The US is concerned that a potential rise in economic nationalism in China could undercut Beijing's promises to the World Trade Organisation, the top US trade official said today.
A chorus of calls by Chinese officials for closer scrutiny of foreign investment, especially into key industries, has prompted concern among foreign businesses and officials that Beijing may backtrack on free market reforms.
"We'll be watching for substantive developments that would indicate a resurgence of economic nationalism," US Trade Representative Susan Schwab told a news briefing, warning that such moves could retard China's growth.
"That direction is a known failure. We have had that experiment in this country and it did not work," she said, referring to the command economy that China enforced until the 1980s.
US companies have been "anticipating improvements that haven't necessarily been forthcoming", she said, citing long-running negotiations about US investors' bids for a stake in Guangdong Development Bank.
A Citigroup-led consortium is bidding against one led by Societe Generale for a controlling stake in the mid-sized bank.
Ms Schwab said Washington was especially anxious to see progress on opening up China's financial sector. When China joined the World Trade Organisation in 2001, it promised to open up banking and insurance to foreign firms by December 2006.
"There has been a sense that some things take longer than you'd like and there tend to be additional barriers and application processes," Timothy Stratford, Assistant US Trade Representative for China Affairs, told reporters.
China had yet to carry out a commitment to remove geographical barriers on foreign banks doing business in the local yuan currency, he said.
Ms Schwab said that financial services were one of a range of issues she raised with Chinese Commerce Minister Bo Xilai on Monday in a three-hour meeting.
Other US trade complaints focused on China's lax enforcement of intellectual property rights and barriers to US companies entering China's market in express deliveries, beef, and telecommunications.
Ms Schwab said China has made "significant improvements" in fighting piracy of films, software and other patented and copyrighted products, but much remained to be done.
The United States wanted to see disputes solved through negotiations, not suits brought at the WTO, she said. "Our objective is to solve the problem, whatever the problem is, and not to jump into retaliation," she said