US Says State Intervention in China Economy Grows

China has become an economic powerhouse in Asia and throughout the world. The nation's stimulus package far outstrips the US. The socialist nation places people before banks., a photo by Pan-African News Wire File Photos on Flickr.

US says state intervention in China economy grows 10 years after it joined WTO

By Associated Press
Published: December 13

WASHINGTON — The U.S. says that China has intensified state intervention in its economy despite reform commitments it made on joining the World Trade Organization 10 years ago.

The office of the U.S. trade representative says there has been impressive growth in U.S.-China trade since 2001, but the Asian nation’s move toward market liberalization has slowed since 2006.

Despite some progress during 2011 in its consultations with China, the U.S. remains concerned over state intervention and the large role played by state-owned enterprises in China’s economy, intellectual property rights violations and other policies that disadvantage foreign firms.

“In recent years, China seems to be embracing state capitalism more strongly, rather than continuing to move toward the economic reform goals that originally drove its pursuit of WTO membership,” the trade representative’s office said in an annual report to Congress on China’s compliance to its WTO commitments, released late Monday.

The report’s findings underscore the complex relationship between the world’s two largest economies. They need each other’s markets, and the U.S. also counts China as its largest foreign creditor, but the U.S. accuses China of undervaluing its currency against the dollar to aid its exporters, and other trade-distorting policies.

Those concerns fuel growing criticism of China in the U.S. Congress and from Republican presidential candidates as the country enters an election year with unemployment running at 8.6 percent and economic recovery uncertain.

Bilateral trade remains heavily skewed in China’s favor. In the first 10 months of this year, two-way trade in goods totaled $414 billion: U.S. imports from China exceeded its exports by $245 billion.

Despite anti-piracy campaigns in China and an increasing number of cases brought to Chinese court, “counterfeiting and piracy remain at unacceptably high levels and continue to cause serious harm to U.S. businesses across many sectors of the economy,” the report said.

It said China has committed more resources to a program aimed at making government offices use legalized software and taken concrete steps toward opening up its vast government procurement market, although its effort still “falls short,” the report said.

And while the U.S. has recorded a substantial surplus in trade in services with China in 2011, regulators discriminate against U.S. suppliers of banking, insurance, express delivery, telecommunications, legal and other services, it said.

U.S. agricultural products experienced strong sales during the year — increasing 27 percent in the first nine months of 2011 compared with the same period in 2010 — but the report found fault with “capricious practices” by Chinese customs and quarantine agencies. Authorities block imports of U.S. beef and beef products — four years after the products had been declared safe to trade, it said.

The report also said the U.S. would continue to press China to eliminate export constraints on rare earths used in high-tech manufacturing.