THE United States Commerce Department has announced its decision not to initiate investigation on allegations that China's currency practices constitute an unfair subsidy.

The currency allegations under review were made in the context of countervailing duties investigations of two Chinese products - aluminum extrusions and coated paper.

"Two allegations before it that China's currency practices constitute an unfair subsidy under US countervailing duty law failed to meet the requirements for the initiation of an investigation," the department said in a statement on Tuesday.

"Today's (Tuesday) currency decision was based on a careful evaluation of the specific legal arguments and evidence put before the department, in relation to the standards for the initiation of an investigation under the CVD law," Deputy Assistant Secretary for Import Administration Ronald K. Lorentzen said.

"In these two cases, the department has determined not to investigate whether the alleged undervaluation of China's currency, the yuan, is a countervailable subsidy," it said.

Lorentzen said the department made the decision because "the allegations made by domestic producers do not meet the statutory standard for initiating an investigation under the requirement that benefits provided under China's unified foreign exchange regime be specific to the enterprise or industries being investigated."

However, in a preliminary determination, the department ruled that US$514 million of aluminum products imported from China in 2009 were unfairly subsidized. As a result, importers of Chinese aluminum extrusions will be required to post cash deposits or bonds at rates determined by the department.

Aluminum extrusions are shapes and forms made via an extrusion process of aluminum alloys.