US-China: A Shared Vision of Global Economic Partnership

The Honorable Penny Pritzker, Secretary, United States Department of Commerce; The Honorable Michael Froman, United States Trade Representative, Executive Office of the President; His Excellency Wang Yang, Vice Premier, State Council, People’s Republic of China

US-China: A Shared Vision of Global Economic Partnership

Event summary by Richard C. Longworth

In a unique program cohosted by The Chicago Council on Global Affairs and World Business Chicago, top trade negotiators for the United States and China pulled back the diplomatic curtain Wednesday just far enough to give Chicagoans a glimpse of the promise and potential roadblocks in economic relations between the world’s two biggest economies.

Both sides assured the Chicago audience that relation between the two giants are based on “mutual interest and mutual respect.” But US Commerce Secretary Penny Pritzker warned the Chinese that the massive US investment in China won’t necessarily continue, especially if China doesn’t meet American concerns over “sanctity of contracts, transparency, rule of law, intellectual property protection and other issues.”

These concerns, Pritzker said, “are beginning to take their toll.”

Chinese Vice Premier Wang Yang assured Pritzker that China knows it has thrived in a world trading system led by the US and based on mutual trade laws, and has no intention of rocking that boat.
“We accept these rules,” Wang said. “We have neither the ability nor the intent to challenge the United States.”

This was the public face to a day of private negotiations under the Joint Commission on Commerce and Trade, or JCCT. The JCCT has been held annually for 25 years, almost always in Washington or Beijing: this was only the second time it has been held outside the capitals and the first time in Chicago, which Chicago Council President Ivo Daalder called “evidence of this city’s position at the nexus of trade.”

For the first time, the government negotiators are meeting not just with each other but with private business leaders from the two countries, an innovation which Wang credited to Pritzker and to Michael Froman, the US Trade Representative. The three leaders and Daalder shared the stage before 500 Chicagoans in a program cohosted with World Business Chicago.

Pritzker’s comments were the most pointed, and almost seemed to put Wang on the defensive.

“Foreign companies need to know they are on equal footing with domestic companies if governments hope to attract their capital,” she said. She noted that the “unabashed rash to invest in China” over the past 25 year has slowed recently to a four-year low. One reason, she said, is the concern of US companies over Chinese government policy. She reminded Wang that China’s economic growth, fueled by foreign investment, has lifted 600 million persons there out of poverty.  

“None of us can rest on our laurels,” she said.

Wang granted that “many of our American friends have questions as China has become stronger,” but insisted that China’s policies are based on “equal protection of the law” and “equal protection for the rights of Chinese and foreign companies.”

Wang said China’s economy is indeed changing, with more attention to the environment, more advanced technology, a move away from “backward manufacturing” and hence a need for new foreign technology.

The two nations are nearing agreement on a Bilateral Investment Treaty, or BIT, which would provide important protection for investors against discrimination and arbitrary treatment. The BIT, as envisaged, could open major areas of the Chinese economy, including financial services and health care, to U.S. investment. But China is now drawing up the so-called “negative list” of areas that will still be off limits.

Apart from this “negative list,” Wang said, “the door is open wider. But he gave no hint what the list will include.

A greater immediate concern of US businesses is the Chinese anti-monopoly law, passed in 2008 and seen then as a major step toward bringing China into line with international anti-trust legislation. But more recently, American businesses have complained that China may be using it as a protectionist weapon against US investment.

Daalder asked Wang if the Chinese investment environment is “tightening,” and Wang said it isn’t.

China is “strengthening its anti-monopoly supervision,”  he said, but insisted that only ten percent of the anti-monopoly cases since the law was passed involved foreign companies.

“China is more integrated with the world now,” he said, “so we have no reason not to open up.”

Chicago political and business leaders took advantage of the JCCT to show the Chinese visitors the city and to push for more Chinese investment. Froman said that fifty Chinese-owned companies now invest in Chicago, but this is small compared to investment in China by US firms, including Chicago ones.

But at the same time, a Chinese property developer announced it would built Chicago’s third-highest skyscraper, an 88-story building housing a five-star hotel and condos, to be designed by Jeanne Gang, Chicago’s new star architect. The two developers of the lakefront building are Wanda Group, controlled by China’s richest man, Wang Jianlin, and the Chicago-based Magellan Development Group. The building is to cost $900 million, with ground-breaking in 2016. 

Richard C. Longworth is a distinguished fellow at The Chicago Council on Global Affairs. Read more of his program summaries and recent publications or follow his blog.
 

Speaker Bio

Schedule

3:00 p.m.             Registration and security check-in
4:05 p.m.             Presentation and discussion
5:00 p.m.             Adjournment

Media Information

This event is open to the media. Registration is required by 5 p.m. EST on Wednesday, December 10. All press must be registered, confirmed, and credentialed for any open press events. Media that is not registered by the deadline will not be allowed. Freelancers must produce a letter of assignment.

To register as media, please contact Betsy Hushek at bhushek@thechicagocouncil.org.
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