A top adviser to the Chinese government on Tuesday warned that a proposed US border tax on carbon sensitive materials “smells of protectionism” and could spark retaliation from developing countries.

During a speech at New York University about how the US and China can forge a closer partnership, Tung Chee-hwa, vice-chairman of the Chinese People's Political Consultative Conference (CPPCC), the Chinese government's official advisory, said that a proposed “border adjustment” programme could be challenged through the World Trade Organisation and that he was “distressed” by the new bill introduced to Congress.

The programme in question was introduced earlier this month by two powerful Democrats in the House of Representatives. The bill includes aggressive climate targets to be met through a green house gas emissions cap and trade programme, where companies would be eligible for rebates to compensate for cost they incur. More controversially, the US government would be able to levy import taxes on foreign manufacturers to cover carbon contained in US-bound products.