Chinese policies hurting US businesses

China's business policies are promoting local companies over foreign competition, especially U.S. businesses, a report showed on Tuesday.

The American Chamber of Commerce in China said in its annual report that there is an emerging pattern of Chinese industrial policies that favor domestic companies while stifling foreign competition, including regulations related to indigenous innovation, licensing, standards, government procurement, competition law and intellectual property enforcement. 

U.S. business and congressional leaders have been repeatedly critical of China's indigenous innovation along with most of the other policies examined in the report that have slowed the expansion of American exports and business into the vast Chinese economic landscape. 

Still, the chamber report did find that, generally, U.S. companies are doing well in China, reporting "strong revenue growth and good profit margins" with 85 percent of survey respondents reporting growth in 2010, and 78 percent reporting that they were profitable or very profitable.

“As China seeks to transform its growth model and develop a knowledge‐based economy, U.S. business can serve as a valuable resource by sharing expertise in technology and management," said AmCham‐China Chairman Ted Dean in a statement. 

"However, to promote closer economic ties and information sharing, it is important to ensure that U.S. companies can expect to receive the same standard of efficient, fair regulatory treatment as their Chinese counterparts,” he said. 

Dean urged Chinese authorities to expand market access and improve regulatory transparency and consistency across different geographic regions.

U.S. officials have expressed concern that besides regulatory obstacles that impede foreign investment in China, the report shows that foreign companies remain partly or completely barred from participating in major industries such as banking, securities, telecommunications, legal services and insurance. 

"The ongoing restrictions, combined with a less welcoming regulatory environment, raise questions about the depth of China’s commitment as a WTO member to developing free and open markets," the report said. 

U.S. and Chinese officials are meeting next month in Washington for high-level talks on a variety of issues, including the expansion of U.S. exports, business, currency manipulation and intellectual property rights. 

Meanwhile, AmCham‐China President Christian Murck noted some encouraging signs from the Chinese government, saying that Chinese leaders have welcomed foreign involvement in the strategic emerging industries and are extending the six‐month campaign to crack down on violations of intellectual property rights

In December, U.S. and Chinese trade officials agreed that China's local governments would not be required to buy locally developed technology products and that the government agencies would stop using illegal software.

Still, some chamber officials argue that China hasn't made the strides they promised despite some arrests for copyright and other intellectual property violations, the report said.