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U.S. Urges Level Playing Field as China Pledges Reforms

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July 10 (Bloomberg) -- The U.S. pressed China today to ensure that American companies there are treated fairly and aren’t subjected to cyber surveillance by the Chinese government.

Representatives from agencies including the Federal Bureau of Investigation and the departments of Defense, Homeland Security, Treasury and State met with their Chinese counterparts to reiterate U.S. concerns about cyber-enabled theft of intellectual property and trade secrets, an Obama administration official told reporters.

The official, who asked for anonymity as a condition for giving the briefing, said the two sides agreed that a new U.S.- China working group on cybersecurity would meet again later this year. Today’s talks were positive and constructive, the official said.

Treasury Secretary Jacob J. Lew, speaking earlier at the start of two days of U.S.-China talks in Washington, called for “an economic relationship where our firms and workers operate on a level playing field.” Companies that innovate and hold intellectual property should be “protected from government-sponsored cyber intrusion,” he said.

China State Councilor Yang Jiechi said the country’s leadership is committed to economic reforms and the continued opening of its markets. China also is ready to discuss human-rights issues and work with the U.S. to fight terrorism, he said.

The U.S. has been complaining to China about surveillance of American companies. The issue may be complicated by Edward Snowden’s disclosures about U.S. programs that collect phone and Internet data, and his assertion last month that the U.S. had been hacking into computers in Hong Kong and mainland China since 2009.

“Our relationship is, and will continue to be, God willing, a mix of competition and cooperation,” U.S. Vice President Joe Biden said during a ceremony at the State Department marking the annual U.S.-China Strategic and Economic Dialogue. “Competition can be good for both of us. And cooperation is essential.”

China’s Slowdown

U.S. officials have said they plan to press China to pursue policies that will help reverse a Chinese slowdown, safeguard its financial system, open markets to overseas products and capital, and allow for a more flexible exchange rate.

“We will never agree on everything,” Secretary of State John Kerry said. “We will have candid conversation on those issues where we don’t see eye to eye because that is absolutely the best way to constructively manage our differences and increase understanding.”

Kerry participated in today’s talks and then returned to Boston to be with his wife, Teresa Heinz Kerry, who was hospitalized after suffering seizure-like symptoms on July 7. Deputy Secretary Bill Burns will take Kerry’s place in the meetings.

Vice Premier Wang Yang, also speaking during the opening, said such talks benefit peace and development.

China’s economic growth has been slowing. The International Monetary Fund yesterday projected that China’s economy will grow 7.8 percent this year and 7.7 percent in 2014. U.S. gross domestic product is forecast to expand 1.7 percent before accelerating by 2.7 percent next year, according to the Washington-based IMF.

‘Balanced’ Growth

The U.S. economy is “poised for continued strong and broad-based growth,” Lew said in his prepared remarks. “What matters is ensuring that our economies are growing in a way that is balanced, beneficial and mutually compatible.”

China’s exports and imports unexpectedly declined in June, underscoring the severity of the slowdown in the world’s second-biggest economy as Premier Li Keqiang reins in credit growth.

Overseas shipments fell 3.1 percent from a year earlier, the most since the global financial crisis, data from the General Administration of Customs showed in Beijing earlier today, compared with the median estimate of a 3.7 percent gain in a Bloomberg News survey. Imports dropped 0.7 percent, while the median projection was for a 6 percent increase.

Lew urged China to make good on pledges to open its economy to competition and adopt more flexible exchange and interest rates. “I will encourage China to follow through decisively on the important commitments it has made to transition to a more balanced and sustainable pattern of growth,” he said.

Lew, speaking at the Treasury Department later at the start of the economic talks, said exchange-rate reform in China is “essential” because it would “boost the purchasing power of Chinese households.”

To contact the reporters on this story: Ian Katz in Washington at Ikatz2@bloomberg.net; Kasia Klimasinska in Washington at kklimasinska@bloomberg.net

To contact the editor responsible for this story: Chris Wellisz at cwellisz@bloomberg.net

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