China could face US-led WTO action unless it addresses concerns over piracy and trade policies, according to a report made to Congress ahead of the first round of the US-China Strategic Economic Dialogue on Thursday. The report made repeated warnings that Washington could file trade complaints against China at the WTO if Beijing did not correct issues said to be behind America's US$202 billion trade deficit with China. Piracy and "trade-distorting measures" such as local content requirements, import and export restrictions, discriminatory regulations and prohibited subsidies, were highlighted as the principal concerns. Both China's central bank chief Zhou Xiaochuan and US Treasury Secretary Hank Paulson were more restrained in their comments ahead of the meetings. Zhou said China was "prepared to give a very positive and active response" while Paulson played down hopes for a quick fix to currency and trade issues, according to media reports.