Barriers Still Affecting U.S.-China Trade, Despite China's Efforts To Meet WTO Commmitments

U.S. trade offical says that if China and U.S. cannot agree on market-access barriers, the world economy will suffer.

BEIJING (AP) - American businesses are having a hard time operating in China because of significant trade barriers that remain despite efforts by Beijing to keep World Trade Organization commitments, a U.S. trade official said Thursday.

Franklin Lavin, undersecretary of commerce for international trade, said that while China and the U.S. have an overall positive relationship and that Beijing has ''by and large honored its WTO commitments,'' there are still ''a cluster of issues'' challenging commercial ties between the two mammoth economies.

''There are an enormous number of market-access barriers, impediments that make it more difficult for U.S. business operating in the market,'' Lavin told American entrepreneurs in Beijing.

U.S. officials have singled out China's failure to protect U.S. copyrights, government subsidies and regulations that favor domestic companies as ways that are limiting U.S. companies' competitiveness in China.

Lavin highlighted tensions in the aviation, steel and telecommunications industries, most of which center around criticisms that Chinese policy unfairly supports domestic monopolies.

''The world economy is moving so we should always look ahead at what barriers remain,'' Lavin said. ''In our view there has been little to no movement in some of these areas ... Why not open up?''

In addition, China's mounting trade surplus with the United States has fueled complaints by American manufacturers that Beijing keeps its currency, the yuan, undervalued, giving its exporters an unfair price advantage.

''There is a perception not just that there are trade barriers ... but somehow the Chinese aren't playing a fair game or Chinese aren't dealing with the U.S. in a way that friendly trading countries ought to deal with each other,'' Lavin said.

He also said China should be more sympathetic to potential investments like that from the U.S. private equity firm Carlyle Group to ''help well-performing national-level companies move to an international level.''

A bid by Carlyle for a majority stake of Xugong Group Construction Machinery Co., a Chinese construction company, prompted a nationalist outcry and confirmed warnings by the American government about possible Chinese protectionist sentiment. Earlier this month, Carlyle agreed to 45 percent of a joint venture formed with Xugong.

''I think China needs a hundred Carlyle Groups to come in and buy a hundred Xugongs, and bring in the IT and the international management,'' Lavin said.

On Wednesday, Democratic Senator Charles Schumer and Republican Senator Lindsey Graham said they were planning tough legislation that would push China to change its currency policies, which critics say have contributed to a record $232.5 billion trade imbalance with the U.S. last year and the loss of nearly 3 million American manufacturing jobs since U.S. President George W. Bush took office in early 2001.

Chinese leaders have said they plan eventually to let the yuan trade freely on world markets, but they hold that doing so immediately would cause financial turmoil and damage the Chinese economy.

''The relationship between the United States and China might be the single most important bilateral relationship in the world,'' Lavin said. ''You have the largest economy in the world with the fastest-growing economy in the world. ... If those two countries do not get along, if there are friction issues, it can affect the world economy.''