THE US Congress is being urged to tighten screening of investment by Chinese state-owned companies in the United States, with an advisory panel saying they present "unfair competition" to American firms.
That's the primary recommendation of an annual report by the US-China Economic and Security Review Commission. The panel advises Congress on the national security implications of the relationship between the world's two largest economies.
It is proposing that Congress broaden the mandate of a committee chaired by Treasury Secretary Timothy Geithner that screens foreign investment proposals.
China already accuses the US of discriminating against its companies. Its investment in the US is still comparatively low but has risen sharply in recent years and is set to hit record levels this year.
The commission said: "Growing Chinese investment may offer an important new source for US job creation and economic growth, but it is too early to know whether the benefits will outweigh whatever longer-term economic costs Chinese state-owned and state-directed investments may bring."
Its report said that despite three decades of economic reform in China, state-controlled enterprises still accounted for as much as half of the Chinese economy, and their role had been enhanced by a US$585 billion government stimulus program during the 2008 slowdown.
The enterprises benefit from preferential financing from China's state-dominated banks, cheap land, fuel and electricity, regulatory exemptions and tax preferences, the commission claimed.
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