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Vice President Xi Pledges Equal, Fair Treatment for Foreign Firms in China
Chinese Vice President Xi Jinping pledged that foreign firms operating in the world’s fastest growing major economy will be treated fairly after U.S. and European companies complained of government discrimination.
China advocates equal treatment for foreign and domestic companies and will continue to open up its economy, bringing overseas investors “broader room and heftier returns,” Xi said today at a forum in the city of Xiamen in southern China’s Fujian province.
The European Chamber of Commerce expressed “frustration” this month with the pace of market opening in China after its U.S. counterpart in April called the regulatory environment “increasingly difficult”. Government procurement rules that favor local companies, a postal law that excludes foreign suppliers such as FedEx Corp. and curbs on rare-earth exports have strained relations with China’s largest trading partners.
“China will continue to create a market environment with fair competition” and is “dedicated to creating a more open and better-optimized investment environment,” Xi said at the forum organized by the United Nations Conference on Trade and Development.
The vice president, a likely successor to President Hu Jintao, also directly addressed concerns about rules introduced in November that would give preference in government procurement to companies with products accredited for “indigenous innovation.” Robert Hormats, the U.S. State Department’s undersecretary for economic affairs, in April said the rules were discriminatory and raised concern.
Domestic Innovation
Xi said today that foreign and domestic companies would be treated equally under the rules. “The Chinese government’s policy to encourage indigenous innovation covers all enterprises on Chinese soil and it applies to all foreign investments in China established according to the law,” he said.
China last year overtook the U.S. to become the world’s biggest car market, passed Germany as the largest exporter and in the second-quarter of this year surpassed Japan to become the second-biggest economy. It may overtake the U.S. as the world’s biggest economy by 2027, according to Goldman Sachs Group Inc. chief economist Jim O’Neill.
Foreign companies that have faced difficulties in China this year include Google Inc. and Rio Tinto Plc. The owner of the world’s most-used search engine shut its China website in March after saying it was no longer willing to censor content as required by Chinese law. That same month, a Shanghai court sentenced four Rio Tinto executives to jail for taking bribes and infringing commercial secrets.
The nation is also committed to developing domestic companies into multinationals, will encourage Chinese companies to expand globally and increase cooperation for construction of infrastructure overseas, Xi said.
The global economy is “gradually moving out from under a shadow” after China aided growth by keeping its economy open during the financial crisis, Xi said. China will encourage more local companies to invest overseas and quicken the pace of opening up its inland provinces to help promote “strong, sustainable and balanced” global economic growth, Xi said.
--Chua Kong Ho, Zhang Dingmin. With assistance from Vincent Ni in Beijing. Editors: John Liu,
To contact Bloomberg News staff for this story: Chua Kong Ho in Shanghai at +86-21-6104-7011 or kchua6@bloomberg.net Zhang Dingmin in Beijing at +86-10-6649-7576 or Dzhang14@bloomberg.net
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