China's national innovation program had led to protectionist telecoms and IT policies, the American Chamber of Commerce in China (AmCham China) has warned.
In its annual white paper, the business lobby said overcoming protectionism across the economy was one of the biggest challenges facing foreign businesses in China.
It said the encouragement of "indigenous innovation" in ICT had created "protectionist policies that may discriminate against foreign companies and ultimately retard the pace of China's own innovation."
Under the guise of Indigenous Innovation, many Chinese agencies had called for technological standards with China's own IPR and the imposition of domestic standards, the paper said.
It said the mandating of TD-SCDMA as a 3G technology was at odds with the government's commitments to technology neutrality.
The introduction of IT and networking security standard means that vendors would have to buy the locally-developed technology in order to sell equipment. Implementation of the new rule, originally scheduled to start from May 1, 2009, has been delayed after intense lobbying from foreign business groups.
Additionally, the formation of the new Ministry for Industry and IT (MIIT), with responsibility for industry development and the ICT sector, was a top-down approach to innovation "that could create a more burdensome regulatory environment and could lead to new trade barriers."
AmCham called for the removal of the "indigenous innovation product" requirement for procurement and the establishment of a transparent system for licensing of all new technologies.
It said spectrum allocation should be technology-neutral and markets should be allowed to decide standards issues.