China's new international trade curb on technology transfer could spark an "ugly" reaction around the world, the head of the biggest US business organization said Tuesday.
Tom Donohue, president and chief executive of the US Chamber of Commerce, vowed to step up opposition to the Chinese government procurement rule that high-tech products must contain Chinese intellectual property.
The controversial rule that took effect last month requires that sellers of high-tech goods have them accredited based on "indigenous innovation" — meaning they must contain Chinese intellectual property.
Responding to a reporter's request at a news conference in Washington to comment on the rule, which has sparked accusations of protectionism from industry groups around the world, Donohue called the curb a "weapon" that would hurt world trade and vowed his organization would mount stiff opposition.
"Why is it dangerous? You take one of what may be the second- or third-largest economy in the world, which has extraordinary talent going forward, which built this economy with a lot of engagement and support and technology transfer from around the world, to slam the door now that they think they have the technology and use it as a weapon to force companies to agree to that kind of an arrangement to have access to the market could get real ugly all around the world," he said.
"It's not in China's best economic or geopolitical interest and it's certainly not in the interest of American companies and we have only begun to raise hell on this deal."
The US Chamber of Commerce represents more than three million businesses and organizations, the world's largest business federation.
China, which overtook Germany in November as the world's largest exporter, defends its new technology transfer limit as "in line" with World Trade Organization rules.
More than 30 industry groups from the United States, Canada, Europe, Japan and South Korea in early December lodged a protest with the Chinese ministries responsible for the measures, claiming they were "restrictive and discriminatory".
The rules "impose onerous and discriminatory requirements on companies seeking to sell into the Chinese government procurement market and contravene multiple commitments of China's leadership to resist trade and investment protectionism," the groups said in a letter dated December 10.
Chinese government procurement totaled 599.1 billion yuan (87.7 billion dollars) in 2008, up 28.5 percent from the previous year, according to official data.
The dispute comes amid growing concerns about protectionism as the world recovers from its worst economic crisis in decades.
The US government reported Tuesday that the US trade deficit widened in November to a 10-month high of 36.4 billion dollars on the back of surging imports.
The politically sensitive goods deficit with China narrowed 10.8 percent to 20.2 billion dollars in November from 22.7 billion dollars in October, after US exports to China posted their sharpest increase on record, to 7.3 billion dollars.
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