China Urges U.S. to Treat Chinese Firms Fairly

Feb. 17, 2011
Based on dispute over on Huawei's acquisition of 3Leaf Systems, China wants U.S. to 'increase the transparency of its security review and provide fair treatment for Chinese investments.'

After Washington voiced concerns over security in its review of Chinese tech giant Huawei's takeover of a U.S. computer firm, China on Feb. 17 insisted that the U.S. treat its businesses fairly.

The U.S. Committee on Foreign Investment (CFIUS) has asked Huawei to go back on a $2 million deal last May in which it acquired 3Leaf Systems. Huawei has said it would not back down, shunting the issue to President Barack Obama.

"We hope the United States will increase the transparency of its (security) review and provide fair treatment for Chinese investment there," said Yao Jian, spokesman of the Ministry of Commerce.

The United States has in the past rejected investment bids by several Chinese companies on national security grounds, including a joint bid worth $2.2 billion by Huawei for U.S. technology firm 3Com in 2008.

"Several cases ... were resisted or disturbed, which has affected Sino-U.S. cooperation to some extent," Yao said.

The move by Huawei to resist the advice of CFIUS, which vets deals on security grounds, puts Obama in a difficult position after last month's state visit by Chinese President Hu Jintao to the United States.

U.S. officials have also been lobbying Beijing to give US tech firms greater market access.

China's State Council, or cabinet, announced on Feb. 12 it would vet proposed mergers and acquisitions by foreign firms to "safeguard national security", a move that could complicate business dealings in the country. A panel is being established that would examine foreign investments in areas pertaining to national defense, agriculture, energy, resources, infrastructure, transport, technology and equipment manufacturing, it said.

Yao said such reviews internationally accepted and "necessary" for China as deals by foreign firms were expected to increase significantly in the future. He said mergers and acquisitions accounted for just 3% of China's total foreign direct investment.

FDI in non-financial sectors totaled $105.74 billion last year, up 17.4% from a year ago, official data showed.

Copyright Agence France-Presse, 2011

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