Kicking off his first trade mission to China, Locke said Beijing's policies in favour of local innovation and technology could give domestic firms a "leg up" over foreign rivals and pledged to raise the issue with Chinese officials.

"We're very concerned about that," Locke told reporters in Hong Kong, saying earlier that the policy was "made without any input from affected businesses and really not subject to any public comment."

The issue comes ahead of key Sino-US talks scheduled for next week in Beijing, to be attended by US Secretary of State Hillary Clinton, US Treasury Secretary Timothy Geithner, Locke and other key officials.

Relations have been tense for months, with clashes over everything from the value of the yuan and trade to human rights and Internet freedoms.

Locke said Beijing had made some changes to its innovation policies but added that despite laws guaranteeing foreign firms access to the Chinese market "implementation is often inconsistent at the provincial and local level."

"This is especially true when it comes to intellectual property protection," he told a business lunch Monday in Hong Kong.

"As China moves up the economic value chain from low-cost manufacturing to higher value-added research and development, they too will count on protections for their innovations and free access to other markets."

One directive issued by China -- and cited in the past by Washington as a problem -- stipulates that high-tech goods must contain Chinese intellectual property in order to be included in a Chinese government procurement catalogue.

Accredited products would be favoured, according to the policy, which foreign firms say effectively excludes them from the process.

In a sweeping speech on clean energy, Locke played down "inevitable" trade spats between the two countries, saying less than three percent of Chinese exports to the US were slapped with antidumping duties last year.

"The disagreements we have are an inevitable byproduct of the growing and mature trade relationship between our two countries," Locke said.

The US and China could work together on environmental technologies "to help lead the world away from the brink of environmental disaster," Locke said.

China invested 34.6 billion dollars in clean energy in 2009, up more than 50 percent on the previous year -- making it the world's biggest investor in energy-efficient technology, according to a UN report published this month.

earlier related report
EU's Kroes says China 'Great Firewall' a WTO issue
Shanghai (AFP) May 17, 2010 - European Commission vice president Neelie Kroes said Monday that China's censorship of the Internet constituted a trade barrier and should be dealt with by the World Trade Organisation.

Kroes, who is also in charge of charting the European Union's digital agenda, said she had raised the issue in Beijing last week in a meeting with Chinese Vice Premier Zhang Dejiang.

"It is one of those issues that needs to be tackled in the WTO," Kroes said in Shanghai as she concluded a five-day visit to China.

China blocks access to web content the government deems unacceptable, ranging from pornography to political dissent, in a vast censorship system known as the "Great Firewall of China".

Kroes spoke to reporters during a visit to the Shanghai headquarters of Tudou.com, a popular Chinese video-sharing website founded by Chinese and Dutch entrepreneurs.

She said China's "Great Firewall" was a trade issue "as long as that is a real barrier for communication".

"I am pushing wherever I can to get the European enterprises in a fair and level playing field in China -- and the other way around," said Kroes, who is also a former competition commissioner.

She added that European Trade Commissioner Karel De Gucht was very involved in discussions on what action the EU should take.

In March, Internet giant Google stopped filtering results on its Chinese-language search engine to protest government censorship and what it said were China-based cyberattacks.

The issue touched off a war of words between Beijing and Washington over Internet freedom, adding to a host of other bilateral trade disputes.

Kroes declined to comment on the Google matter, saying the firm's decision was a matter of corporate and US policy.

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