Editor's note: The author, Zhenyu Li, is a contributing columnist for some of the world's premier publications and editor-in-chief of the business channel at the People's Daily Online, a publication of China's Communist Party.
BEIJING, China — For the world's most important bilateral economic relationships — the China-US economic relationships, the year 2013 was an unusual one. Dialogues, exchanges and cooperation have been strengthened between the world's top two economies since China's smooth leadership transition and the start of US President Barack Obama's second term. The reform initiatives proposed at China's recently concluded Third Plenum will also create more opportunities for broader win-win economic cooperation between the two highly complementary economies. The China-US economic relationships are poised to grow to new heights.
China and the United States recently concluded their first Joint Commission on Commerce and Trade (JCCT) since the new Chinese and US administrations took office, agreeing to remove some trade barriers and build a foundation for the new model of major power relations.
As the China-US economic ties deepen, what will emerge as the new possibilities for the bilateral economic cooperation between China and the United States? How should we see the growing Chinese investment in the US? Is it a threat or a boon to the US economy?
As undersecretary for international trade at the US Department of Commerce, Francisco Sánchez is one of the few elites who can provide the most authoritative answers to these questions.
Sánchez heads up the US International Trade Administration (ITA), which addresses market access and compliance issues, and has led international trade missions to China many times.
He recently had an in-depth conversation with Zhenyu Li, a contributing columnist for some of the world's premier publications and editor-in-chief of the business channel at the People's Daily Online in China, a publication of China's Communist Party.
They talked about China's hotly-discussed new catchphrase — the Chinese Dream, the ever-growing China-US commercial ties and the expanding Chinese investment in the United States.
Here are excerpts from their conversation, edited and condensed by GlobalPost.
Zhenyu Li: As a US senior official, you must have noticed that Chinese President Xi Jinping has put forward a new catchphrase — the Chinese Dream, which can be viewed as China's new guiding spirit or concept. So, what's your interpretation of the Chinese Dream?
Undersecretary Francisco Sánchez: I think that President Xi wants the people of China to prosper and to live in a country with opportunity.
And so I think that he is focused on making reforms that will help continue stable economic growth. And I believe that part of that is fully integrating into the world economic community, encouraging more investment, and as you encourage more investment, it also encourages Chinese companies to invest around the world.
Zhenyu Li: So how do you think the so-call Chinese Dream will affect the US economy and China-US economic ties?
Sánchez: I think as my president, President Obama, has said that it is in the United States' interest for a strong and prosperous China, and we support that effort. As China grows, we can participate in that growth, and we can help by company investment. And we also want to encourage Chinese investment in our country.
Zhenyu Li: When talking about the Chinese Dream with the Americans, the first thing that pops up in their minds is often the well-known American Dream, which is more widely understood. So, what's your interpretation of the Chinese dream and the American dream? Care to make a comparison of the two dreams?
Sánchez: That's an interesting comparison. I think the goals and aspirations of what's been known as the American Dream is an interesting one. Certainly the American Dream has been characterized by opportunity and quality of life. And I think that President Xi aspires for similar goals to have a good quality of life and to make sure there is opportunity for personal growth and opportunity for economic growth.
Zhenyu Li: OK, let's move on to the questions about China-US economic ties, which is perhaps the world's most important bilateral economic relationships.
As you know, the China-US economic relationships have become more positive and constructive since the meetings between Chinese President Xi Jinping and his US counterpart Barack Obama in June. So, what do you think are the new possibilities and opportunities for the China-US economic cooperation?
Sánchez: I think they remain an increased trade, and increased investment, and flowing in both directions. So I think that I'd like to see us look for ways to reduce barriers to trade and barriers to investment. By doing so, China will attract good quality products and services; China will attract companies that can share best practices and know-how. And the United States in turn wants to encourage Chinese investment in our economy.
And so I think those are some of the goals and objectives that we have. Our two-way trade continues to increase, and I think that's a good thing. Chinese investment in the US economy is growing at a rate of about 70 percent a year. So, as we continue to find ways to grow our commercial relationships, I believe a closer and deeper relationship will bring prosperity to both of our countries.
I am very encouraged by the growth in the US-China commercial relationships.
Zhenyu Li: What type of cooperation do you think China and the United States should have to achieve win-win results?
Sánchez: Well, I am going to focus my response on commercial and economic relationships, and I think that China and the United States can play a role in strengthening their own relationships by reducing barriers to trade and investment, but also as the two most important economies in the world, the United States and China can set an example for economic growth through this work of reducing barriers to trade and investment, and by doing so, they'll create opportunities in third countries.
Zhenyu Li: You know, President Obama has reaffirmed his commitment to trade and investment liberalization and opposition to trade protectionism, and China also expressed concerns over whether its fast-growing investment in the US will be treated fairly. So, what's your take on the growing Chinese investment in the US?
Sánchez: Well, I think the concerns that some people raise are unfounded. Approximately 98 percent of Chinese investment doesn't require any government approval. None. Zero. And the little bit, the few transactions that do require a review because of national security, most of those get approved. So it's no surprise that when a survey was done in China about a year ago, when asked what is the most attractive place for Chinese companies to invest — and these were Chinese mainland companies — the first place described was Hong Kong and the second was the United States.
So this perception that the Chinese companies have problems is just not true. There are a few cases that have received a lot of publicity. But for every one case that has been reviewed and may have not been able to be completed, I can name you 30 or 40 that have. So I think that we have the most open investment climate in the world, and we encourage Chinese companies to invest in our country.
Zhenyu Li: What do you think are the benefits that Chinese investment has brought to the US in an economic downturn?
Sánchez: Well, one of the most important things for us, meaning for the government to encourage investment is job growth. And so certainly, foreign direct investment creates jobs. Today, nearly 5 million Americans are employed not just by Chinese firms but all foreign direct investment from all over the world. In the US, it supports about 5 million jobs. And so Chinese investment contributes to that number and contributes to job growth, as well as sustained economic growth.
I am optimistic about the US-China commercial relationships. And we very much encourage Chinese investment in the United States. We welcome that investment and hope to see more Chinese companies looking at the American market.
Zhenyu Li: Chinese industrial company Sany Group, oil and gas company China National Offshore Oil Corporation (CNOOC), and telecommunications corporations Huawei and ZTE all met similar resistance to investing in the US. Their investments were labeled as potential threats to the US national security. Do you have any comments about that?
Sánchez: No, I don't really have any comments. And again, we encourage foreign direct investment from all countries including China, and we hope to see more investment from China in the future.
Zhenyu Li: Are there any political considerations or factors involved in those transactions?
Sánchez: You know, we support all companies taking a look at the United States as a place to invest. The very few transactions, and there are very few, I think just a couple percentage points of all the investment that get reviewed for national security interest is not unlike what any other country does. So, when you are a company involved in high technology for example, there is a greater chance that it will receive a level of scrutiny that others don't.
But I don't think that should be a deterrent, as I said, in most instances even after review, most transactions can go forward, but there are some that won't. The good news is that's the minority, it's a very small percentage of all the billions of dollars that are being invested in the United States.
Zhenyu Li: There's a view that politics should not stand in the way of business. What do you think of that?
Sánchez: Well, I think that, in general, we should continue to build our commercial relationships, because I think good commercial relationships can have a positive impact on the political relationships between the two countries. And so I kind of turn the question around. I think we should increase commercial engagement among nations to improve the political relationships.
Zhenyu Li: There are some politicians who view Chinese investment as a threat. What is your take on China's "peaceful rise" and its impact on China-US economic ties?
Sánchez: I agree with my president that it is in the United States' interest for a strong and prosperous China that plays a responsible leadership role in the world.
Zhenyu Li: Some Chinese and American business leaders recently called for resuming negotiations on the China-US Bilateral Investment Treaty (BIT). Anything new on that negotiation?
Sánchez: That's managed by the Office of the US Trade Representative, and I don't have any new information as to where that is. I know there is a lot of interest on the Bilateral Investment Treaty by both the United States and China, and so I know we will continue to engage on that issue but I don't have any new information in terms of timing.
What I can say is that there are many things that we can do to encourage trade and investment in our respective countries, and a Bilateral Investment Treaty is one of those, but I also think we need to spend time on other things like specific barriers to trade and barriers to investment, and find ways to reduce those barriers for our mutual interests.
Zhenyu Li: Talking about reducing trade barriers, the US has been actively pushing forward a free trade initiative — the Trans Pacific Partnership (TPP) across the Asia-Pacific region. It is now in the final stages of negotiations. Anything new on the horizon for that negotiation?
Sánchez: I am very excited about the TPP. It is an effort by now 12 countries that touch on the Pacific to create a 21st century, high-standard trade agreement. And I think not only will it benefit those 12 countries, but it will help become a precedent for trade generally.