China could face censure at the World Trade Organisation after the US and Europe lodged a joint complaint over its restrictions on raw materials exports

Europe and the United States announced last night co-ordinated action against China for busting World Trade Organisation (WTO) rules by restricting exports of essential raw materials, raising fears of a damaging east-west trade war in the depths of the global recession.

Ron Kirk, the US trade representative, accused Beijing of putting a "giant thumb on the scale" by restricting exports of commodities including silicon, coke and zinc, to give Chinese manufacturers an unfair advantage over their international rivals. "It's our job to make sure we remove that thumb from that scale," he said in Washington. "Today's action is proof of our commitment to level the playing field in this area."

The US, with Europe, announced that it would start formal "dispute resolution consultations" at the WTO in Geneva, claiming China has breached the rules of the international marketplace. At a press conference in Washington, Kirk said: "We will enforce the rights of American manufacturers, farmers, ranchers, services providers, and workers using the rules-based global trading system."

Baroness Ashton, Europe's trade commissioner, said: "The Chinese restrictions on raw materials distort competition and increase global prices, making things even more difficult for our companies in this economic downturn. I hope that we can find an amicable solution to this issue through the consultation process."

China imposes restrictions, including minimum export prices and tariffs of up to 70%, on a range of raw materials of which it is a major producer. The EU claims these not only break general WTO rules on world trade, but specific promises China made when it joined the organisation in 2001, becoming a fully fledged player in global markets. The US said China produced 336m tonnes of coke in 2008 but only exported 12m tonnes.

The raw materials are used in a range of key products, from steel to semi-­conductors. Brussels said manufacturers and processors in Europe were at risk of going bust if the flow of exports from China was not restarted.

With oil prices rising rapidly, western governments including Britain have become concerned that higher commodity costs could choke off the fragile economic recovery, and they suspect China of deliberately stockpiling materials - in contravention of WTO rules on free trade.

If countries cannot reach agreement under consultation, which can take up to 60 days, the WTO will appoint a panel to examine the case and decide whether China is at fault. If Beijing then refused to comply, Europe and the US could be given permission to impose trade sanctions. US officials said they would, "press vigorously for redress".

Taking China to the WTO marks a sharp deterioration in relations between the world's largest trading powers. Sources in Geneva said: "In terms of trade disputes, it doesn't get bigger than this."

Gerard Lyons, chief economist at Standard Chartered, said there was probably "an element of brinkmanship" involved but the tough economic climate made any trade dispute alarming. "Everyone, policy­makers and markets, is a lot more sensitive to any indication of protectionism issues, given the economic environment," he said. "It's not a good situation."

G20 leaders pledged to resist protectionism at the London summit in April, but the US was infuriated by Beijing's inclusion of a "Buy Chinese" clause in its huge fiscal stimulus programme (although the US had a similar clause in its own stimulus), to ensure the money is spent at home.

Democrats in Congress have led an increasingly vocal campaign accusing China of controlling its currency to gain an unfair advantage over its competitors. In his battle for the White House, Obama promised to defend US rustbelt manufacturers against cut-price competition, and the mass layoffs since the global recession have increased the pressure for action.

Barack Obama's treasury secretary, Tim Geithner, sparked an angry response from Beijing in January, when an official document accused China of being a "currency manipulator" and deliberately depressing the value of the yuan - though the language was later toned down.

With the Doha round of world trade talks at a standstill, the cooling of relations will underline fears that the march of globalisation has been halted. The White House appears reluctant to restart negotiations. Duncan Green, head of policy at Oxfam, said: "The danger is that this is how the Doha round ends - not with a bang but with a dispute settlement mechanism."Kick-started Begun in 2001 in Qatar, in the wake of the terrorist attacks on New York, the Doha round was meant to give developing countries a fair stake in the global trading system, but negotiations collapsed in Geneva last summer, when India and the US could not agree on how much protection should be given to poor farmers.