US presses China to reduce barriers for foreign business

A man carries his shopping bags on a busy street in Shanghai on April 1.
A man carries his shopping bags on a busy street in Shanghai on April 1. PHOTO: AFP

BEIJING (Reuters, AFP) - US firms feel increasingly unwelcome in China, top American officials said on Tuesday (June 7) as they pressed Beijing to reduce barriers for foreign businesses, saying concerns have grown due to a more complex regulatory environment.

Foreign business confidence has been impacted by regulatory and protectionist worries, following a series of government investigations targeting foreign companies and the roll-out of a national security law limiting the use of overseas technology.

US business groups have also complained about new Chinese regulations they say favour local firms and make it more difficult to operate in China, as well as other laws related to national security.

"Concerns about the business climate have grown in recent years, with foreign businesses confronting a more complex regulatory environment and questioning whether they are welcome in China," US Treasury Secretary Jack Lew told Chinese and American businesses and officials.

"Our two governments have a responsibility to foster conditions that facilitate continued and increased investment, trade, and commercial cooperation," Lew said, on the second day of high level talks between the two countries in Beijing.

"This means enacting policies that encourage healthy competition, ensuring predictability and transparency in the policy-making and regulatory process, protecting intellectual property rights, and removing discriminatory investment barriers. These policies are vital as China seeks to build on its economic progress in recent decades."

The comments came as a survey of European firms said China’s slowing growth was matched by an “increasingly hostile” business environment.  

Secretary of State John Kerry, speaking at the same event, said that as the two economies become more intertwined in shared prosperity, they have more "skin in the game" to keep their economic relationship on an even keel.

"So we have to work on intellectual property. We have to work on transparency and accountability, we have to work on certainty and the rules of the road," Kerry said, adding that certainty was critical for business.

Kerry expressed concern about China's new law on foreign non-governmental organisations, which he said may have a negative impact on non-profit health care groups that want to do business in China.

Barriers to investment in China should removed as quickly as possible, he added.

Lew and Kerry made their comments in a meeting with CEOs from US corporations including metals manufacturer Alcoa, which has accused China of dumping aluminium on world markets.

The group also included executives from China’s Wanda Group, whose recent overseas buying spree included the purchase of Hollywood studio Legendary earlier this year.

China’s vice-premier Wang Yang called on companies to seek “win-win results” while acknowledging that “in a market economy there will always be competition between our businesses”.  

State Councillor Yang Jiechi, China's top diplomat who outranks the foreign minister, said China was working to open its markets, and pointed to talks over a bilateral investment treaty as an example of this.

"We are comprehensively deepening reform, expanding, opening up, and our economy is expected to maintain long term medium-high growth rates."

The event came on the second day of the annual dialogue whose opening was marked by pointed exchanges on China’s alleged overproduction of steel. Lew said excess capacity had a “distorting and damaging effect” on world markets, but China’s finance minister replied that the world was merely “pointing a finger” at his country.