WASHINGTON — US Commerce Secretary Gary Locke said Wednesday it was increasingly difficult to do business in China and called restrictions on foreign investment a major impediment in relations.
Locke, the nominee to be the next ambassador to Beijing, said the US government and companies had "real frustrations" that would be raised during high-level talks between the world's two largest economies next week.
Speaking at the launch of a think-tank report that supported further Chinese investment, Locke said that Washington imposed few impediments on Chinese companies seeking to enter the United States.
"Unfortunately, that is not the case for American companies operating in China, where they are frequently shut out of entire industries or they are forced to give up proprietary information as a condition of operating in China," he said.
"This imbalance of opportunity is a major barrier to continued improvement of the United States and China's commercial relationship," he said.
"And it is part of a broader trend of China recently narrowing its commercial environment after a long and fruitful period of opening," he told the event attended by China's ambassador to Washington, Zhang Yesui.
Locke said that China's recently revised Foreign Investment Catalogue, which lists sectors in which outside firms are barred from participation, "falls far short" of past promises to the United States for more openness.
He strongly criticized a new review system in which he said that commercial competitors would be able to ask the Chinese government to review a particular item of foreign direct investment (FDI).
"I am aware of no other country which allows this potentially abusive element in their FDI reviews," Locke said.
The United States and China on Monday and Tuesday hold their annual Strategic and Economic Dialogue, with the US side led by Treasury Secretary Timothy Geithner and Secretary of State Hillary Clinton.
Geithner said this week he would press China on reforms in the financial sector, saying that controls on bank deposits and loan rates were designed to give an advantage to state-owned companies.
While Locke said that the United States was open to Chinese businesses, a number of high-profile Chinese bids have proven controversial after lawmakers voiced fears over national security.
China's Huawei Technologies has repeatedly been blocked or given up on deals in the United States, including a plan to take a hefty stake in technology firm 3Com, amid US concerns it could acquire sensitive information.
The study released Wednesday, produced by the Woodrow Wilson International Center for Scholars and the Asia Society, said that the United States needed to send an unambiguous message that Chinese businesses are welcome if it wants to attract their growing investment.
Despite the Asian power's soaring growth, only 3.5 percent of the foreign investment around the world now originates from China and the figure is expected to shoot up, the study said.
The United States is by far the world's biggest recipient of FDI and China accounts for only a sliver of it, with Europeans providing nearly two-thirds of US investment and Japan far exceeding other Asian nations.
Presenting the report, Stapleton Roy, a former US ambassador to Beijing, recalled that he used to have to try to persuade China that US businesses had no ulterior motive in trying to enter the market.
"We were not investing in China to subvert China and China does not -- by and large -- invest in the United States for reasons other than profit. That's what drives business investments around the world," he said.
"If you engage in hanky-panky, you compromise your ability to be a major exporting country," he said.
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