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China doing business dangerously

world Updated: Mar 06, 2010 01:19 IST
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Officially, the trial of American geologist Xue Feng is about state secrets. He’s accused of exporting sensitive information abroad for helping his Colorado-based employer buy a database about China’s oil industry.

But Xue’s attorneys say Chinese authorities pursuing the case have another motivation: commercial competition. When Xue bought the surveys and maps for use in his company’s research reports, the information was openly available.

It was only after the fact that Chinese authorities classified it a “state secret.” In the past, many foreign businesses said, they might have considered a case like Xue’s an isolated incident, perhaps brought forth by a single overzealous government official.

But some, viewing it alongside a spate of new regulations and trade policies, believe it represents a fundamental shift in China’s attitude toward foreign businesses.

Company executives, trade groups and diplomats said Xue’s case, which is now in its seventh month, and two similar ones involving an American auto engineer and an Australian mining executive appear to be part of a broader effort by China over the past few years to use everything at its disposal — the courts, the regulatory system, trade law and even hacking — to promote its own “national champions.”

The boldness of the new policies, foreign companies said, speaks to a self-confidence that has emerged as a result of China’s strong and speedy recovery from a global economic crisis that developed countries are still struggling with. “When the Chinese government’s economic growth objectives depended on money, jobs, best practices and technology transfers from foreign direct investment, they welcomed us,” said Robert Ness, a Beijing-based lobbyist representing US technology firms.

But now that some of China’s domestic industries are mature, Ness said, “we are all waking up to the fact that in China the concept of ‘open markets’ is not a value like it is in the West. It is a means to an end.”

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