Business wants U.S. action on China as tensions grow



China and the U.S. also sparred at the Copenhagen climate-change conference in December. Meanwhile, trade tensions between the two countries continue to simmer. They revolve around the U.S. trade deficit with China, China’s policy of pegging its currency to the U.S. dollar, which the U.S. sees as exacerbating the trade deficit, and China’s record holdings of U.S. debt.

U.S. trade officials were in China last week gathering information on the Chinese policies. William Reinsch, the president of the National Foreign Trade Council, said U.S. business groups expect to learn more about this this week.

Reinsch, who is a commissioner on the U.S.-China Economic and Security Review Commission, has predicted that tensions on economic issues will escalate in 2010 between the U.S. and China. He also said he’d put more of the blame on the Chinese side.

China is imposing new restrictions on investment, is reinvigorating its emphasis on an export-oriented economic strategy and is making a major push for domestic companies, he said. It is also introducing policies that would transfer technologies to China, and in some cases is involved in “outright intellectual property theft,” Reinsh said.

Reinsch warned the policies could hurt China, as foreign companies will become less willing to stand up for China to Congress. He also said companies could consider shifting their investment to other fast-growing developing countries such as Brazil and India.

The business groups are criticizing rules issued by China in November and December.

In November, China announced it would establish a national catalog of products that are to receive significant preference in government procurement decisions. To be registered, products must contain intellectual property that is developed and owned in China.

In a Jan. 26 letter, 19 U.S. trade associations labeled those rules “an unprecedented use of domestic intellectual property as a market-access condition” that makes it impossible for U.S. products to qualify unless they establish Chinese brands and transfer their research and development of new products to China.

That could give new advantages to Chinese firms to the detriment of foreign companies in the U.S. and elsewhere.

In December, China announced the development of a broader catalog of products and sectors to be given preferences beyond government procurement.

The programs being pursued by the Chinese government threaten to exclude U.S. firms and dampen job creation in the U.S. just as the economy looks to be reviving from a recession, according to the business groups.

They say the new policies in China could have a “far-reaching impact on the American economy,” and that the Obama administration should make them a “strategic priority” in dealings with China.

Those signing the letter include the U.S. Chamber of Commerce, the Business Roundtable and the National Association of Manufacturers. The Business Software Alliance, Consumer Electronics Association, Software and Information Industry Association and TechAmerica also signed on to the letter.

It was sent to Treasury Secretary Tim Geithner, Secretary of State Hillary Rodham Clinton, Attorney General Eric Holder, Commerce Secretary Gary Locke and U.S. Trade Representative Ron Kirk.