US calms concerns over Chinese investments
Updated: 2011-09-20 10:57
By Chen Weihua (China Daily)
NEW YORK - The United States welcomes Chinese direct investment but is worried over the role of State-owned enterprises, according to a top State Department official.
"We are very welcoming of Chinese investment. (But) we have to figure out the right way of doing it and creating the right environment," Hormats said.
He said what the US needs to do is to find a way of working together with the Chinese in a more effective fashion, such as designing and establishing dialogues to create a welcome attitude toward Chinese investments in the US.
Apart from the US-China Strategic and Economic Dialogue, Hormats believes a much richer dialogue is needed between American state governors and Chinese provincial leaders.
"The hope is that governors and provincial leaders can sit down and talk about improving our political environment, so there is a more receptive environment toward Chinese investment in this country," said Hormats, who will lead a US governors' delegation to Beijing next month.
"American governors are very good at promoting trade and attracting foreign investment and having such sub-level dialogue is very helpful," he said.
He also noted the importance for Chinese investors to understand the American investment environment.
Over the next few months, the US government will stress in a more direct way the opportunities for foreign countries and foreign companies to invest in the US, Hormats said.
A report released a few months back by the New York-based Asia Society expressed concern that politicizing Chinese direct investment in the US will deny many potential benefits for Americans.
Refuting the argument that the US should turn inward because of its current economic doldrums, Hormats cited what Secretary of State Hillary Clinton said earlier that in the current environment, the very worst thing Americans could do is to turn inward and to turn away from the global economy.
"Our view is exactly the opposite. We need to work more with other countries around the world to strengthen cooperation. We want to enable American companies to take advantage of the global economy," he said.
Hormats said the US is every pleased that US exports to China are increasing.
A recent US-China Business Council report said that US exports to China grew four times faster in the past decade than its exports to the rest of the world. The overall growth of US exports to China hit 468 percent from 2000 to 2010, averaging 19 percent a year.
Hormats said what the Chinese government is trying to do in its 12th Five-Year Plan (2011-2015) in reducing dependence on exports, increasing imports and domestic consumption is consistent with what the US wants to do - to have a better balance in trade between the US and China.
Hormats acknowledges the US must improve its savings and investment balances, including increasing domestic savings, borrowing less andconsuming less or at least in a more sustainable pace.
"The Chinese government has correctly underscored this is something that will be constructive for the United States to do," said Hormats, whose experiences in dealing with China goes back to the Nixon administration.
Hormats, however, expressed deep concern over the emerging model of state capitalism in the world that he said "has the potential to dramatically change the global economic system that has facilitated the prosperity of the US and countless other countries around the world".
"How we respond to this changing landscape will have enormous implications for our prosperity and security here at home and our influence around the world as well as the way the global economy functions," he said.
While pointing out that the US' goal is not to question whether countries can and should establish state enterprises, Hormats said the basic point is to make sure that there is a level playing field between private companies and state enterprises.
"The decision as to whether the support for state enterprises distorts trade or gives those state enterprises artificial advantage over private enterprises in the US or elsewhere is, however, a concern for the US," he said.
Hormats emphasized that the goal is not to do this in a confrontational way but to emphasize common interests between the US and other countries.
"We see a multipolar world with a lot of economic powers around the world. It's also a multi-partner world. We see more and more opportunities for partners with other countries on a variety of things," he said, citing examples of US-China cooperation on new sources of energy and electric cars.
"Our two largest economies have a lot to gain by working together. We are always going to have big issues because we are big economies. But there is a huge amount of effort on both sides trying to work through these issues in a constructive way," he said.