Concern over China’s Protectionism at 10 Year High Says U.S. Chamber

May 24, 2010

Concern among U.S. companies that China is backtracking on opening its economy are at a 10-year high, the head of the U.S. Chamber of Commerce said on Monday.

Chamber President and Chief Executive Thomas Donohue said companies from the United States were growing increasingly worried about investing in China because of uncertainty over future industrial policy measures.

“This concern is, are we going to have a level playing field? What they (U.S. companies) are troubled and what we are therefore talking about are the industrial and indigenous innovation policies,” Donohue said in a speech in Shanghai.

Donohue said the argument that China was a developing country and therefore entitled to certain policies that developed countries were not, did not always hold true. “We advise the Chinese leadership that our companies are concerned about continuing investment operating restrictions.”

Earlier in May, Donohue gave a more vocal speech in Washington, where he said China was using industrial policies to foster national champions by promoting the transfer of technology and innovative capacity domestically.

During his speech in Shanghai, Donohue’s rhetoric expressed concern over China’s indigenous policies but said the mainland had been making great progress compared with many other countries.

“Most critical in Washington and Beijing is not to waver on the commitment to open markets and the need to move forward all the time on building this relationship,” Donohue said.

Both countries are meeting in Beijing for high-level talks this week in an attempt to ease Sino-U.S. tensions, which have escalated in recent months. The U.S. delegation is led by Treasury Secretary Timothy Geithner and Secretary of State Hilary Clinton.

Donohue said both countries needed to work together to address global problems including North Korea, adding that he hoped China could play a very helpful role in addressing the issue.

Donohue briefly touched upon the yuan, another contentious issue in Washington, saying the currency issue was very important from a political point of view in the United States.

“It gives everybody an excuse to be China bashers. I am hopeful that we will get some rational discussion on this.”

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