U.S. businesses fret China, U.S. protectionism may rise

By Kirby Chien

BEIJING (Reuters) - A U.S. business group said on Monday it was worried that protectionist sentiment could rise in both China and the United States as the global economy shrinks.

The American Chamber of Commerce in China also said in its annual white paper that China was still crucial as a base for manufacturing and increasingly as a market, but the regulatory environment was opaque and sometimes worked against foreigners.

"The risk is higher in an economic downturn" that governments will turn to protectionism, AmCham China Chairman John Watkins told reporters.

"We want to highlight that risk in both countries," he said.

On Friday, China approved a postal law that could severely restrict foreign companies such as FedEx Corp and TNT in the fast growing express delivery sector.

That law comes only weeks after Beijing blocked Coca-Cola Co from buying China Huiyuan Juice, a case that sparked widespread nationalist sentiment in the mainland. A "buy American" provision in U.S. President Barack Obama's stimulus plan attracted criticism from trading partners around the world.

The postal law's vague wording also opened the door to inconsistent or arbitrary implementation, highlighting another major complaint of U.S. businesses.

The chamber's two main goals in 2009 are overcoming protectionism and improving implementation of China's regulatory environment.