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US business group cries foul over China technology push

China moves to calm local govt debt fears
China's banking regulator has moved to ease concerns after reports said nearly a quarter of loans to local governments were at serious risk of default. Century Weekly magazine said this week that 23 percent of the 7.66 trillion yuan (1.1 trillion dollars) extended to local governments' financing vehicles were in danger of turning sour. It cited estimates by the China Banking Regulatory Commission. However, the agency downplayed the risks to the banking system in a statement sent to AFP. "Currently Chinese banks have enough provisions and good capability to withstand risks," it said. The statement acknowledged some of the loans "do not comply with regulations" but added that with appropriate measures "their risks can be controlled and resolved". Regulators will carry out spot checks at commercial banks in the third quarter to ensure banks can cope with potential non-performing loans, according to the statement. Chinese banks lent huge amounts to provincial financing vehicles for construction projects last year after Beijing called for nationwide efforts to spur the economy. China has powered out of the global crisis on the back of a stimulus package worth four trillion yuan and the state-backed bank lending, which saw new loans nearly double from the previous year to 9.6 trillion yuan in 2009. The lending spree raised concerns in Beijing over a possible new crop of bad loans that could threaten the world's third-largest economy. The roughly 1.76 trillion yuan reportedly at risk of default would be nearly four times the amount of all non-performing loans in Chinese banks as of the end of June, according to figures released by the bank regulator.
by Staff Writers
Beijing (AFP) July 28, 2010
China's drive to develop homegrown technology was "anti-foreign and regressive" and would continue to fuel trade disputes with Washington, a US business group said in a report Wednesday.

The US Chamber of Commerce report said China was abusing the allure of its vast market to push foreign companies to transfer their latest technologies to Chinese competitors.

This was a "blueprint for technology theft on a scale the world has never seen before," it said.

The report is the latest in a growing chorus of complaints by foreign businesses and governments over perceived unfair policies and market restrictions in the world's third-largest economy.

"Indigenous innovation is a massive and complicated plan to turn the Chinese economy into a technology powerhouse by 2020 and a global leader by 2050," said the US Chamber of Commerce, one of the biggest business groups in the world.

"What is worrisome for the business community is that these indigenous innovation industrial policies are headed towards triggering contentious trade disputes and inflamed political rhetoric on both sides."

China launched its indigenous innovation campaign in 2006 to encourage the development of domestic technology, and thereby reduce its reliance on foreign know-how, to boost economic growth and national security.

Tensions over it flared after Beijing issued rules late last year that were widely seen by foreign businesses as squeezing them out of the government's multi-billion dollar procurement market.

Concerns over indigenous innovation extended to security encryption rules, domestic patent laws and preferential policies for domestic companies, the US Chamber of Commerce report said.

Amid rising foreign criticism, Beijing has strongly defended its policies.

Visiting German Chancellor Angela Merkel earlier this month prodded China to provide a more level playing field for German businesses here.

But in a meeting with German business leaders accompanying Merkel, Premier Wen Jiabao rejected suggestions that foreign businesses were being put at a disadvantage.

The requirements for technology transfer were "forcing foreign technology companies to anguish over balancing today's profits with tomorrow's survival".

"The belief by foreign companies that large financial investments, the sharing of expertise and significant technology transfers would lead to an ever-opening China market is being replaced by boardroom banter that win-win in China means China wins twice," the report said.



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