China Announces New Anti-piracy Crackdown

[SmoothOperator]

Joe Mcdonald, Canadian Press

Published: Sunday, December 17, 2006

China announces new anti-piracy crackdown as Treasury Secretary Paulson visits

BEIJING (AP) - U.S. Treasury Secretary Henry Paulson confronted mixed signals as he arrived in China Wednesday for trade talks, with Beijing announcing a renewed crackdown on pirated goods but also running up a record trade surplus with the United States.

American officials are trying to play down expectations of breakthroughs from the talks led by Paulson, Washington's point man on economic ties with Beijing, and Chinese Premier Wu Yi. The talks are billed as the start of a wide-ranging "strategic economic dialogue."

In a prelude to the visit, Chinese and U.S. companies announced a series of deals, including the purchase by U.S. retailer Home Depot Inc. of a chain of Chinese home improvement stores and the sale of GE Aviation jet engines to a Shanghai airline.

"Commercial engagement built on fair, effective rules is the foundation of the healthy, strong and continually growing trade relationship that we envision between China and the United States," said Commerce Secretary Carlos Gutierrez, a member of Paulson's delegation, who attended the signing ceremony for the deals.

The anti-piracy campaign announced Wednesday will target producers and distributors of illegally copied movies, music and other goods, the official Xinhua news agency said. It follows a 100-day-long crackdown launched in July that targeted vendors.

"The campaign will hunt out producers of pirated movies, books and software and break their distribution chains," Xinhua said, citing the government's anti-piracy agency. "The smuggling of pirating equipment will be severely punished."

China is believed to be the world's leading source of pirated goods ranging from Hollywood movies to designer clothes, sports equipment and even medicines. American officials say Chinese piracy costs legitimate producers up to US$50 billion a year in lost potential sales.

Washington has warned Beijing might face a formal complaint in the World Trade Organization, with the possibility of sanctions, if it fails to stamp out the illicit trade.

Such government campaigns and business deals are frequently announced ahead of U.S.-Chinese meetings as Beijing tries to mollify American critics of its soaring trade surplus with the United States.

American business groups are pressing for quicker action and have appealed to Paulson to take a hard line with Beijing over its currency controls. They say China's yuan is undervalued, giving the country's exporters an unfair price advantage.

U.S. officials say they also want more Chinese action against piracy and more access to the country's service industries.

Home Depot's president of international operations, Annette Verschuren, would not give a value for the purchase of the 12-store Home Way chain.

GE said its sale of engines to Shanghai Airlines to power new Boeing 787 Dreamliner aircraft was worth $550 million.

Also signed at the ceremony, were deals by Oshkosh Truck Corp. to sell U.S.-made airport rescue and firefighting equipment to an airport in eastern China, and a deal between VeriSign and the China Netcom Group and the Ministry of Information and Industry to set up a system to help create domain names.

Despite the complaints about the trade deficit and piracy, the United States has benefited from growing ties with China.

U.S. imports of low-cost Chinese toys, shoes and other goods have held down consumer prices and added to retailers' profits. American companies are seeing growing revenues from operations in China to tap the country's growing consumer market.

China's imports from the United States in the first 11 months this year rose 23 per cent over the same period last year to $53.9 billion, according to Vice-Commerce Minister Yi Xiaozhun.

He said total U.S. investment in China stands at $121.3 billion.

Paulson is accompanied by Federal Reserve chairman Ben Bernanke and four other cabinet members - Commerce's Gutierrez, Energy Secretary Samuel Bodman, Labor Secretary Elaine Chao and Health and Human Services Secretary Mike Leavitt.

U.S. Trade Representative Susan Schwab and the head of the Environmental Protection Agency, Stephen Johnson, also are attending.

On Tuesday, pressure on Washington for action mounted when the Commerce Department reported that the U.S. trade deficit with China rose by 6.1 per cent to $24.4 billion.

The U.S. deficit with China is running at an annual rate of $229 billion, far above last year's $202 billion deficit, an all-time high for any country.

© The Canadian Press 2006

LINK to ARTICLE click here

[Devedander]

The anti-piracy campaign announced Wednesday will target producers and distributors of illegally copied movies, music and other goods, the official Xinhua news agency said. It follows a 100-day-long crackdown launched in July that targeted vendors.

This might explain recent reports of the watch markets in Guangzhou being less impressive. Hopefully it's a good sign though as reprecussions should have reached our dealers by now... and I think our dealers are still going strong...

But this upcomming olympics does make me think the time to buy is now rather than later...

[hambone]

The crackdown on piracy most likely will target movies, and CD's which generate the most revenue and attention. It would be my guess that the watch market as it stands will not be affected other than the occasional walk through of the Guanzou markets by the anti pirate police. The matter of the Olympics coming up will be a time of much more aggressive action so the Chinese Govt. can save face while in the International spotlight. This will be a time for them to also take a more palatable approach to human rights, which next to piracy of goods, are the two biggest complaints about China.

[ratchpot]

They have rather a lot of official "crackdowns on piracy" but always seem to lose interest in properly implementing the policy. Maybe it was another slow news day...

[sssurfer]

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[Watchmeister]

Well what else are you going to say when the U.S. Secretary of the Treasury is coming to visit. It is not like the Chines agreed to float their currency.

[crystalcranium]

I think and hope when the crackdown does come down, it will be on the open market nature of sales and not on production which, apparently, is decentralized and underground. What it probably means for us is higher risk and prices in the future.

[pollux1]

Its simply karma at work, the west screws the developing world, now China screws the west ( to a tiny little degree albeit ) I say fair play to the Chinese, and anyone else for that matter. personally, as long as i can buy nice reps, i'm not in the least concerned

[jdavis]

This so called crack down may be just so much political rhetoric used to impress those companies that have expressed great concern about the counterfeiting their goods. The export of the "illegal" goods represents a substantial percentage of the Chinese GNP so, they aren't likely to do much more than a cursive look at these operations. This will satisfy any obligation under the trade agreement and it will be business as usual before long. This however is only my opinion. I would be most interested to hear from our dealers as to what impact if any this trade agreement might have on the watch trade.

[MechWatch]

Since most, if not all, of the gen's that are replicated are Swiss made, I doubt that counterfit watches is one of the items the US is complaining about.

[ubiquitous]

Seems to me, at least from what I seem to recall, that the 'big crackdowns' seem to be rather cyclical, and happen from time to time, though with not much impact.

So... Business as usual, then?

[archibald]

Yeah, the stall owners are going to have to cover their watches for 3 minutes a day instead of one...