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TRADE WARS
EU seeks 'clarification' on Chinese stimulus favouring local firms

KFC plans China expansion as US sales fall: state media
Fast food giant KFC is planning to open around 370 outlets in China this year, with the firm boosted by growing local sales, while revenues fall at home in the US, state media said Wednesday. "KFC has and (been) will be opening at least one more store everyday" this year, said Han Jilin, vice president of the China division of Yum!, KFC's parent, according to the China Daily. The move will mark KFC's most ambitious expansion in China since its entry into the country in 1987, the report said. The food retailer has already opened more than 240 outlets since the beginning of the year and inaugurated store number 2,600 in the central city of Zhengzhou on Tuesday, the paper said. In its financial report for the first quarter, Yum! said sales per store in China increased by two percent, compared with a two-percent drop in the United States, the report said. "China is KFC's fastest and most important market worldwide. The confidence has been growing stronger," the report quoted Sam Su, president of Yum! China Division, as saying. The confidence is well bolstered by robust domestic consumption, it said, with retail sales in the country rising 15.2 percent year on year last month thanks to Beijing's 580-billion-dollar stimulus package unveiled in November.
by Staff Writers
 Brussels (AFP) June 17, 2009
 The European Commission said on Wednesday it was seeking "clarification" into Chinese reports that Beijing wants economic stimulus cash to favour local firms over foreign rivals.

"We continue to follow the developments in this issue very closely and of course will attempt to seek further clarification of the Chinese policy," commission spokesman Amadeu Altafaj told journalists in Brussels.

Chinese state media reported on Tuesday that China had ordered local governments to favour domestic companies when carrying out projects that are part of a massive anti-crisis stimulus package.

The call for preferential treatment for Chinese firms follows claims by local businesses that a large part of Beijing's stimulus money has gone into foreign pockets, the China Daily newspaper said.

"We continue to believe that we need to trade our way out of the current economic difficulties and in that sense openness to trade and investment is part of the solution," Altafaj said.

"This includes of course foreign companies being able to participate in the procurement for stimulus packages or other government projects on the same basis" as local firms, he added.

Altafaj said the matter was not yet at the point where it could be raised at the World Trade Organisation but he noted that China was not a signatory to the WTO government procurement pact covering discrimination against foreign firms.

China unveiled a four-trillion-yuan (580-billion-dollar) package in late 2008 aimed at revitalising the economy, which has been hit by the global meltdown.

There are no figures available on the value or proportion of foreign products purchased under the stimulus budget, the China Daily said.

But in the months that have passed since the package was announced, the corporate sector has become increasingly suspicious that the money mainly benefits foreign companies.

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