Saturday, September 16 2006 13:42 Hrs (IST) - World Time -

Hamburg: China's political and business leadership is defensive following complaints from Western investors about restrictions on access to that country's markets and claims about poaching of industrial ideas.

A major business summit here this week helped to underscore the tensions unleashed by Western accusations about counterfeiting, intellectual property rights, forced transfer of technology and the need for greater market liberalisation as China moves to propel itself into the top league of world economic powers.

The barrage left Chinese political leaders and industrialists attending the summit, including Prime Minister Wen Jiabao, to fend off the criticism by insisting that Beijing was stepping up action to address the problems.

But Cai Weici, vice president of the China Machinery Industry Federation, bluntly warned that foreign companies complaining about the forced transfer of technology should be aware that it was a matter of competition.

Cai told the three-day summit, organised by the Hamburg Chamber of Commerce, that if Western firms were not prepared to fulfil the needs of Chinese companies, then others would.

After all, he said, Chinese companies seek out foreign partners to help in meeting their growing technology needs. China is currently drawing in foreign direct investment totalling about $60 billion a year.

However, echoing remarks made by Jiabao at Wednesday's summit opening, Cai said: "If we improve our awareness, then intellectual property rights will improve."

In his comments, the Chinese premier tried to allay foreign investors' concerns about his country's commitment to boosting intellectual property rights and economic reforms.

"The Chinese premier told the summit opening that Beijing had already taken steps to shore up intellectual property rights. "Now we have recognised the importance of this and we will take it seriously," he said.

"Their (foreign investors') intellectual property rights will be protected."

The Hamburg summit comes against the backdrop of a booming trade between Germany and China with the northern German port emerging as the gateway between Asia's powerhouse economy and Europe.

To be sure, China's blistering expansion growth rates and rapid economic transformation is likely to mean that the nation's bourse will become the world's third biggest stock market in the coming years.

"Five years ago Chinese companies were not known," Ronnie C. Chan, chief of the Hong Kong-based Hang Lung Group, told the summit. "Now they are acquiring companies around the world."

Further highlighting China's fast-paced change, Lutz Bethge, managing director of the luxury accessory goods maker Montblanc International, said he expects the country to replace the US as the world's second biggest luxury goods market in the next decade.

But Bethge was also forthright in warning China about the threat posing to Western business in the country by counterfeiting and the manufacture of fake brand names.

He went on to challenge the official line on China's commitment to addressing Western industry's concerns about counterfeiting.

"To say we are getting protection is one thing," he said.

"To actually get it is another thing," he said.

"Clarity and legal security are for us indispensable," said Bernd Gottschalk, chief of Germany's car industry federation, while urging Beijing to accelerate moves to open up its market for car supplies and to improve import conditions.

Ulrich Ellerbeck, a senior executive with the leading regional German bank Nordbank, said Beijing officials would never allow local banks to disappear in a wave of foreign takeovers as had been the case in Central and Eastern Europe.

"It will take a long time for a free market to show up in China," said Ellerbeck.

Jin Yun, chairman of the Shanghai Pudong Development Bank, said the finance sector was a sensitive area.

"We need reform in China, but it needs to be a step by step process," he said.