Lawmakers press Obama on cyber, trade concerns with China

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Key House and Senate leaders are expressing concerns about the direction of the U.S.-China economic partnership ahead of a visit from Chinese President Xi Jinping this week.

Four lawmakers — Senate Finance Committee Chairman Orrin Hatch (R-Utah), ranking member Ron Wyden (D-Ore.), House Ways and Means Committee Chairman Paul Ryan (R-Wis.) and ranking member Rep. Sandy Levin (D-Mich.) — said they are worried that progress is braking in the U.S.-China trade relationship.

They are urging President Obama to take advantage of the visit and make clear to Xi that the U.S. wants the communist nation to lower barriers that hamper market access for U.S. businesses in China.

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“We recognize that progress is often incremental and slow, but we are increasingly concerned that we have lost forward momentum in the U.S.-China trade and economic relationship,” the lawmakers wrote in a letter to President Obama, which was sent on Monday.

“China and the United States both have enormous responsibilities to the global economy, but recent developments suggest that China is not fulfilling that responsibility,” they wrote.

“We urge you to work with President Xi to correct course and improve these circumstances.”

The lawmakers are concerned about a wide range of issues including cyber hacking, currency policies, intellectual property protections, the heavy role of state-owned enterprises in the Chinese economy and the lack of transparency and commitment of China to open up its policymaking and regulatory processes.

Topping the list of talking points for the White House, lawmakers and business groups is Chinese cyberattacks on U.S. networks.

The lawmakers said that government-sanctioned hacking has “deeply eroded trust between the United States and China particularly given that they have often been economically motivated and have targeted the proprietary and sensitive assets of U.S. private industry.”

Last week, Obama told The Business Roundtable that “this is an issue that is not going away” and it will probably be one of the biggest topics he discusses with Xi.  

“We are preparing a number of measures that will indicate to the Chinese that this is not just a matter of us being mildly upset, but is something that will put significant strains on the bilateral relationship if not resolved, and that we are prepared to some countervailing actions in order to get their attention,” Obama said.

He said that ultimately the goal should be to have an international framework.

The lawmakers argue that China is pushing policies that would compromise the integrity of U.S. technology companies by forcing them to localize data, production or disclose source code.

“China remains headed in the wrong direction when it comes to the global digital economy and innovation,” they said.

On other issues, they said that state-owned enterprises (SOEs) continue to play a central role in the Chinese economy, arguing that the situation has changed very little in the past five years.

“Allowing SOEs to continue to dominate the economy hampers the functioning of the Chinese marketplace and is detrimental to all companies trying to compete in China,” they wrote.

The lack of adequate protection for intellectual property rights, including the theft of trade secrets, is a growing threat to U.S. businesses, especially amid new Chinese rules requiring firms to forfeit their intellectual property or localize their activities.

The lawmakers also are urging more aggressive work on the Bilateral Investment Treaty that would “address the problems that U.S. investors face arising out of the particularly problematic nature of China’s economic, political and legal systems.”

They also said that they are troubled by reports of retaliation and threats of retaliation by China against U.S. and other foreign companies in the trade and economic sphere, through discretionary discriminatory policies or the initiation of baseless trade remedy cases.

The value of China's currency, the yuan, also remains a focus for congressional lawmakers.

“The continued misalignment of China’s currency is unsustainable and unacceptable," they wrote.

“So long as China’s currency is not set by market forces, China will be unable to rebalance its economy, and U.S. workers and companies will continue to be harmed."