China Admits Foreign Investors Face Obstacles

Officials said foreign companies face problems in China but said Beijing is improving conditions amid tensions over foreigners being squeezed out of Chinese industries.

BEIJING (AP) -- Cabinet officials acknowledged Wednesday foreign companies face problems in China but said the government is improving conditions, in a new effort to defuse tensions over complaints foreigners are being squeezed out of Chinese industries.

"We never claimed China's foreign investment environment is perfect, but these problems occurred in the course of rapid growth," said Zhang Xiangqiang, a vice chairman of the country's planning agency, the National Development and Reform Commission, at a news conference.

The leading U.S. and European business groups in China have complained in recent weeks that Beijing is increasingly using discriminatory rules to reduce access to previously open areas of its economy and promote its technology industries.

This week, Beijing responded to complaints about one of the most contentious issues by easing requirements for companies to qualify for government purchasing of technology after a plan to favor domestic technology met criticism from the United States and the European Union.

The government made the changes in response to public comments, said a deputy commerce minister at the event with Zhang.

"China is improving its investment environment in many ways," said Ma Xiuhong.

On Wednesday, the Commerce Ministry reported that China's foreign direct investment rose 12.1 percent in March from a year earlier to $9.4 billion. That was a jump from February's 1.1 percent year-on-year investment growth, the slowest rate in seven months.

Foreign investment in the January-to-March quarter jumped 7.7 percent to $23.4 billion. FDI includes spending on factories, real estate and other assets but excludes investment in stocks and other financial instruments.

On Tuesday, the Cabinet released new recommendations for supporting foreign investment, saying it will encourage investment in high-tech and renewable energy industries but curb it in high-pollution industries or those where supply exceeds demand.

The American Chamber of Commerce in China welcomed the changes.

"This indicates a trend of productive engagement," said the Chamber president, Christian Murck, in a statement.

Foreign businesses in China have been rattled by a string of incidents including Google Inc.'s dispute with Beijing over censorship and the trial of four Rio Tinto Ltd. employees on commercial spying charges.

Associated Press researcher Bonnie Cao in Beijing contributed to this report.

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