The EU and US have complained to the World Trade Organization about what they say are China's unfair restrictions on foreign financial-news providers in the country.
China has come under wide criticism for restricting foreign news providers
On Monday, March 3, the European Union and United States called for the WTO to initiate talks over what it sees as Beijing's biased treatment of foreign news agencies specializing in financial news.
"China has prevented foreign suppliers of financial information services from providing their services directly to their clients... The measures appear to breach China's GATS commitments on national treatment and market access," a European Commission statement said.
The dispute has been brewing since September 2006, when China renewed the monopoly held by state news agency Xinhua, which precludes foreign providers of financial information services from dealing directly with Chinese clients.
Disadvantage for foreign suppliers
China has come under criticism from Canada, the EU, Japan and the United States for its restrictions on foreign news agencies such as Bloomberg and Reuters.
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"Xinhua is both a competitor of European financial services information providers and their Chinese regulator," an EU Commission source told AFP news service in Feburary.
"This creates a situation that is unfair and puts foreign suppliers at a disadvantage," the source said.
In its statement, the European Commission said the rules in China "pose a serious obstacle to the business of EU financial information suppliers, which in turn impedes the smooth functioning and transparency of China's financial markets."
Under the 1995 General Agreement on Trade in Services, or GATS, members of the WTO are expected to regulate their markets for services "in a reasonable, objective and impartial manner" so that their rules "do not constitute unnecessary barriers to trade."
Xinhua: both the means and the competition
Crucially, that includes the obligation to offer foreign service providers "treatment no less favorable than that accorded to like services and services suppliers of any other country."
However, the commission points out that Chinese rules only allow foreign companies supplying financial information to Chinese clients to do so through a branch of the state-run Xinhua news agency.
Japan and Canada have also criticized China's practice
Xinhua itself recently launched its own financial-information service in direct competition with the foreign agencies.
And the commission holds that China's rules breach the key GATS provision on non-discriminatory treatment.
Difficulty accessing Chinese market
"Competitive and open financial services information markets are the lifeblood of a strong financial sector, but China's rules have tipped the balance against foreign companies," EU Trade Commissioner Peter Mandelson said in a statement.
Mandelson has already held talks with the president of Xinhua, Tian Congming, and China's Vice-Premier Wu Yi on the issue.
China is the EU's second-largest trading partner, and its enormous market is seen as a key target by many European financial institutions and service providers.
However, EU officials point out that the vast majority of bilateral trade currently flows from China to the EU, rather than vice versa.
The deficit "reflects the considerable problems EU businesses have accessing the Chinese market," a recent EU press release stated.