WASHINGTON (AFP) — The United States accused China Wednesday of discriminating against foreign investors and taking short cuts to address serious concerns over safety of its products, amid new concerns over Beijing's trade and economic policies.
"China has been more open than many developing countries, but there are increasing signs of policies that seek to direct markets rather than opening them," said US under secretary of commerce for international trade Christopher Padilla.
He charged that Beijing was forging a new network of policies that appear designed to favor Chinese "national champion" firms over foreign competitors.
"This trend, perhaps more than any other, worries American business leaders in industries from steel to software," he told a forum of the Washington-based Center for Strategic and International Studies.
An an example, he cited China's new anti-monopoly law that might exempt Chinese state-owned firms from what he called disciplines of competition rules.
There are also rumored technical standards for cellphone batteries that would make it impossible for Chinese consumers to buy the hottest American technologies on the market, he said.
In addition, Chinese regulators in industries such as insurance and financial services "routinely treat foreign firms more harshly than domestic ones," he said, citing "opaque" foreign investment laws and state subsidies to so-called 'pillar'industries."
Padilla also referred to renewed Chinese government efforts to "redirect the market with price controls and quotas," which he said had resulted in widespread power shortages, transportation bottlenecks and gas lines in the world?s fourth largest economy.
"All these policies raise questions about the direction that the Chinese leadership wants to take -- continued reform, or a brand of more insular thinking," he said.
China is America?s third-largest export market but the bilateral trade deficit with China is at record levels and America?s largest.
US foreign direct investment in China more than doubled from roughly 10 billion dollars in 2002 to 22 billion dollars in 2006, while in 2007 alone, Chinese direct and portfolio investment in the United States totaled nearly 10 billion dollars.
Amid the increasing volume of trade and investment, frictions have grown, including concerns about trade imbalances, product safety, the Chinese government's large holdings of foreign exchange reserves, and Beijing's foreign exchange policies.
Padilla also questioned Beijing's commitment to ensure the safety of China-made products following a deluge of recalls last year involving tainted goods, including toys.
"China?s response to date has not inspired confidence," he said.
Beijing's initial reaction to the problem was to deny its severity and blame the media, he said.
But just a few weeks ago, he added, a senior Chinese product-safety official assured Washington there had been a problem but that it had been solved four months ahead of schedule and there was nothing left to worry about.
"Such wildly varying pronouncements do not build trust," Padilla said. "Instead, they suggest that China?s government does not yet fully understand that it must do the long, hard work of strengthening its product safety regime -- or put the 'made in China' brand at even greater risk," he said.
Despite the problems, Padilla said the United States would continue with its "economic engagement" policy with China that combined dialogue with the "intelligent use of leverage," including hauling Beijing to the WTO and vigorously enforcing US laws against dumping and government subsidies.
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