination later this year. Until then, importers will be required to post bonds or deposit cash with the U.S. Customs Service, based on the preliminary duty levels.