FOREIGN FIRMS FEEL UNLOVED

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Is China already removing its 'braces' before it can walk? Just my thoughts...

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BEIJING - A growing number of foreign businesses in China feel shut out under new government policies promoting homegrown technology, according a survey released yesterday.

Feeling increasingly unwelcomed to participate and compete in the Chinese market was 38 per cent of foreign firms questioned by the American Chamber of Commerce. That marks a 12 percentage-point rise from the last survey taken just a few months before. Over that period, the government has increasingly steered business toward state-owned companies, ostensibly as part of efforts to boost innovation among Chinese firms.

The chamber's data, gathered earlier this year from 203 companies, portrays a steadily worsening environment for foreign companies in China over the past three years. The disquiet was most pronounced among foreign firms specialising in high-tech and information technology, with 57 per cent saying they felt negatively affected by government policies. In that sector, 37 per cent of foreign companies said they were losing sales as a result of Chinese government policies. Such sentiment has increased following the government's launch of a 4 trillion yuan ($820 billion) stimulus package in late 2008 designed to help China rebound quickly from the global crisis.

Foreign direct investment in China rose at its slowest rate in seven months in February, up 1.1 per cent from a year earlier.

The chamber's report comes amid a dispute over China's currency controls. Some United States lawmakers have demanded to have China declared a currency manipulator by the Treasury Department, possibly mandating trade sanctions. AP

From TODAYOnline.com, Tuesday, 23-Mar-2010
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US becoming unwelcome in China?

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US firms feel increasingly unwelcome in China: survey
Posted: 22 March 2010 1131 hrs

BEIJING: A growing number of American businesses feel unwelcome in China because of what they see as discriminatory government policies and inconsistent legal treatment, according to a survey released Monday.

The American Chamber of Commerce in China asked 203 member companies if they felt unwelcome to participate and compete in China's market, with 38 per cent saying they did, up from 26 per cent in the fourth quarter of 2009.

Inconsistent regulatory interpretation and judicial treatment topped the list of concerns for American businesses, the survey said.

Respondents also blamed what they view as a push by Beijing to squeeze foreign technology companies out of the lucrative government procurement market.

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Beijing skyline

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"The AmCham-China survey shows that US companies believe they face product discrimination in state-owned enterprise purchases, as well as in government procurement," a statement accompanying the survey results said.

The survey was released as the trial of four employees of Anglo-Australian miner Rio Tinto - including an Australian citizen - on bribery and trade secrets charges opened in Shanghai.

The four defendants were arrested last July during contentious iron ore contract negotiations that later collapsed, and after Rio snubbed a near 20-billion-dollar cash injection from state-run Chinese mining firm Chinalco.

The trial has strained Beijing's relations with Canberra and raised concerns about doing business in China.

The survey also comes as US Internet giant Google has threatened to leave China, citing cyber attacks and censorship, and with Sino-US ties inflamed over a range of contentious issues including China's currency policy.

Critics say China keeps the value of its yuan artificially low, making its exports cheaper and thus more competitive on world markets.

- AFP/sc

From ChannelNewsAsia.com; see the source article here.

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White House on China-Google case...

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White House 'disappointed' no Google, China deal
Posted: 23 March 2010 0627 hrs

WASHINGTON - The White House said Monday it was "disappointed" that Google could not reach a deal with Beijing, after the Internet giant announced it was no longer censoring its search engine in China.

"We are disappointed that Google and the Chinese government were unable to reach an agreement that would allow Google to continue operating its search services in China on its Google.cn website," National Security Council spokesman Mike Hammer said in a statement.

"Google made its decision based on what it believed was in its interest," he added, noting the White House respects the search engine's decision and was informed of it before the company made its announcement to the public.

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The Google logo on the rooftop of the Google China headoffice building in Beijing

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President Barack Obama's administration has previously raised its concerns about the matter with the Chinese government, Hammer recalled, stressing that US-China ties were "mature enough to sustain differences."

The administration is "committed to Internet freedom and... opposed to censorship," he added. "While we seek to expand cooperation on issues of mutual interest with China, we will candidly and frankly address areas of disagreement."

In announcing its decision to stop censoring its search engine in China and redirect mainland Chinese users to an uncensored site in Hong Kong, Google said it intended to continue research and development work in China and maintain a sales presence there.

China was quick to criticize the company for being "totally wrong" and having "violated its written promise," according to the state-run Xinhua news agency, which cited an official in charge of the Internet bureau of the State Council Information Office.

Google's lifting of censorship on Google.cn came a little over two months after the Mountain View, California-based company said it had been the victim of cyberattacks originating from China.

- AFP /ls

From ChannelNewsAsia.com; see the source article here.

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CHINA TIGHTENS BANK LENDING RULES

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BEIJING - Banking regulators in China have ordered institutions to tighten controls on risk and carefully scrutinise borrowers' ability to pay their debts in a new step to rein in lending.

The government order comes as Beijing tries to prevent excessive lending that it says could lead to financial problems while ensuring adequate credit to keep the economic recovery on track.

Chinese leaders are worried that a stimulus-driven torrent of lending is fuelling a dangerous bubble in stock and real estate prices. Beijing has ordered banks to set aside additional reserves and to keep lending stable, but the central bank has avoided raising interest rates, which might slow growth.

The China Banking Regulatory Commission said in a statement that it issued two regulations to increase risk management on personal and working capital loans.

The rules took effect on Feb 12.

The regulation on working capital loans stated that banks must calculate borrowers' actual needs and also consider their cash flow, liabilities, repayment abilities and other factors when assessing loan applications.

On personal lending, the regulation says that borrowers may not obtain loans if they do not specify what the money is to be used for.

Chinese leaders have warned banks repeatedly to keep lending stable this year and avoid financing real estate and industrial projects that are not needed due to fears they might fuel inflation or leave banks burdened with bad debts if poorly planned projects fail.

Banks were ordered on Feb 12 to increase reserves by half a percentage point - to 16.5 per cent for large lenders and to 14.5 per cent for smaller institutions.

The government reported earlier this month that January bank lending rocketed to 1.4 trillion yuan ($290 billion) - nearly one-fifth of the planned 2010 total. AP

From TODAY, Monday, 22-Feb-2010

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