China should brace for more subsidy complaints by European manufacturers, Europe’s trade chief said, in a sign of growing Chinese commercial tensions with the West.

The European Union opened its first inquiry into alleged trade-distorting government aid by China in April in a case involving EU imports of paper, and began the second probe last month covering shipments of wireless modems to Europe. Both cases, which stem from complaints by paper makers in Europe including Sappi Ltd. and Belgian modem producer Option NV, could lead to punitive EU tariffs against China.

“I expect that it will become a trend,” EU Trade Commissioner Karel De Gucht said in an interview today in Brussels. “What European companies see as unfair competition has to do with subsidization. I expect that there will be more and more complaints.”

EU anti-subsidy duties against China would open a new front in Europe’s battle to slow imports of Chinese manufactured goods and may sharpen political tensions. Europe already imposes levies to counter below-cost -- or dumped -- imports of Chinese goods ranging from textiles and chemicals to shoes and bicycles. China, the world’s most populous country, faces EU anti-dumping measures on about 50 products, more than any other nation.

The prospect of broader European trade protection against China comes as the EU and the U.S., seeking to bolster western exporters and narrow their trade deficits, press China to let its currency strengthen as the global economy recovers from the financial crisis. EU officials including Jean-Claude Juncker, who heads a group of euro-area finance ministers, plan to raise the matter with Chinese Prime Minister Wen Jiabao in a meeting tomorrow in Brussels.
U.S. Legislation

The U.S. House of Representatives last month approved a measure that would allow domestic companies to petition for higher American import duties against China to compensate for the effect of a weak yuan. The Senate plans to take up its version of the legislation after elections in November, according to sponsor Charles Schumer of New York.

De Gucht expressed concern about an undervalued yuan while predicting it would appreciate “over time” as a result mainly of domestic Chinese considerations rather than western demands.

“There is a real problem with the value of the Chinese currency,” he said. “I have my doubts whether you can influence that by international pressure. I continue to believe that over time the Chinese currency will appreciate, but this will rather be I think on the basis of internal requirements than international pressure, mainly, for example, the risk that they would get into an inflationary spiral.”