Geithner slams China's intellectual property policies

WASHINGTON (Reuters) – Treasury Secretary Timothy Geithner said on Thursday that China is holding to its decades-old strategy to steal American intellectual property, in a pointed statement reflecting U.S. officials' growing impatience with Beijing.

"They have made possible systematic stealing of intellectual property of American companies and have not been very aggressive to put in place the basic protections for property rights that every serious economy needs over time," Geithner told a forum in Washington.

"We're seeing China continue to be very, very aggressive in a strategy they started several decades ago, which goes like this: you want to sell to our country, we want you to come produce here ... if you want to come produce here, you need to transfer your technology to us," Geithner said.

Although unusually direct, Geithner's comments echo a common refrain from U.S. officials and executives. The new U.S. Ambassador to China, Gary Locke, who has assailed China in the past for its trade practices, has put the defense of U.S. intellectual property among his chief priorities.

China has said it would drop some of its "indigenous innovation" rules that have riled foreign companies who say access to government equipment and technology orders hinge on their transferring patents and other intellectual property.

But business associations in China argue that enforcement of Beijing's promises has been spotty, particularly at the local government level, hampering foreign companies' access to a market estimated to be worth as much as $1 trillion a year.

In an offshoot of Washington's dissatisfaction with Beijing's trade policies, leaders in Washington have long argued that China's yuan currency is undervalued, giving Chinese companies a price advantage that costs U.S. jobs.

But the foreign business community in China -- concerned about what they see as China becoming more closed toward foreign investors in recent years -- has argued that the emphasis on yuan revaluation distracts from the most serious issues threatening U.S. business interests.

A coalition of 51 U.S. business groups sent a letter dated Wednesday to senators considering a currency bill, urging them to focus more on China's inadequate protection of intellectual property and restrictions on market access.

"... unilateral legislation on this issue would be counterproductive not only to the goals related to China's exchange rate that we all share, but also to our nation's broader objectives of addressing the many and growing challenges that we face in China," the groups said.

Piracy and counterfeiting of U.S. software and a wide range of other intellectual property in China cost U.S. businesses alone an estimated $48 billion and 2.1 million jobs in 2009, the U.S. International Trade Commission has said.

The United States' trade deficit with China hit a record $273 billion in 2010 and could top that this year.

In May, China was listed for the seventh year by the U.S. Trade Representative's office as a country with one of the worst records for preventing copyright theft.

(Reporting by Rachelle Younglai; Writing by Michael Martina in Beijing; Editing by Don Durfee)