Thu, Feb 16, 2017 - Page 10 News List

US firms in China warm to ‘reciprocity’

RESTRICTIVE RULES:Foreign firms in China are hamstrung by regulations, despite WTO rulings demanding their lifting, whereas Chinese companies have spent billions in the US

Reuters, BEIJING

“Reciprocity” has become the new buzzword in the US business community in China, with some industry leaders saying they would welcome a tougher approach from US President Donald Trump’s administration in opening up the markets of the world’s second-largest economy.

It is a striking shift within the US community in China, which had long-lobbied Washington against taking more aggressive policies, fearing they could draw retribution from China’s leaders.

US Secretary of Commerce Wilbur Ross and US Trade Representative Robert Lighthizer have in the past backed the reciprocity principle when it comes to China: That Beijing should provide the same access and benefits to US business in China that Washington gives the Chinese in the US.

“Our membership has moved to some extent in that direction as well, in advocating a firmer posture with respect to China,” American Chamber of Commerce in China policy committee chairman Lester Ross said.

He made the remarks last month after the group issued a report that found more than 60 percent of the chamber’s members had “little or no confidence that the Chinese government is committed to opening markets further in the next three years.”

Many sectors of China’s economy are either off limits or severely restricted to foreign investors.

For example foreign banks in China account for less than 2 percent of total assets, according to the China Banking Regulatory Commission.

A 50 percent ownership cap for foreign life insurers, despite China’s 2001 WTO commitments to lift it, has helped limit their market share to about 6 percent.

On the other hand, China’s Anbang Insurance Group (安邦保險集團) has spent more than US$8 billion acquiring US assets, including the Waldorf Astoria Hotel and Strategic Hotels & Resorts. It is still waiting for regulatory approval to buy US life insurer Fidelity & Guaranty Life for US$1.6 billion.

The same imbalances can be seen in sectors such as automobiles, payment cards and technology.

China’s Geely Holding Group (吉利控股集團) bought Volvo Cars Corp from Ford Motor Co in 2010, but foreign companies are required to set up joint ventures to assemble vehicles in China, often transferring technology in the process.

While China UnionPay (中國銀聯) cards have grown to become the world’s No. 1 in terms of number of cards issued, US credit-card operators Visa Inc and MasterCard Inc have yet to be independently licensed to clear transactions in China, despite a 2012 WTO ruling mandating that Beijing open the sector.

Foreign technology hardware and service providers are bristling at requirements to meet the restrictive terms of newly minted cybersecurity regulations.

Beijing’s “Made in China 2025” plan also calls for a progressive increase in domestic parts used in priority sectors, such as advanced information technology and robotics to 70 percent by 2025.

The idea of some form of reciprocity is gaining traction, particularly in combating “techno-nationalism,” APCO Worldwide greater China region chairman James McGregor said.

“You’ve got Chinese companies that have protected markets and make loads of money and then they are going out and doing international acquisitions that could destroy other companies,” he said. “Now China has overreached so much they have alienated much of the business community.”

US policymakers had to figure out how to use the US’ openness and rule of law to deal with China, instead of allowing them to become vulnerabilities, McGregor said.

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