"Under the guise of fostering 'indigenous innovation' in its economy, the government of China appears determined to exclude foreigners from bidding on government contracts at the central, provincial, and local levels," said Dan Slane, chairman of the US-China Economic and Security Review Commission.

Warning Beijing is failing to fulfill pledges made in 2001 upon joining the World Trade Organization, Slane said the Chinese government "quite simply intends to wall off a majority of its economy from international competition."

A primary goal of the "indigenous innovation" effort, added the commission, was to reduce Chinese dependence on foreign technology in a move that sees significant intellectual property theft from US companies.

Beijing's guidelines in this push, according to a Chamber of Commerce report cited by the commission, provide "a blueprint for technology theft on a scale the world has never seen before."

China launched its "indigenous innovation" campaign in 2006, officially to encourage the development of domestic technology and thereby reduce its reliance on foreign know-how.

Tensions flared after Beijing issued rules late last year under the innovation campaign that were widely seen by foreign businesses as squeezing them out of the government's multi-billion-dollar procurement market.

The Chinese commerce ministry has however denied US charges that it forces foreign firms to hand technology over to Chinese rivals as a price of entry to its huge market. A ministry official told AFP in July that the policies are in line with WTO rules.

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