Deborah A. McCarthy: US is a good solid area to invest
Updated: 2011-04-07 09:27
By Lou Yi (chinadaily.com.cn)
Q: Welcome to China Daily Web Chat, I am your host Gao Yuan. China and the United States are the two major economies in the world, how will the two countries manage their financial systems and their businesses after the post-financial crisis? We are here to invite Deborah A. McCarthy, the Principal Deputy Assistant Secretary for the Bureau of Economic, Energy and Business Affairs, to share her view about this question. Hello Mrs McCarthy.
A: Good afternoon, good to be here.
Q: Good afternoon too. We know that the US is a mature market, however most of the Chinese companies are young and less experienced in terms of international businesses. What will the US government do to help these companies grow in America?
A: We recognize we have a very huge market, and that is not well known to many Chinese companies. So, through combination of back and forth between our governments, which is very active when, we are here to talk about investment issues in the coming day. That's the key element. We also work very closely to put together companies across certain areas. We have worked a lot to bring knowledge of our market. Here, through organizing sessions where we can learn the rules. And also our businesses are already here, they know their own market. There's interact with Chinese companies, there's also education process going on there. So it's in different levels.
Q: Okay, we know that the world economy is still slowly recovering from the financial crisis, many Chinese entrepreneurs may ask, is this the best time for them to invest in the US market? Why should they do it right now?
A: The good news is that the statistics are getting to be much better in the United States, I think we're seeing an upswing. Certainly consumer confidence has been increasing in the United States. So, we still remain the No 1 destination for investment. We have rules of the game that appealed in our traditional system, we have a transparent process. It takes time to learn the process for the companies coming from overseas. But the numbers are looking better, we still, as I said, are the premium destination for investment and for people to invest. And the process, like I said, is transparent, and can be easily known by companies and entities. In other words, the information was there, it's good information, and therefore warrants takes close attention, so, it's a great destination.
Q: Talking about transparent, what kind of deal can the US offer to Chinese investors when they put heir money into the US? How do you safeguard their assets?
A: I would say that with the following, the system is known, it is predictable. There are risks, I mean when you invest, you do take a risk. But it's known elements of a market system that has been appealed through a juridical system, such that you have protection for your investment. You could be sure that you can go and get redressed if need be, and the information that you need, to invest successfully and continue to work successfully is freely available, it is not hidden. I would say that is our huge strength.
Q: Mrs McCarthy, which businesses in the US are the most attractive to Chinese investors do you think?
A: I suppose that's the question to ask the Chinese investors. But probably because of the strength of the Chinese economy, I would say it would cover the areas from the cutting edge, you know, in telecommunications, to more traditional manufacturing. Again, it really depends on the longer term of objective of the Chinese investor. Whether they want to work across the United States or in one particular state, the market is open to all from the cutting edge to traditional. So, I would say that is the choice for investor to make. The companies can certainly make money in a lot of areas.
Q: Chinese Commerce Minister Chen Deming once said that during Chinese President Hu Jintao's visit to the US in 2010, a total of $5.1 billion worth of investment deals were signed, including $3.24 billion of the investments were those Chinese people who invest in the US market. How are these projects going right now?
A: Well, first comment. It was an outstanding excellent visit. I think a lot was accomplished, there was a lot of understanding about the challenges that we both faced in this coming century. So, that would the first remark. Secondly, it did lead, as you point out, to key investment projects, that are beginning now, which will take sometime to go to fruition, some have vary by the areas of going into, but I think it's a very positive signal of a huge boost to the intertwining between the two economies at the investment level. So, I would say that it is beginning, it is ongoing, and should be very positive and fruitful.
Q: Is there any follow-up measures that the government wants take to lure more investment from China?
A: I would say the following. We've started a process of inviting at the sub-national level to interact with our states and governors level, and it will be some meetings coming up this early part of the summer. And that is taking the dialogue beyond the dialogue just between governments at the certain level, but going below. And certainly that is leading to a lot of positive dynamism in for both countries to get to know each other through the economic lens. And for broader aspects of American society to know the strength that China has to offer.
Q: China's Ministry of Commerce announced last Tuesday that China's outbound direct investment in the non-financial sector saw a 13.1 percent year-on-year increase just in the first two months of this year. However the investment was scattered. The Chinese companies invested in 680 overseas companies across 88 countries and regions around the world. Does the US want to share a bigger piece of cake?
A: I think what we were interested in doing is in areas that we have strength to partner. We don't have in the US one way to get to know the entire market. So as companies discovered the US, Chinese companies discover us, probably one would see sort of more scattered short effect in the beginning until they see where the strategic advantages are for their talents. So, I don't see it, in terms of competing across the world, I know what we have to offer is a good solid area to invest, which I said there are certain rules of the game that can give a lot of certain need to Chinese investors. It's a learning process on getting to know in our market, any market. Our market is particularly big and varies by state with no federal-level entry point. The way we assist through our investment process. And again, it's the beginning, so the numbers are increasing, which is wonderful, and I think we are gonna to see very positive increases.
Q: According to data from the New York Stock Exchange, a total of 34 Chinese enterprises companies were listed in major US stock markets last year. The data will be increased in 2011. It was estimated that the number of Chinese IPOs in the US markets will surge by 50 percent this year. Why do you think the US capital market is so attractive to Chinese companies and investors?
A: In response I would say because it was vast, it was wide and it was deep. It has amazing resources, amazing flexibility to move into different areas, and it provides solid return with non-risk factors that it makes it a good deal I would say. But again, it's its ability to bring resources, bring it quickly and to adapt to ever changing circumstances. We are very flexible in other words.
Q: China has been trying to strike a balance between environmental protection and a faster economic growing. However, as Robert F. Kennedy once noted in his famous speech some forty years ago, it's important to know what the GDP means, however, more importantly, what the GDP does not mean. As the fastest-growing economy in the world, what do you think China should learn from the US on this regard?
A: In the Untied States, at all levels, from families at home, through schools through local associations, to the various levels of government, there has been in the past decade growing realization of the need to protect what we have and to seek growth through this protection. It has become a central part of what we do business. It goes to recycling in the schools, it goes from protecting roads and beaches and so forth at the school level of through national programs such as those launched by our president. So, I think we have a way that we have approached that we are a very large consuming nation, and a huge market. So I would say that that is an area where there is more than ample room for fruitful exchange. We certainly need to continue learning on how best to manage our environment from others, we don't have all the answers. So I think it would be a wonderful area to have additional exchanges, and in some of the exchanges, Chinese enterprises could do very good business.
Q: For example?
A: I won't predict which ones, but certainly in key areas of mass consumption, where again, there is need for recycling and further use of the products, I think there could be a number of exchanges there.
Q: We've talked so much about the US investment environment, how about Chinese investment environment? Do you think that the US companies should invest more money in the Chinese market?
A: I think US companies are hungry to invest more in Chinese market. It is seen as an excellent size having huge potential number of areas. We hear from many, many companies that want to come here, they are constantly sort of knocking at the door. So I would say yes, it is an extremely attractive market and one where a number of large, small and medium enterprises if not here would like to enter. And we have learned about the market in the years we have come here with valuable lessons and how best to cooperate, you know with respecting local norms and the culture, and for prosperous growth of both sides.
Q: What about US energy corporations invest in China?
A: I am not going to make any predictions about specific companies. Each company makes their own, but I think that's an area where we have seen investment, and we are likely to see more. Energy is the Gordian knot that challenges all the economies as they move ahead and grow. Resources are finite, it is a challenge for both countries. We face large challenges in that area, and I think we've had fruitful exchanges on it.
Q: What do you think the US companies should do when they add carbon emissions to China when starting new energy business?
A: Again, in that area, in a dialogue that we are having enlarged into a global area, that challenge is present. How best to measure it? There's been a lot of expertise going on measuring, there has been a lot of expertise to go in carbon trading emissions. Our challenge is to come up with a global norm. That will enable us to all be on the same line or sheet of music. Going forth, I think that's the key element.
Q: Okay, thank you Mrs McCarthy.
A: You are welcome, I enjoyed it.
Q: Thanks for watching.
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