China said it was abolishing an allowance that provided key export companies with a discount of up to 10 percent on bank loan rates, effective immediately.

"This is a welcome move by China," US Trade Representative Susan Schwab said in a statement.

"We hope the termination of these discounted loans signals China's willingness to withdraw other subsidy programs identified in our recent WTO action that harm US companies and workers," she said.

In early February, the United States hauled the fast-growing Asian giant to the World Trade Organization over a raft of "illegal" industrial subsidies in steel, paper, information technology and other sectors.

The two nations are to hold consultations over the dispute at WTO headquarters in Geneva towards the end of this month.