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China paper warns poor ties threaten US business

BEIJING: Deteriorating ties between Washington and Beijing are threatening the future of U.S. companies in the world's fastest growing economy, a Chinese newspaper warned on Sunday.

Rising tension over copyright piracy, human rights and Chinese sabre-rattling near Taiwan had already cost the United States $4 billion in postponed aircraft deals, the Capital Economic Information News said in a business weekly edition.

While U.S. firms such as Boeing Corp and McDonnell Douglas Corp lost out, European companies were rushing to take their place in China, it said in a front page editorial.

"Vacillation in U.S. policies towards China and lack of clarity in relations between the two countries already seriously menace the interests of U.S. companies," the newspaper said.

"The U.S. commercial world will discover that if ties between the two sides continue to deteriorate, they will lose their position of competitive advantage in China's huge and constantly growing market," it said.

Sino-U.S. ties have been sorely tested in recent months by disputes over human rights, intellectual property piracy and by Chinese military exercises and missile tests in waters near Taiwan before the island's first direct presidential election last month.

China said its manoeuvres were aimed at quelling any dreams of independence by Taiwan, which Beijing considers a rebel province. Beijing was enraged when Washington reacted by sending two aircraft carrier battle groups to monitor the tests.

The newspaper suggested the U.S. decision to send ships to the region had cost it more than just Beijing's good will.

China's Minister of Trade and Economic Cooperation Wu Yi had originally planned to buy aircraft worth $4 billion from Boeing and MacDonnell Douglas during a visit to the United States last month, it said.

Beijing cancelled Wu Yi's trip, a decision closely followed by Chinese orders for 33 jetliners worth $1.89 billion from Boeing's arch rival, European consortium Airbus Industrie, during a visit to France by Premier Li Peng.

European nations have in recent years stressed the value of trade in their relations with Beijing, playing down official reactions to reports of widespread human rights abuse in China and letting Washington take the lead in disputes over the terms of Beijing's entry to the World Trade Organisation.

Europe's softly-softly approach has been condemned by human rights activists, but is widely thought to be paying off in increased business for European companies.

"While the United States tries to solve its trade disputes with China using the methods of a dramatic play, experienced European politicians pay more attention to the opportunities and influence the fast-growing Chinese economy brings to the world," the China Economic Information News said.

More Europeans would be seen in Chinese foreign trade in the future, it said.

The newspaper hinted that the $4 billion in aircraft deals postponed indefinitely during the stand-off in the Taiwan Strait could appear on the table again in the future -- if Washington mended its ways.

"The purchase voucher for $4 billion in the hands of Foreign Minister Wu Yi is a test balloon. What will the United States do next?" it said.-Reuter