Commerce chief urges reform at China’s tech forum

For the second day in a row, Commerce Secretary Penny Pritzker urged Chinese leaders to reform a slate of economic practices she described as discriminatory and unfair to outside businesses.

Speaking at a Beijing-organized tech forum in Seattle with Chinese President Xi Jinping and many of America’s top chief executives, Pritzker praised the Asian power’s booming economic growth over the past few decades but warned that some of its business practices are not sustainable.

{mosads}“American CEOs also frequently share serious concerns about Chinese policies and practices,” she said of her conversations with industry leaders, “ranging from theft of technologies and other intellectual property to discriminatory cybersecurity regulations, forced technology transfer, application of the anti-monopoly law and the uneven application of commercial laws generally.”

Xi is in the U.S. this week for a four-day visit that culminates with his first official state dinner in Washington on Friday.

Concerned CEOs were in the room Wednesday with Xi and other top Chinese Internet regulators.

They had reportedly come with some arm twisting but also to take advantage of the rare opportunity to hear directly from Chinese regulators about the often confusing and opaque rules foreign tech firms face in China.

Over the last year, Beijing has proposed a slate of new counterterrorism and national security laws that critics say threaten to restrict the Internet economy in China and lock out foreign tech firms.

The private sector also says it is wilting under a deluge of Chinese cyberattacks that are plundering its intellectual property and eroding its global competitive edge.

“These issues certainly have a negative impact on American firms and create an unlevel playing field for foreign companies,” Pritzker said, echoing comments she had made the night before at a dinner honoring Xi. “They also hurt Chinese businesses and make it harder for us to unlock mutually beneficial commercial opportunities.”

In his U.S. visit thus far, Xi has sought to assuage those doubts.

“China will never close its open door to the outside world,” Xi said during his dinner with business leaders in Seattle.

The Chinese leader pledged to “stick to” market economy reforms and “address legitimate concerns of foreign investors.”

“The fire burns high when everyone brings wood to it,” he said, quoting a Chinese proverb.

At Wednesday’s tech forum, business leaders said in speeches they were cautiously optimistic about the assurances.

“We are encouraged by many of the reforms that are being advanced in China by President Xi and many of his comments most recently about allowing the market to work in China as well,” said Dean Garfield, CEO of the Information Technology Industry Council, which counts Apple, Facebook, Google, Microsoft, Twitter and Yahoo as members.

“If those reforms do move forward, then the opportunity for collective growth is high,” Garfield added. “But, there is a big ‘if.’ ”

China has made similar public promises before, he said, only to offer countervailing regulations.

“There are real challenges in China where the rhetoric and the vision doesn’t meet the reality,” Garfield said, citing the recently approved national security law.

The measure gives Beijing authorities the vague authority to make certain technologies “secure and controllable,” potentially scaring away foreign firms.

The result, Garfield said, “may tip the scales in favor of domestic players in a way that’s unfair.”