U.S. tech group urges
global action against Chinese "mercantilism"
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[March 16, 2017]
By Michael Martina
(Reuters) - A U.S. technology group said in a report on Thursday that
China's mercantilist industrial policies were a risk to the global
economy and trading system, and called for international pressure on
China to force a policy "reset".
The report coincided with the release of a separate paper by an
influential U.S. business chamber criticizing Beijing's "Made in China
2025" plan, which aims to dramatically increase domestically made
products in 10 sectors, from robotics to biopharmaceuticals.
The two groups join a growing chorus of foreign business lobbies crying
foul over such plans and the Chinese government's billions of dollars in
subsidies they fear will force members to surrender key technology or
weaken their global competitiveness.
Technology policy group Information Technology & Innovation Foundation (ITIF)
said China's policies threatened the "entire global economic and trade
Efforts by the three previous U.S. administrations to engage Chinese
officials had "failed", ITIF said, and with China no longer as
economically dependent upon the United States, Washington has
insufficient leverage to counter Beijing alone.
"America cannot respond with either flaccid appeasement or economic
nationalism; it must assemble an international coalition that pressures
China to stop rigging markets and start competing on fair terms," said
ITIF, a Washington-based think tank whose board includes representatives
from top companies such as Apple, Amazon, Cisco, Google, and Intel.
ITIF urged the United States, along with Australia, Canada, Germany,
Japan, South Korea, the United Kingdom, and the European Union, to
jointly pressure China into a "fundamental economic policy reset".
A new approach is needed that goes beyond the "naive push for further
dialogue and instead makes it clear to Chinese leaders that such unfair,
harmful policies cannot be practiced with impunity," ITIF said.
U.S. President Donald Trump's trade policy should focus on China and not
Mexico, it added, warning that the Chinese government could
"capriciously punish U.S. firms" in response.
"But doing nothing due to the fear of retaliation should not be an
option," it said.
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AUGMENTING GLOBAL MARKETS
Premier Li Keqiang told China's parliament at the opening of its annual
session this month that foreign and domestic companies "will enjoy the
same preferential policies under the Made in China 2025 initiative".
Since Trump's November election win, China's President Xi Jinping has
tried to position the country as a champion of free trade.
But such pledges have done little to allay the concerns of China's trade
"Chinese efforts to exert greater control over where commercial data is
stored and how it is transferred are skewing the decision-making process
for companies that must decide where products are made and innovation
takes place," the U.S. Chamber of Commerce said in a separate report.
"China's subsidy policies not only enhance the competitiveness of
domestic companies at home, but also help to augment their
competitiveness in global markets," it said.
A progressive increase in domestic parts used in high-tech sectors to 70
percent by 2025 is among targets set out in the plan, which is set to
use subsidies, standards, financial policy and government-backed
investment funds to reach them.
The European Union Chamber of Commerce in China last week called the
plan "highly problematic".
The more vociferous complaints from the American business community in
China mark a shift from years past, when many companies eschewed the
idea of forceful action by Washington out of fear of retribution from
Trump's choice for U.S. Trade Representative, Robert Lighthizer, who has
long advocated aggressive action against China, told senators at his
confirmation hearing on Tuesday that he expected the administration
would have a "very rigorous enforcement policy".
(Reporting by Michael Martina; Editing by Ryan Woo and Simon
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