|US Undersecretary of Commerce Francisco Sánchez speaks to the PDO Biz|
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China continues to be the fastest growing economy, while the United States is recovering sooner and growing more rapidly than most other developed nations. Their respective performance and bilateral economic relationships will without all questions have a great impact on the global economic landscape.
For the world's most important bilateral economic relationships, an increasingly important part is investment. Robust two-way investment is a source of tremendous benefits to both China and the United States and would strengthen the China-US bilateral economic ties.
Bilateral investment between China and the United States has expanded substantially over the past few years, and the pace and magnitude are expected to grow continually, as China is encouraging domestic companies to invest abroad while the United States is advancing its SelectUSA initiative to attract foreign investment.
However, in recent years, some Chinese investments in the US were frustrated by regulatory resistance - transactions were blocked for so-called "national security" reasons, which raises concerns over whether China's fast-growing investment in the US would be treated fairly.
Joining the Elite Talk to talk about this hotly discussed issue is Mr. Francisco Sánchez. He is the Undersecretary for International Trade at the US Department of Commerce and heads up the US International Trade Administration (ITA), which addresses market access and compliance issues.
Mr. Sánchez said Chinese investment helps create jobs and sustain economic growth; and he expressed his hearty welcome for more Chinese investment to the US. Here are excerpts from this talk.
Host: You know, US president Mr. 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, which is the majority, 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.
Host: 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 five 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 five 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.
Host: 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.
Host: 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, less 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.
Host: 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 kinda turn the question around. I think we should increase commercial engagement among nations to improve the political relationships.
Host: You know, 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.
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