China misses deadline for 'negative list' investment offer to U.S.

WASHINGTON (Reuters) - Chinese officials have missed their own March deadline to submit a new offer for a proposed investment treaty that would shrink the number of sectors closed to American investors, U.S. officials and China trade watchers said on Friday.

The lack of a new "negative list" proposal could make it more difficult to complete the bilateral investment treaty negotiations with Beijing before President Barack Obama leaves office in January.

"We did not receive a revised negative list from China this week," a spokeswoman for U.S. Trade Representative Michael Froman said in a statement. "The negotiating teams are continuing to engage closely to work toward a high-standard bilateral investment treaty, as agreed by Presidents Obama and Xi in September of last year."

That was when the last investment treaty proposals were exchanged between the two sides. U.S. business groups have said that China wants to keep too many sectors of its economy off-limits to U.S. investment, while Beijing has complained that the United States too often singles out Chinese companies and investors for national security reviews.

Earlier this month, the USTR spokeswoman had said a third negative list exchange would be an important milestone in the talks.

"To facilitate further progress and the successful conclusion of the treaty, China will need to significantly narrow its proposed negative list and demonstrate a substantial liberalization of the Chinese investment market, as well as addresobamasing other key priorities," the spokeswoman said.

Despite the lack of a new proposal, China's Vice Foreign Minister Zheng Zeguang said on Thursday that Obama and Chinese President Xi Jinping pledged to step up the investment negotiations after the two leaders met on the sidelines of a nuclear security summit in Washington.

"The two sides agreed that they would continue to expedite the talks in seeking to arrive at a China-U.S. investment agreement that is mutually beneficial and win-win at an early date," Zheng told reporters.

Erin Ennis, senior vice president of the Washington-based U.S.-China Business Council, expressed disappointment at the missed deadline said the longer Beijing waits, the chances that differences can be worked out with the Obama administration will diminish.

"With limited information at this point, it is difficult to assess what exactly is behind the missed deadline," Ennis said in a statement. "This may be a signal of the ongoing debate in China as to how much they will open their economy as part of their economic reforms."

(Reporting By David Lawder; Additional reporting by David Brunnstrom; Editing by Dan Grebler)