U.S. lobby say many economies like China pursue policies detrimental to infocomm sector

SINGAPORE (Reuters) - Many economies, including China, pursue policies on national security grounds that may hit the free flow of trade and investment in information and communications technology (ICT), the U.S. Chamber of Commerce said in a report.

In deciding national security risks, governments often look to the potential for cyber espionage or sabotage by foreign governments, according to the report, issued ahead of the G20 summit of world leaders this weekend.

Though such concerns are not unfounded, the policies, laws and regulations being considered create a competitive advantage for indigenous companies in the ICT sector and push out foreign competition - and that will come at a cost, the chamber said.

China, Russia, India, Brazil, Europe and also the United States were examined in the report.

Taking China as a case study, a decision to purge foreign ICT product and service providers from the market would lead to an annual cut in China's gross domestic product anywhere from 1.77–3.44 percent, or at least $200 billion based on 2015 GDP, according to the report.

By 2025, this would equate to a reduction in China's GDP of nearly $3 trillion annually, the chamber said, citing an analysis by U.S.-based research firm the Rhodium Group.

More than 40 global business groups last month petitioned China's Premier Li Keqiang, according to a copy of a letter seen by Reuters, urging Beijing to revise draft cyber rules they say are vague and discriminate against foreign enterprises.

China has said its pending cyber security law will not create obstacles and barriers for international trade and foreign businesses investing in China.

Foreign firms fear they will be required to make products in China or use source code released to inspectors, forcing them to expose intellectual property.

Asked about the report by the U.S. Chamber of Commerce, Chinese Foreign Ministry spokeswoman Hua Chunying said the facts show foreign investors continue to view China well and are increasing their investments.

"We hope the relevant side, when issuing such reports or opinions, can more objectively and fairly comment, seeking truth from the facts, on China's development and investment environment," she told a daily news briefing in Beijing on Friday.

(Reporting by Ryan Woo in SINGAPORE; Additional reporting by Ben Blanchard in BEIJING; Editing by Simon Cameron-Moore)

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