A senior U.S. official took aim at a clutch of China's industrial policies on Wednesday, saying they could give domestic firms an unfair advantage and spell a retreat from open markets.

The warning by Acting Under-Secretary of Commerce Christopher Padilla reflects growing U.S. frustration over America's trade deficit with China, which is set to surpass last year's record $233 billion.

Beijing recently announced an anti-monopoly law which could work with rules on technology standards, procurement, taxes and patent transfer requirements to give Chinese firms an unfair boost over foreign competitors, including U.S. companies, Padilla told reporters in Beijing.

"This, I would say, is a potentially worrisome trend," he said. "Over the last thirty years, China has been fairly open to foreign participation in its economy ... What we're seeing with these industrial policies is, in my view, perhaps an effort to close the doors a little bit."

Some U.S. business groups have said the anti-monopoly law could be unfairly used to hobble multinationals rather than to challenge domestic strangleholds.

Padilla said that over time China's economy could come to resemble other East Asian economies that have favored nurturing "national champions" over free trade.

Sectors that could be affected included vehicle and auto parts manufacturing, chemicals, steel and electronics, he said.


The warning over industrial policies comes on top of formal complaints that Washington has lodged with the World Trade Organization about China's use of subsidies and what it sees as its failure to protect intellectual property such as films and software.

Padilla and Deputy U.S. Trade Representative Karan Bhatia said they also raised those concerns, as well as product safety worries, during discussions with Chinese officials in preparations for regular bilateral trade negotiations due in December.

Chinese officials have not announced what they told the U.S. officials. But China has often said its industrial policies do not violate trade rules and the country continues to welcome foreign investors.

Some Chinese officials have also said a recent torrent of seizures and recalls of Chinese-made goods in the United States reflects unfair media bias. But Padilla said he told his counterparts the safety concerns were real.

"We emphasized that these problems are not being generated by the media or by critics of U.S.-China trade but actually are real concerns being raised by real consumers," he said.

China's economic success over the past three decades had depended vitally on its openness to trade and investment, Padilla said.

"Signals from the Chinese government that they will reserve whole sectors of the economy to Chinese state-owned, state-controlled entities are concerning," said Bhatia, who will soon leave his government post.