Frank Lavin, U.S. Under Secretary of Commerce for International Trade, spoke to AmCham-China and US-China Business Council members at the American Club on 31 July 06.
He was in town to meet Chinese officials about ongoing market access and compliance issues. He commented that China is expected to replace Japan as the U.S.’s third largest export market by the end of 2006 and that U.S. exports to China grew 36.5% on a base of US$ 41 billion during the first half of 2006.

Lavin said, recent sentiments in China for setting an FDI cap and tightening foreign investment policies were worrisome. “It is precisely the international sector of the Chinese economy that has been most successful,” he said. He added that for China to remain an export superpower, it needed to adopt international standards, those set by a free market rather than by the government. While noting that some protectionist sentiments exist in the U.S., the dominant philosophy was that U.S. economic growth lies in keeping its markets open and encouraging investment abroad, Lavin said. (comments from AMCHAM)
The China Economic Review added other comments – that the greatest challenge American businesses face in China is not lack of intellectual property rights or an undervalued yuan, but the “worrisome trend” of economic nationalism.
Mr. Lavin was in Beijing and Shanghai to address several issues, including US-based Carlyle’s attempted takeover of Xugong Construction Machinery, Citigroup’s bid for a controlling stake in Guangdong Development Bank, and Beijing’s upcoming decision on which 3G technology it will adopt as its standard.
For sure some sensitive and hot issues… I can agree with Lavin’s comments – nothing really new for me. Only now some observers start noticing the increasing trend of economic protectionism. The WTO grace period may come to an end soon but don’t expect the front gates to swing wide open. I made this comment five years ago when China joined the WTO. Just look at the closing doors as far as M&A are concerned.
It doesn’t mean there are no business opportunities – one just has to find the sectors where China agrees to open door to do the business it wants and needs, not the ones foreign companies dream about. That Mr. Lavin will have to understand… China wants to have a say in trade, investment and where it takes the country. It wants to decide its own fate and become more independent. Not that all will be pleased.

Visit to Beijing Sinofile Information Services (www.sinofile.net)
Finally Grant Jacobson, director of communications for Sinofile succeeded in kidnapping me to his office, located in a 100 years old church, now a protected historical building, where the information company accommodates its staff of around 100 monks and piles of newspapers, computer equipment, one dog and one cat. Well, not real monks but they are doing a monk’s job: reading hundreds of websites, newspapers and keeping a digital eye on more than a dozen of TV stations. All looking for interesting information in the media to pass on to their clients. One client is the American Chamber in Beijing, through whom I receive a daily newsfile. Cool.

The church building is remarkable, especially the wooden roof structure – on the inside (the astonishing wooden beams) as well as on the outside (the bell towers look like Chinese pavilions).
The interior designer had to be creative because nothing could be damaged – sorry, no nails in the wooden beams.

Grant insisted is removing the wooden floor to show the “bath” where the baptism ceremony was held (sorry Grant, how do you call that properly?). Grant then tried to wash away my many sins but he run out of water.
The building is actually the “Cathedral of the Savior”, at Nangouyan (close to the Xuanwumen subway station). In 1907 the Anglican Bishop of North China designed, built and consecrated the church. After 1950 the church served as a warehouse. Restoration began in 1996.

Edited 1 July 06
Foreign companies complain that when pirates are caught, fines are too little to deter copycats. Maybe they have a point. A native from Anhui was jailed for four years for printing and selling pirated Shanghai maps – 77,000. It made him 20,000 RMB. He was fined 10,000 RMB. If he would have done the same for a famous western brand or DVDs, he would have paid a fine and that’s it – never heard anybody went to jail in a comparable case – or I may be mistaken?
Shanghai Daily also reported two gangs that produced and sold counterfeit certificates and cigarettes received prison terms ranging from 5 months to 4 years. The cigarette gang – of course Chinese brands such as Chung Hwa and Panda – were also fined 765,000 RMB. No mention of foreign brands – not clear.
When a Korean trading company was caught in Shanghai with fake Louis Vuitton and other foreign brands – valued at 3 million RMB, 3,000 pieces, authorities would not say what punishment would be given if the firm was found guilty “but they believed it would be only an administrative punishment rather than a criminal charge” – according to Shanghai Daily.
Anybody can explain that?
Not to wonder foreign companies and foreign chambers of commerce are getting upset.
On a more positive note – we hope – the Beijing IPR Complaint Center was to start a hot line (12312) at the end of June. China is planning to build 50 IPR complaint service centers across the country by the end of this year, according to China Daily. Hopefully somebody will pick up the phone when called.

I have been curious at times to figure that out but lack of time and the contradictory figures are a real deterrent. According to recent figures in China Daily, there are right now about 150,000 “foreigners” holding legal employment contracts. So, add the family. But wait, does it include our Taiwan, Hong Kong and Macau compatriots? Well… who knows, sometimes they are foreigners, sometimes they are not. I remember some figures that in East China there would about 500,000 Taiwanese. Then we have the “official’ students, somewhere around 150,000. And the diplomats. But when one looks closer, like how many Japanese and (South) Koreans are in China, it all falls apart. Of course we still have legions of “II” here (Illegal Immigrants), people who simply live and work in China without the proper visas. So, I guess nobody knows. My very wild guess would be we have at least one million of “non-Chinese passport holders” in China on a semi-permanent basis.
Otherwise, where do all those people come from filling Sanlitun and other bar areas? Let’s go and have a beer and count them.