China must address its ‘loopholes’: Ex-PBOC chief


China must plug loopholes in the way it applies rules on subsidies and technology transfer to address complaints from the United States and the European Union, a former central bank chief said on Wednesday.

Zhou Xiaochuan, addressing a seminar at the Center for Trade and Economic Integration in Geneva, said it would be possible to achieve consensus on reform of the World Trade Organization, a target of U.S. President Donald Trump, who says the global body does not give the United States a fair deal.

Trump has launched a barrage of tariffs on Chinese goods, protesting what he says is China’s theft of American technology and illegal subsidies for state-backed Chinese companies.

Zhou, who stepped down as governor of the People’s Bank of China in March, said China had low levels of public expenditure and most of it went into infrastructure, and was thus not available for subsidies.

“But of course every sector in China has its own budget so it allocates some money. So we should change the mentality, we should learn more about WTO rules. There could have been some inappropriate behavior sometimes, but we are improving.”

China had a policy in the 1980s of granting foreign firms market access in return for the transfer of their technology, but things had changed, he said, and China had listened to the views from the European Union and others.

“Of course China is a large country and sometimes there are loopholes at the local level, we can see that. But I should emphasize that at the state level we don’t carry out the mandatory transfer of technology,” Zhou said.

Zhou said that China hoped to reduce trade frictions with the United States, despite Trump’s increasing tariffs.

China had also been reforming its corporate governance to be closer to the OECD standard of neutral competition, he said.

“We haven’t done enough, but we are moving to that direction.” (Reuters)

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