Bloomberg News

China’s ‘Interventionist Policies’ a Concern, U.S. Report Says

December 16, 2011

Dec. 13 (Bloomberg) -- China’s trade restrictions and “interventionist policies” in areas such as intellectual property rights remain a concern for American companies doing business in the Asian nation, the U.S. said.

China discriminates against foreign business in “numerous sectors” of the economy, the U.S. Trade Representative’s office said yesterday in its annual report on Chinese compliance with World Trade Organization rules. Continued government intervention in its economy has been a “troubling trend,” the U.S. said.

“China seems to be embracing state capitalism more strongly, rather than continuing to move toward the economic reform goals that originally drove its pursuit of WTO membership,” the report said.

The USTR report to Congress came a day after China marked its 10-year anniversary of joining the Geneva-based WTO. In the past decade, China has become the world’s biggest exporter and second-largest importer. Trade in goods such as clothing, electronics, toys and appliances soared to almost $3 trillion last year from $510 billion in 2001, with both exports and imports growing almost fivefold.

The growth has provided business opportunities for U.S. companies, workers, and farmers, according to the report. U.S. exports to China have increased 380 percent since 2001, to $92 billion from $19 billion. Services provided from majority U.S.- invested companies in China totaled $23 billion in 2009.

‘Complex’ Relationship

U.S.-China trade talks this year resulted in progress “on some meaningful issues, but many issues remain outstanding,” the report said. The Chinese trend toward state action has led to a “complex” relationship between the world’s two biggest economies and both need to “redouble their efforts going forward,” the U.S. wrote.

When those efforts have failed, the U.S. has brought WTO complaints against China over actions regarding poultry, steel, industrial raw materials, electronic payment services, wind power and tire imports.

“Looking ahead, essential work for China includes the need to reduce market access barriers, uniformly follow the fundamental principles of non-discrimination and transparency, fully embrace the rule of law and fully institutionalize market mechanisms,” the U.S. wrote.

While China has been revising its legal system to better protect intellectual property rights, there has been little success in enforcing laws in the face of widespread counterfeiting, pirating and other infringement, the report said. There are few deterrents for criminals, the USTR said. Import and distribution restrictions on legitimate copyrighted products such as theatrical films have resulted in ensuring that pirated products dominate the markets, the U.S. wrote.

Yuan Appreciation

The Obama administration has also criticized the pace of appreciation in the yuan. In October, the U.S. Senate passed legislation designed to punish China for maintaining an undervalued currency, though it stalled in the House of Representatives.

China’s trade surplus with the U.S. has helped the country accumulate a record $3.2 trillion in foreign-exchange reserves and made it the U.S.’s biggest overseas creditor, contributing to bilateral friction.

--With assistance from John Brinsley in Tokyo. Editors: John Brinsley, Patrick Harrington

To contact the reporter on this story: William McQuillen in Washington at bmcquillen@bloomberg.net

To contact the editor responsible for this story: John Brinsley at jbrinsley@bloomberg.net


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