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[BEIJING] Turmoil in China's stock markets should encourage the government to open the economy to foreign services companies more quickly, a US business lobby said on Friday, adding it hoped to see investment treaty progress made during President Xi Jinping's impending US visit.
China has vowed to boost its service sector as a driver of growth because manufacturing - a major economic engine of recent decades - has slowed.
Foreign firms, however, have long complained that they are largely shut out of many service industries, including banking, insurance and securities, and argued that letting them in would assist China's economic rebalancing.
Lester Ross, vice chairman of The American Chamber of Commerce in China, said Chinese consumers needed more choice in services, which would in turn provide more stability as plunging stock markets have exacerbated worries about China's economy. "China is actually depriving its citizens of the best available advice, the best available services," Mr Ross told reporters at the launch of a report on China's service sector. "Our hope is that the downturn in the market will encourage the Chinese government to open faster," Mr Ross said.
Government preferences for state-owned enterprises and designated monopolies, and "overly broad definitions of national security" are barriers to foreign investment in China's service sector, the report said.
Measures by China's State Council, or cabinet, to open sectors such as finance, education, culture and medical treatment to foreign capital "do not yet resolve the fundamental concerns of foreign investors", it said.
The report was issued as US negotiators visit China this week to pave the way for visible progress on a US-China bilateral investment treaty (BIT) during Xi's visit to Washington in September. "Numerous companies have reported being told by Chinese government officials that any further market opening will be held off until the completion of the BIT," the report said.
China, which has more restrictions on foreign investment than the United States, is in talks with Washington to reduce the scope of so-called negative lists of sectors closed to the other side's investors.
The sides exchanged initial lists, of which service industries are a key component, in June.
Chamber of Commerce chairman James Zimmerman said he hoped significant progress in reducing China's restrictions will be announced during Xi's US visit. "That is one of the things that we are really pushing, that there is no place on that negative list for the service sector," Mr Zimmerman said.