China’s premier denies Beijing tells companies to spy

BEIJING, March 15 .  China’s premier denied Beijing tells its tech companies to spy abroad and promised Friday to treat foreign and domestic competitors equally, seeking to defuse tensions with Washington and Europe over technology, market access and other irritants.

Premier Li Keqiang’s rejection of spying accusations at a news conference was the communist government’s highest-level effort to put to rest Western security concerns. They threaten Chinese access to lucrative markets for telecom and other technology.

“This is not how China behaves. We did not do that and will not do that in the future,” the premier, China’s No. 2 leader, said when asked whether Beijing told Chinese companies to spy on foreign countries.

The United States, Australia and some other governments have imposed curbs on use of technology from Chinese vendors including Huawei Technologies Ltd. That threatens to disrupt Huawei’s access to phone carriers that are preparing to invest billions of dollars in next-generation technology.

Huawei, the biggest global maker of network gear, has denied accusations it facilitates Chinese spying. Its founder told reporters this year he would reject official requests to disclose its foreign customers’ secrets.

President Xi Jinping’s government faces mounting pressure to repair trade relations with the United States, Europe and other major markets after China’s economic growth fell to a three-decade low of 6.6 percent last year. Activity has weakened further on multiple fronts including cooling export growth and a contraction in auto sales.

Li promised to create a “level playing field” for all competitors in China’s state-dominated economy to help “boost the vitality of the market.” He also pledged to open more industries to foreign investment but gave no details.

“We will adhere to the principle of neutrality and treat domestic and foreign companies as equals,” the premier said.

Also Friday, the country’s ceremonial legislature endorsed a law aimed at defusing a tariff war with Washington by discouraging Chinese officials from pressuring companies to hand over technology.

The measure is part of an investment law that aims to address complaints China’s system is rigged against foreign companies. The tariff battle was triggered by U.S. complaints Beijing steals or pressures companies to give up technology.

“This is designed to protect the rights and interests of foreign investors and attract more foreign investment,” said Li.

It was unclear whether the measure would mollify Trump, who also wants Beijing to roll back plans for government-led creation of global competitors in robotics and other technologies.

American and Chinese negotiators are in the midst of rapid-fire negotiations but have yet to announce formal agreements.

The official Xinhua News Agency said China’s economy czar, Vice Premier Liu He, talked by phone with U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin. The one-sentence report said they made “further substantial progress” but gave no details.

Forecasters expect Chinese economic activity to pick up in the quarter that starts in April as government stimulus efforts through higher spending on public works construction gain traction.

“The economy has started to rely on fiscal stimulus, especially for infrastructure investment,” said Irene Pang of ING in a report Thursday. “This will continue for the rest of 2019, and will be particularly important if a trade deal comes later than expected.”

Government plans also call for higher spending on development of technologies including artificial intelligence, electric cars, biotechnology and new materials that China’s leaders see as a path to prosperity and global influence.

China’s emergence as a competitor in smartphones, solar power and other technologies has increased consumer choice and helped to drive down prices. But it rattles Washington and other governments that worry Chinese competition threatens their industries and employment.

The government said earlier the investment law will prohibit Chinese officials from using “administrative methods to force technology transfers.” The wording of the final version of the law following amendments this week wasn’t immediately released, but state media gave no indication the technology portion had changed.

Ahead of Friday’s vote, foreign business groups welcomed the proposed law but said it might have been rushed through the approval too quickly. They said they will need to see how it is enforced to know whether it will improve conditions for foreign companies.

The law is “still quite general” and fails to address problems including the potential for unequal treatment of companies, the American Chamber of Commerce in China said in a statement Wednesday. It expressed concern about the broad scope of “national security reviews” allowed by the law and the impact of regulations on individual industries.

The European Union Chamber of Commerce in China earlier expressed concern the focus on “administrative methods” might mean officials still are free to use other tactics to pressure companies to hand over know-how.

Chinese officials deny companies are required to hand over technology. But they face pressures including requirements in industries including auto manufacturing and pharmaceuticals to work through state-owned partners. That requires to them provide technology to companies the ruling Communist Party hopes will become their competitors. AP Business Writer