Commerce Secretary Gary Locke on Thursday called for China to make its economy more open to international investment and to respect intellectual property laws, on the same day his department released November figures that showed an unexpected narrowing of the U.S. trade deficit.
Locke praised China for its growth and increasing openness over the past 20 years, but he said its old policies of protecting domestic industries would no longer suffice.
“The gross trade imbalances between our countries. . .threaten global stability and prosperity,” Locke said.
Locke made the remarks in a speech given to the US-China Business Council ahead of Chinese President Hu Jintao’s state visit next week.
Both China and the United States have been positioning themselves prior to the visit. Treasury Secretary Timothy F. Geithner said Wednesday that China’s unwillingness to allow its currency to rise was harming both American competitiveness and the Chinese economy.
The U.S. trade figures released Thursday surprised economists and analysts, many of whom had expected the trade deficit to widen. The November trade gap shrank 0.3 percent, to $38.3 billion, as demand for U.S. exports rose while the dollar weakened.
China imported more from the United States in November than in October, but gains were offset by a rising U.S. demand for Chinese exports. The U.S. trade deficit with China widened by 0.5 percent, to $25.6 billion.
A Chinese Foreign Ministry spokesman, Hong Lei, said Thursday that the trade imbalances between the two countries were caused in part by U.S. restrictions on technology exports, Bloomberg News reported.
Locke’s speech struck a conciliatory tone, acknowledging that the United States had engaged in protectionism in the past and that China’s movement toward a market-oriented economy “will take time.”
But he criticized the country for failing to live up to previous agreements to open its economy, and he said changes would ultimately be in China’s interest.
“China’s lax intellectual property protection and enforcement” discourage foreign investment in the country, Locke said. He expressed frustration that agreements made between the United States and China at the highest levels did not always change behavior on the ground, and he said that carrying out agreements is a crucial step to improving trade relations between the countries.
“We will be focused on meaningful outcomes,” he said.
China and the United States should “pursue cooperation over confrontation in the economic sphere,” he said.