WRAPUP 1-China says no curb on Google mobile technology

(For more on China-U.S. relations, click [ID:nCHINA])

* US groups say concerned by China’s purchase rules

* China says telecoms market is open

* Chinese media says severe challenges ahead for US ties

By Michael Wei and Doug Palmer

BEIJING/WASHINGTON, Jan 27 (BestGrowthStock) – China sought to head
off concerns about curbs on Google phone technology on
Wednesday, as U.S. business groups urged Washington to tackle
“alarming” measures against foreign high-tech companies in
China.

Google’s threat to quit China this month over hacking and
U.S. criticism of China’s Internet censorship has irritated
ties between the two economic giants, already hurt by
disagreements over currency exchange, trade and U.S. arms sales
to Taiwan.

In soothing words for investors, a Chinese official said
Beijing would not seek to stand in the way of Google’s Android
mobile phone platform in the Chinese market.

The spokesman for China’s Ministry of Industry and
Information Technology, Zhu Hongren, was responding to a
question about whether use of the Android application in China
would be affected by the Internet giant’s (GOOG.O: ) complaints
against China.

“I think there should be no limit on the use of any system
as long as it complies with regulations in China, it has sound
negotiations and cooperation with telecom operators and obeys
relevant rules and requirement,” Zhu told a news conference.

“The Chinese telecommunication market is an open market.”

The Ministry oversees China’s mobile telephone sector.

Zhu’s remarks appeared to underscore that the Chinese
government does not want to scare investors by directly
attacking Google, and is instead directing its ire at the U.S.
government, which state-run newspapers have accused of
“politicizing” the dispute.

Two weeks ago, Google threatened to shut its Chinese
Google.cn portal and pull back from China, citing problems of
censorship and a hacking attack from within the country. It is
still filtering sensitive content on Google.cn.

The Obama administration backed Google’s criticisms. Last
Thursday U.S. Secretary of State Hillary Clinton urged China to
drop Internet censorship and investigate the hacking.

BUSINESS GROUP CRITICISM

U.S. business groups have fired their own broadside at
China, calling on top U.S. officials to pressure Beijing on
moves to keep out foreign high-tech companies.[ID:nN26130090]

The appeal, in a letter to top U.S. officials including
Clinton, comes as China formulates regulations for policies
meant to encourage domestic industry to ascend the value chain.

Foreign industry fears that incentives for government
purchasers to prioritise domestically developed products could
lose them valuable contracts.

“For several years, the Chinese government has been
implementing indigenous innovation policies aimed at carving
out markets for national champions and increasing the locally
owned and developed intellectual property of innovative
products,” the business groups said, according to a text made
public by the Business Software alliance.

“We are increasingly alarmed by the means China is using to
achieve these goals.”

Signatories urged the Obama administration to make the
issue a top priority and work with the business community and
foreign governments to develop a “strong, fully coordinated
response to the Chinese government.”

MOBILE PHONE INDUSTRY HURT

A showdown between Google and the Chinese government could
possibly hurt mobile phone makers who had bet on the Android
system to increase sales in the world’s biggest mobile market.
[ID:nN19230862]

Motorola Inc (MOT.N: ) has bet its turnaround on Google’s
mobile software and China. Phones running on Android, an
open-software platform for mobile applications, are also being
developed by several Chinese firms, including ZTE Corp
(0763.HK: ) and Huawei [HWT.UL].

Last week, Google postponed the launch of two mobile phones
in China that use its Android platform.

After first fending off criticisms from Google and
Washington, Chinese officials and state-run media have launched
toughly-worded warnings to the Obama administration that have
the hallmarks of a concerted counter-campaign.

The People’s Daily, the main mouthpiece of China’s ruling
Communist Party, said on Wednesday that the Google dispute had
added to strains that have created a rocky start for China-U.S.
relations in 2010.

“All of this means that Sino-U.S. relations face severe
challenges,” said the paper. It said the worries included U.S.
arms sales to Taiwan, trade, and speculation that President
Barack Obama may meet exiled Tibetan leader the Dalai Lama.

“If these issues are mishandled, they will have a powerful
destructive effect on Sino-U.S. relations, and may even affect
the broader development of relations.”

Stock Investing

(Additional reporting by Lucy Hornby, Chris Buckley; Editing
by Jacqueline Wong and Jeremy Laurence)

WRAPUP 1-China says no curb on Google mobile technology