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TRADE WARS
Most US firms feel 'targeted' by China: survey
By Felicia SONMEZ
Beijing (AFP) Feb 11, 2015


US accuses China of illegal export subsidies
Washington (AFP) Feb 11, 2015 - The United States announced Wednesday that it has filed a new complaint at the World Trade Organization over alleged Chinese export subsidies to seven industries.

China "seems to provide" WTO-prohibited support for exports through a special program that helps producers across the country to export, the US Trade Representative said.

The aid is funnelled through the Chinese government's Demonstration Bases-Common Service Platform program, which the USTR said provides free and discounted services to companies.

The support is distributed through 179 Demonstration Bases spread around the country, and also involves cash grants and other incentives that for certain companies amounts to at least $635,000 worth of assistance annually.

"Export subsidies provide an unfair advantage to a vast array of Chinese exporters and are expressly prohibited under WTO rules," the USTR office said in a statement.

"This unfair Chinese program is harmful to American workers and American businesses of all sizes."

Washington said its complaint is directed at the Chinese program's support for seven industries: textiles, advanced materials and metals, light industry, specialty chemicals, medical products, hardware and building materials, and agriculture.

The petition to the WTO for, at the first level, dispute settlement consultations, responds to complaints by various US industries including shrimp fishermen, medical device makers, fruit and vegetable farmers, and textile manufacturers.

Obama, Xi discuss investment pact
Washington (AFP) Feb 11, 2015 - President Barack Obama spoke to his Chinese counterpart Xi Jinping Tuesday, stressing his commitment to reach an investment treaty that could redefine bilateral trade ties.

Obama "reiterated his commitment to pursue a high-standard and comprehensive bilateral investment treaty," officials said describing the call.

"The President encouraged China to continue its move toward consumption-led growth and a market-determined exchange rate," they said.

The treaty is still a work in progress but could make trade considerably easier between the world's two largest economies.

Xi is among a host of Asian leaders who will visit the White House later this year.

The Chinese leader will come on an official state visit, a symbolic move that will see the red carpet rolled out, with Chinese state news agency Xinhua reporting that it will take place in September.

On the back of a bilateral agreement to curb climate change, Obama looked ahead to reaching a multilateral agreement at a major climate summit in Paris in December.

But ties are not without problems.

Obama also "called for swift work to narrow our differences on cyber issues."

China has been accused of involvement in a series of hacking scandals involving state and corporate targets.

Most US firms in China feel "targeted" by authorities, a survey said Wednesday, as the government embarks on a series of high-profile investigations into foreign businesses.

An American Chamber of Commerce survey found 57 percent of respondents believed foreign firms are being singled out in China's pricing, anti-monopoly and anti-corruption campaigns under President Xi Jinping.

Of those who said foreign firms were being targeted, 65 percent said they fear such campaigns will have a negative impact on them.

The results were part of the 17th annual business climate survey by the American Chamber of Commerce in the People's Republic of China (AmCham China), which had responses from 477 of the organisation's 1,012 company members.

"All of us are concerned, because we're on the sidelines for the most part watching and monitoring the campaigns by Xi Jinping and the leadership," AmCham China chairman James Zimmerman said at a news conference announcing the results.

"We don't know if it's going to slow down, or who is going to be targeted next," he said. "All we can do is set an example and do the right thing -- exercise zero tolerance when it comes to these issues, put in place compliance programmes and cooperate with the government when these things come up."

Nearly half of US firms in China -- 47 percent -- say they feel "less welcome" in the country than before, up from 44 percent last year.

The survey's release comes after Chinese authorities stepped up scrutiny of foreign firms, launching sweeping investigations into alleged malpractice in sectors ranging from pharmaceuticals to baby formula over the past two years.

This week US mobile chip titan Qualcomm said it will modify its business practices in China and pay 6.088 billion yuan (around $975 million) to end a long-running antitrust probe in the country, in perhaps the biggest fine ever levied by Beijing in such a case.

Other businesses such as Apple and Starbucks have sometimes received unfavourable coverage in state media over issues regarding service and pricing.

The moves have prompted fears from investors that overseas companies are being especially targeted. China maintains that its anti-monopoly law does not discriminate between domestic and foreign firms.

- Air pollution, Internet woes -

The AmCham survey highlighted a number of other areas of growing concern for US companies doing business in China, including the country's choking air pollution, its slowing growth and the ruling party's ever-tighter grip on the Internet.

For the first time, a majority of respondents -- 53 percent -- said air quality issues had made it difficult for their organisation to hire senior talent to work in China.

The figure is up from 48 percent in 2014 and 34 percent in 2013.

China's cities are often hit by heavy pollution, blamed on coal-burning by power stations and industry, as well as vehicle use, and it has become a major source of discontent with the Communist Party.

Retired senior officials have acknowledged that it may kill as many as half a million people a year.

In addition, China's economic growth is losing steam and more than 30 percent of companies surveyed said they had no investment expansion planned in 2015, the highest rate since 2009.

As authorities' online control tightens, the vast majority of respondents -- 83 percent -- said Internet censorship in China either negatively or somewhat negatively impacts their ability to conduct business in the country.

In recent months, authorities have cracked down on the use of virtual private networks (VPNs) commonly used to scale the vast censorship apparatus known as the Great Firewall.

For the first time since 2010, respondents reported increasing Chinese protectionism as among the top five challenges they face.

The other four were labour costs, inconsistent regulatory interpretation, shortages of qualified employees, and shortage of qualified management.

One bright spot in the survey was the impact of China's much-touted anti-corruption campaign under Xi.

Corruption dropped from the fourth-largest challenge cited by respondents in 2013 to the sixth-largest in 2014. In this year's survey, it had dropped out of the top 10 entirely, falling to 13th place.


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