Money & Company

Tracking the market and economic trends
that shape your finances.

« Previous Post | Money & Company Home | Next Post »

U.S. ambassador warns China: Foreign businesses feel unwelcome

September 20, 2011 |  3:03 am

Gary Locke
U.S. Ambassador to China Gary Locke has been something of an enigma to the Chinese in the month he's been in Beijing.

His no-frills style of traveling coach on planes and buying his own coffee at an airport Starbucks has divided observers used to seeing pampered Chinese officials. Is it a publicity stunt or something local leaders should emulate, many wondered.

Still, one of the remaining questions about the third-generation Chinese American was whether he would be more sympathetic toward Chinese interests. Although such a query may seem fringe in the U.S., it's not out of the ordinary in China to equate race with loyalty. As one popular saying goes, "You can't betray your ancestors."

But speaking to American executives Tuesday in the Chinese capital, the former Washington governor showed no hint of softening U.S. demands. He called on Beijing to appreciate its currency, eliminate trade and investment barriers and strictly enforce intellectual property rights.

Locke also echoed growing concerns from foreigners that China was becoming an increasingly unwelcome place to do business.

"China's current business climate is causing growing frustrations among foreign business and government leaders, including my colleagues in Washington," Locke said in the speech, which outlined his vision of the U.S.-China economic and trade relationship.

Locke warned if China's economy didn't allow wider foreign access, "it will mean less innovations from Chinese businesses, fewer opportunities for the Chinese people [and] slower growth for the Chinese economy."

The ambassador cited regulations in industries such as mining, banking, energy and transportation as being unduly restrictive and, as a result, "creating seeds of doubt in the minds of foreign investors as to whether they are truly welcome in China."

He offered credit cards as an area in which foreign banks could play a larger role to help boost sorely needed domestic consumption in China. Chinese banks are mostly geared toward serving state-owned companies and aren't permitted to compete in interest rates. A recent survey by the accounting firm KPMG showed profits of foreign banks lagging behind their Chinese counterparts.

Discussing intellectual property, Locke cited rampant software piracy as a significant problem.

"In the United States, for every $1 in computer hardware sales, there is about 88 cents in software sales," he said.  “But in China, for every dollar in hardware sales there is only eight cents in software sales." 

The reason, Locke said, was that 80% of software in China was believed to be counterfeit.

A debate last week between Locke and one of China's most famous economists, Li Daokui, underscored just how far apart the two countries are on the issue of intellectual-property protection.

Li, an advisor to the central bank, said he disagreed a growing economy required such legal protections. Instead, the laissez-faire environment was good for young entrepreneurs hoping to get established, Li said, according to the Wall Street Journal.

In his speech Tuesday, Locke again rejected Li's idea, saying China neglected intellectual property protection at its own peril.

"I have heard from so many Chinese-owned companies who have devoted significant resources to develop new products and technologies. And they complain they were almost wiped out by others illegally copying their ideas and technology," Locke said. "For every foreign company calling for stronger IP protection, there are many more Chinese companies demanding the same."

RELATED:

Why airport photo of Ambassador Gary Locke went viral in China

Ambassador nominee raises strong emotions in China

Unlicensed Angry Birds attraction opens in Chinese theme park

-- David Pierson

Twitter.com/dhpierson

Photo: U.S. Ambassador to China Gary Locke speaks to U.S. business executives in Beijing on Tuesday. Credit: Lintao Zhang / Getty Images

Comments 

Advertisement










Video