Congressional Commission Complains: China Is Not Living Up to the "Spirit" of the WTO

May 25 (LPAC)--Jeffrey Fiedler, a member of the U.S.-China Economic and Security Review Commission which was created by Congress in 2000, complained during a commission hearing, yesterday, that China's intent to retain state ownership of key industries, if not in technical violation of the rules of the World Trade Organization, "is contrary to the spirit" of those rules. He further complained that China's objective "is to gain advantage" over its competitors, mainly, the United States, by subsidizing its industries through low interest loans, discounted energy, lax labor policies and so forth, which have combined to create "a huge export engine." Though a Democratically-appointed member of the commission, with close ties to the AFL-CIO, Fiedler's remarks were coherent with the Republican members of the commission, all of whom are from the American Enterprise Institute-Heritage Foundation orbit.

The commission hearing, yesterday, was entitled "Extent of the Government's Control of China's Economy and Implications for the United States." Though EIR was only able to briefly attend, it appears that it was organized around the notion that China uses its state-owned industries to give itself unfair advantage in world trade. This, even though Prof. Barry Naughton, from the University of California at San Diego, pointed out that state- owned firms account for only 3.6% of China's exports. By contrast, foreign invested firms account for 60% of China's exports, overall, and 87% of high tech exports. The industrial sectors in which there is a concentration of state ownership include, according to Naughton, defense, telecommunications, ocean transport, aviation and others. The greater fear seems to be from China's $1.2 trillion in foreign exchange reserves, which they could presumably use to buy up assets all over the world, as indicated by the recent announcement that China would be investing $3 billion in the Blackstone group.