Chinese policies that promote domestic firms and create barriers against foreign ones could cause US companies to lose interest in China, US Commerce Secretary Gary Locke (駱家輝) said on Thursday.
Locke’s warning to Beijing against backsliding on economic openness and the rule of law came amid rising complaints about trade from both partners in a bilateral trading relationship worth more than US$330 billion last year.
“Recent events, specifically the well-publicized Google incident, have reminded us of the continued challenges faced by foreign and US companies operating in China,” Locke said in a speech at the US-China Business Council’s annual forecast conference.
Google, the world’s top search engine, said on Jan. 12 it would not abide by Beijing-mandated censorship of its Chinese-language search engine and might quit the Chinese market entirely because of cyber attacks from China.
“China needs to continue making strides to be more transparent, predictable and committed to the rule of law. If there is backsliding on these issues, it will affect the appetite of US companies and other foreign companies to enter the Chinese market and ultimately that will be bad for both the people of China and the United States,” Locke said.
He criticized a Chinese government plan to promote “indigenous innovation” by giving Chinese companies that use Chinese intellectual property an advantage in bidding on government procurement projects.
Major US business groups wrote to Locke, US Secretary of State Hillary Clinton and other administration officials this week to complain about the initiative.
The Chinese plan “significantly disadvantages” US and foreign firms in bidding on contracts worth an estimated US$85 billion annually and violates market-opening pledges Beijing made last year during commercial talks, Locke said.
“Moreover, we recognize that this issue is just one facet of a broader Chinese approach to industrial policy that is creating headaches for US companies operating in and trying to export to China,” he said.
“Successfully dealing with this will require both tactical and strategic adjustments to our engagement with China, and I can assure you that the administration is diligently studying what steps might be necessary,” Locke said.
However, Locke began and ended his speech on more positive notes, saying he believed no country offered greater growth potential for US exports than China.
Locke, a Chinese-American, said he would be leading a trade mission to China and Indonesia in May to promote exports of US clean energy and energy efficiency products.
The US has big trade imbalance with China, but “keeping Chinese goods from the US market is not the answer to addressing our trade deficit,” Locke said.
“Instead, making sure the Chinese market is more open to US companies is the most productive solution,” he said.
China has chafed at Obama administration decisions last year and this year to slap tariffs on its tires and steel products.
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