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Commerce Secretary Locke hits China over investment barriers
May 4, 2011 / 4:22 AM / 7 years ago

Commerce Secretary Locke hits China over investment barriers

WASHINGTON (Reuters) - Commerce Secretary Gary Locke accused Beijing on Wednesday of discouraging foreign investment to protect its own companies and promised to push against those barriers if confirmed as the next ambassador to China.

<p>Commerce Secretary Gary Locke speaking in Tianjin, May 22, 2010. REUTERS/Jason Lee</p>

Locke, in the text of a speech for delivery at the Woodrow Wilson Center, said the United States saw Chinese investment as a “good thing” for American business and workers and only blocked it in a few cases for national security concerns.

“Unfortunately, that is not the case for American companies operating in China, where they are frequently shut out of entire industries, or they are forced to give up propriety information as a condition of operating in China,” Locke said.

“This imbalance of opportunity is a major barrier to continued improvement of the United States and China’s commercial relationship. And it is part of a broader trend of China recently narrowing its commercial environment after a long and fruitful period of opening.”

The tough words came one week before Treasury Secretary Timothy Geithner and Secretary of State Hillary Clinton will host senior Chinese officials for the annual U.S.-China Strategic and Economic Dialogue.

Geithner on Tuesday urged Beijing to move more swiftly to a market-oriented exchange rate, while acknowledging some progress on that front.

Geithner also pressed China to stop favoring its state-owned enterprises by keeping their borrowing costs low, warning of a protectionist backlash from the United States if it does not.

In the run-up to next week’s high-level talks, American companies have raised concerns about the commercial environment in China, especially what they see as unfair advantages given to state-owned enterprises, many of which are becoming powerful players in world trade.

President Barack Obama has nominated Locke, a former Washington state governor as the next ambassador to China.

If confirmed by the Senate, he would replace Jon Huntsman, a former Utah governor who left Beijing at the end of April and is considering a possible run for the presidency.

Locke said China’s often opaque government regulations and poor enforcement of patents and other intellectual property rights indirectly discouraged foreign investment.

“But China has also pursued policies that make investment by foreign companies especially challenging,” he said.

Those include “indigenous innovation policies that shut foreign companies entirely out of industries or make unacceptable technology transfer provisions a condition of operating in China,” Locke said.

He said Chinese officials pledged at past high-level forums in 2009 and 2010 to lift foreign investment prohibitions on many industries in which U.S. firms are world leaders.

But China’s recently revised “Foreign Investment Catalog falls far short of that promise,” Locke said.

Editing by John O'Callaghan

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