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U.S. panel hears trade complaints, hope for China reform meeting

A Chinese man adjusts a China flag before a news conference attended by Chinese Foreign Minister Yang Jiechi and U.S. Secretary of State Hil
A Chinese man adjusts a China flag before a news conference attended by Chinese Foreign Minister Yang Jiechi and U.S. Secretary of State Hil

By Paul Eckert

WASHINGTON (Reuters) - U.S. trade officials and industry groups on Friday aired concerns about Chinese trade protectionism while voicing hope that an economic agenda-setting meeting of China's top leaders this weekend would launch deeper reforms.

The hearing on China's compliance with market-opening pledges that got it into the World Trade Organization featured a mix of praise for recent signals of a new wave of reform and complaints about theft of intellectual property, discriminatory industrial policies, and trade restrictions.

"For much of the past decade, the Chinese government had been re-emphasizing the state's role in the economy, diverging from the path of economic reform that drove China's accession to the WTO," said Assistant U.S. Trade Representative for China Claire Reade.

The year since China began the leadership transition that elevated Xi Jinping to head of ruling Communist Party and state president has produced "positive signs that China may be focused on re-energizing its economic reforms," she said.

Reade pointed to China's commitment in talks with the United States in July to negotiate a bilateral investment treaty, and to statements from top Beijing officials ahead of the November 9-12 third plenum of the Communist Party Central Committee.

Xi has said the meeting would produce a comprehensive set of reforms. Experts say it is expected to produce broad outlines for policies, rather than specific details on how China will transform its economy away from a reliance on investment and exports and toward consumption and services.

"In China and outside, expectations are high that the Chinese leadership will use the plenum to recommit to the market-opening reforms that enabled China's miraculous economic rise," Jeremie Waterman, the U.S. Chamber of Commerce executive director for greater China, told the panel.

DETERIORATION IN BUSINESS CLIMATE

He said that members of the chamber were optimistic about the plenum reform talk and about business results in China, a $450 billion market for U.S. goods and services that has become a key source of revenue for some American companies.

Waterman added, however, that "on the negative side, there have been few tangible improvements in the business climate over the last year, and some areas of noteworthy deterioration: antitrust policy implementation, access for express delivery service providers, and further restrictions on China's largely closed telecommunications services market."

He urged the U.S. Trade Representative to push hard for high-level trade agreements with China, including the proposed U.S.-China investment treaty, and at various WTO pacts such as on trade in services and government procurement.

"It is important that any trade and investment negotiations with China account for the substantial role of state-owned enterprises in China's economy," said Waterman, reiterating longstanding complaints about monopolies, subsidies and other government favoritism toward the state sector.

U.S. businesses also face impediments from Chinese industrial policies that violate WTO rules such as the "indigenous innovation" program that favors Chinese firms in government procurement and often includes pressure on foreign companies to transfer technology, he said.

The U.S. Trade Representative, which conducted the hearing to produce its annual report to the U.S. Congress, also heard similar testimony from lobby groups representing the film and recording industry, the rare earths sector and information technology and telecommunications businesses.

(Editing by Mohammad Zargham)

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