Global Biz

US firms vent frustration over China trade

By Tan Yingzi and Chen Weihua (China Daily)
Updated: 2010-11-18 16:06

WASHINGTON/NEW YORK - Despite a federal commission report that criticizes China for its "highly discriminatory" economic practices, many US companies said in a survey that they are committed to doing business in China.

But the same survey, released by the US-China Business Council (USCBC) on Wednesday, also did not swerve far from the tone of the report by the US-China Economic and Security Review Commission. In the survey, the US companies said they are increasingly concerned with barriers in accessing the Chinese market.

The nonprofit organization based in Washington represents about 220 US companies selling goods and services in the Chinese market.

According to the survey, 87 percent of respondents said that their operations in China posted revenue growth in 2009. Nearly 90 percent said that profit margin rates in China equaled or exceeded their companies' global margins.

Their greatest worries pivot around human resources, such as talent recruitment and retention, but also around administrative licensing and competition with State-owned enterprises.

Council President John Frisbie said in a statement that for "many USCBC members, these concerns are less about real impact on current operations than they are about policy and regulatory trends that could seriously hinder foreign companies and discourage future investments, if the trends continue and the policies are fully implemented".

That frustration was echoed by the commission report that slammed China's trade policies for what the report says favor domestic producers over foreign manufacturers.

These policies have often been challenged by the Obama administration and the US Congress as factors that have led to a huge trade deficit between the two nations.

"China promotes industrial policies that manipulate trade rules to benefit domestic firms to the detriment of American and other foreign competitors," said the commission's bipartisan report.

The commission annually submits a report on security implications on the trade relationships between China and the US.

Despite the resentment with China's trade policies, the frustration on Wednesday was also aimed at the US.

Trade experts in the US are scratching their heads over the US' trade policies and how the nation interacts with China.

Jagdish Bhagwati, professor of economics and law at Columbia University, believes that the US has been continuously bashing China unnecessarily because China is moving toward domestic consumption.

Charlene Barshefsky, who was US trade representative during the Clinton administration, pointed out that the US does not have a strategy with regard to China.

She said that the US should act if China does not play by the rules. She also said that if the US wants "to make progress with China, sometimes being quiet is better. Sometimes a discussion of a reasonable sort is better than overheated rhetoric. The (Obama) administration needs to sort out how it wants to deal with China".

Beryck Maughan, a partner at Kohlberg, Kravis Roberts & Co, an alternative asset management company, disagreed with the strong China bashing in the US.

"Is it China's fault to have a current account surplus once in the last 30 years? Is it China's fault that we (the US) have deficits with more than 60 countries, not just one? Is it China's fault that we are on a fiscally unsustained path, critically dependent on capital inflow to keep the economy going?" he asked.

China recently has relaxed aspects of its trade policies. Last year, China removed a requirement that most of the components of wind power-related equipment be made within its borders.

The move was made in the hopes of allowing foreign companies to compete in China's wind power market.

The regulation had stated that all local governments use more than 70 percent locally made technologies and products in their wind power facilities.

Premier Wen Jiabao, to address the US' concerns over its trade relationship with China, has repeatedly said that foreign companies will not face discrimination in the country.

He said the Chinese government will "unswervingly" continue its course of openness that will facilitate foreign investment.

"The policy of encouraging indigenous innovation treats all businesses in China the same. It will not exclude foreign companies," Wen said recently.

He reassured foreign companies in September at the World Economic Forum in Tianjin that "China is committed to creating an open and fair environment for foreign-invested enterprises."

China Daily