New Zealand has launched an anti-dumping investigation into Chinese steel - despite the Chinese Government saying the allegations were a "wild guess" with no merit.

The Ministry of Business, Innovation and Employment (MBIE) has confirmed the investigation.

Dumping is the exporting of goods cheaper than the products are sold for in a country's own domestic market, and is illegal under most trade agreements.

MBIE said it had this week started a goods dumping or subsidisation investigation into galvanised steel coil from China.

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The investigation application was from New Zealand Steel, which claimed that imports of Chinese steel coil are being subsidised by the Chinese Government, which has caused "material injury" to the New Zealand industry.

The company is seeking the imposition of provisional countervailing duties.

NZ Steel has publicly warned that a "tremendous surge" in Chinese steel production in the past few years had resulted in more steel that there is world demand, causing job losses around the world.

In its application report, Mbie said it considered there was sufficient evidence to show that imports of subsidised galvanised steel coil from China had been undercutting NZ steel prices, and the imports had caused price depression.

The Chinese Government was informed of the application from NZ Steel on October 20. In its submission, it suggested that NZ Steel had failed to provide sufficient and accurate evidence to prove the alleged subsidies, injury and causal link.

The Chinese Government submitted that "remarks from media and law firms had been used as a basis for a wild guess that China was subsidising its steel industry".

It stated that the application had no merit and no evidence to back it up.

The complaint about alleged steel dumping to MBIE was cited in media reports earlier this year as a reason China could retaliate against New Zealand dairy and kiwifruit exporters in a "trade war".

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Zespri subsequently confirmed that one of its Beijing representatives was given "unsubstantiated information" by a Chinese industry body about the prospect of trade restrictions by China.

It stopped shipments to China for a week in August after China issued a warning notification over the discovery of a fungus in two containers of fruit.

Zespri says the issue was technical, and the New Zealand government has said it has been assured by Beijing there is no prospect of any "retaliation".

Last month, the European Union introduced fresh provisional anti-dumping tariffs on Chinese steel and iron products, after European manufacturers raised complaints alleging that their Chinese competitors were exporting some products at unfairly low prices.

The US has also introduced tariffs of more than 500 per cent on Chinese cold-rolled steel.

Beijing has called such moves "irrational" and has denied any wrongdoing, saying its costs are low and it abides by World Trade Organisation rules.