China Vows Fairness for Foreign Companies

April 29, 2010
Premier Wen Jiabao said his country 'will endeavor to create a level playing field for all market players, foreign and Chinese enterprises alike.'

China's premier promised foreign companies equal treatment with Chinese rivals, in Beijing's most high-profile effort yet to quell complaints it is trying to squeeze foreign competitors out of its markets.

"We will endeavor to create a level playing field for all market players, foreign and Chinese enterprises alike," Premier Wen Jiabao said at a news conference with European Union President Jose Manuel Barroso.

China has faced repeated complaints in recent months that technology and other policy are being used to promote its companies at the expense of foreign rivals in violation of the spirit of its free-trading commitments.

It is unusual for such a senior Chinese leader to respond to complaints by foreign companies, and Wen's remarks indicated the importance Beijing attaches to placating investors that are supplying technology and skills to develop its economy.

The premier repeated Beijing's promise that foreign companies with operations in China would be treated equally under a new policy to promote Chinese innovation by favoring locally developed products in government procurement. The announcement of the "indigenous innovation" policy in November prompted an outcry by foreign companies and governments, which called it protectionist. Beijing backed down this month and said it would make it easier for foreign companies to qualify as suppliers.

"The policy that is designed to encourage indigenous innovation will treat all enterprises that operate on Chinese soil as equals," Wen said. "It will not exclude foreign enterprises."

Beijing has been promoting development of its technology industries and pressing foreign companies to transfer know-how to China. But the foreign outcry appears to have fueled official concern that companies might cut back technology development in China.

After the news conference, Wen and Barroso met with two dozen managers of major European companies including Volkswagen AG, Nokia Corp. and French oil giant Total SA. He was joined by China's finance, technology and industry ministers and the chairman of its planning agency, which Wen said showed how seriously the government took the matter.

The premier smiled politely as executives repeated companies' concerns, including about rules due to take effect on May 1 that require suppliers to disclose how computer security technology works if they want to sell it to the government. Companies worry that trade secrets might be leaked to Chinese competitors, and the United States and Europe have called on Beijing to scrap the measure.

Wen said Beijing wants to work closely with foreign companies, though he did not comment on the technology disclosure demand or say it might be changed or postponed.

"We are going to create more favorable conditions for foreign investors to make investments in China," the premier said. "We will not change our commitment to pursuing an 'opening up' policy."

Responding to a comment by a Nokia manager about China's Web controls, Wen said the communist government "pursues an open approach with regard to development of the Internet" and gave no indication that online censorship might change.

The American Chamber of Commerce in China, in a report this week, expressed concern the government was slowing market-oriented reforms and is using regulations to close access to previously open segments of its economy. The group said conditions have worsened over the past two years. It said foreign companies face unequal enforcement of environmental rules, patent and other rules.

"We see many actions in the area of innovation, in other areas of industrial policy, which suggest to us that in the future in a number of areas, the market opportunity will begin to get narrower," the chamber president, Christian Murck, said.

Copyright 2010 The Associated Press.

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