United States should focus on China’s technology plans when trade talks resume, business groups say

  • US Chamber of Commerce and American Chamber of Commerce in China deliver joint report to Office of US Trade Representative before trade talks resume
  • Washington should address Chinese policies and practices the report claims are unfair and restrictive for American companies
PUBLISHED : Wednesday, 23 January, 2019, 7:26am
UPDATED : Wednesday, 23 January, 2019, 11:27pm

Two US business groups have told American trade negotiators that Beijing is moving ahead with its hi-tech ambitions as outlined in the “Made in China 2025” strategy, a policy expected to be a focus of talks that resume next week to try to end the trade war.

In a joint report with the American Chamber of Commerce in China, the US Chamber of Commerce said it had identified more than 100 policies in 24 provinces and cities that “either set targets, create rules, or provide normative guidance” that directly institute or are related to MIC 2025, a key initiative backed by Chinese President Xi Jinping to build up technology sectors including robotics, semiconductors, AI and aviation.

The groups’ conclusions were delivered to the Office of the US Trade Representative last week, according to The Wall Street Journal, which first wrote about the report.

The Chinese advances are occurring at the local level, according to the report, seen by the South China Morning Post.

“Developing and owning indigenous innovation and intellectual property is a primary goal” and regional governments had been actively developing and promoting their own plans in line with MIC2025 with state support, the US Chamber of Commerce said.

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“It suggests a deep, concerted, and continuing effort among sub-central authorities to carry out and take advantage of incentives ties to Made in China 2025 plan,” the report said. “Any solution must address systemic challenges at all levels of the Chinese government.”

Apart from reducing the US trade deficit with China, the report also called on Washington to “prioritise outcomes” to address structural challenges in China’s economic policies and practices, which the groups contend are unfair and restrictive for US companies.

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Concerns have risen after little progress was made during negotiations earlier this month in Beijing to address the deep-rooted conflicts on China’s state-supported industry policies and hi-tech development plans.

Sources told the Post that during those talks, Chinese negotiators discussed the prospects of increasing purchases of American goods – which would help lower the trade imbalance – while avoiding the issue of structural challenges in the Chinese economy.

According to a Financial Times report, the US has rejected a Chinese offer to send vice-minister-level officials to Washington to prepare for Chinese Vice-Premier Liu He’s visit next week – raising fresh doubts as to whether the countries can meet the deadline of March 1 – set by US President Donald Trump and Chinese President Xi Jinping – before tariff increases could resume.

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But Craig Allen, president of the US-China Business Council, brushed off such issues as mere “logistics” that “change all the time”.

“The preparation does not necessarily require face-to-face consultation,” he said.

“I think that we need not worry about this development at all and should remain focused on the bigger picture.”

On Tuesday White House chief economic adviser Larry Kudlow told CNBC that no meeting had been scheduled for this week but that the two countries were in constant contact ahead of the talks next week.

In Beijing, Chinese foreign ministry spokeswoman Hua Chunying echoed Kudlow’s remarks.

“I noticed that an American official has clarified the issue. The two sides have remained in contact over trade talks, I haven’t heard of any changes,” Hua told a press conference on Wednesday.

The joint report proposes changes China should make in policy guidance and regulations to eliminate technology transfer, addressing market barriers and unfairness in the hi-tech development plans embodied by MIC2025.

“We urge the US government to take a holistic approach that achieve specific and concurrent changes to laws, regulations, and standards – and implementation thereof – across China’s policy landscape,” it said.

China’s pledges of reform should be tied to “clear benchmarks, timelines and intensive monitoring”, it said.

The report also seeks the removal of barriers on so-called cross-border data flows and implored US negotiators to demand that China address security requirements which US digital service providers have complained are discriminatory and undermine competition in the Chinese market.

Additional reporting by Jun Mai