U.S. Multinationals in China Still Worried About a Trade War

(Bloomberg) -- American companies still fret they’ll get caught in the crossfire of a trade war between the U.S. and China.

The American Chamber of Commerce in China (AmCham) said in a report published Wednesday that its member companies are worried investigations into China’s intellectual property practices and industrial policies could cause tensions to flare again. It was written before the White House announced Tuesday that it would push ahead with tariffs despite an earlier agreement to put them on hold.

"Bilateral relations between China and the U.S. have become an increasing concern to U.S. businesses in China," the Chamber said in its annual American Business in China White Paper. "Trade tensions between the U.S. and China, particularly those surrounding the Section 232 and 301 investigations, have raised serious concerns that such tensions will escalate into a trade war with retaliatory measures from both sides."

After successive rounds of trade negotiations in Beijing and Washington, Commerce Secretary Wilbur Ross is scheduled to travel to Beijing from June 2-4 to continue talks with Chinese counterparts. Although President Donald Trump decided earlier this month to retreat from threats to impose tariffs on billions of dollars worth of Chinese goods, his administration said Tuesday it would move ahead with plans to impose tariffs on $50 billion of Chinese imports and curb investment in sensitive technology.

The White Paper makes note of U.S. government concerns over cyber theft, forced technology transfer and discriminatory industrial policies. It urged the Chinese government to address these issues in part by ensuring equal participation for foreign and domestic firms in the Made in China 2025 initiative, as well as investigating the use of tax credits to support the scheme as an alternative to subsidies.

The report also called on China to:

• Negotiate a Bilateral Investment Treaty with the U.S.
• Implement market-opening measures in more sectors
• Ensure national security reviews are narrowly applied
• Develop a comprehensive trade secrets law
• Open standards-development technical committees to foreign-invested enterprises
• Improve transparency and equal enforcement of laws and regulations by extending comment periods on new rules, clarifying regulations and issuing public guidance

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