U.S.-China Dialogue Opening Remarks by Thomas J. Donohue

Beijing, China
October 14, 2003

Thank you very much Mr. Chairman (Chairman WAN of CCPIT) and good morning ladies and gentlemen.

I'd like to begin by thanking you, Mr. Chairman and your entire staff at CCPIT for everything you have done to make those of us from the United States so welcome. We have been eagerly anticipating our discussion today, and are really looking forward to hosting you in the United States for our next meeting.

The U.S.-China Dialogue is a unique vehicle by which business leaders from both our countries can sit down face-to-face to identify opportunities, solve problems, and set a course for future and closer cooperation between our business communities.

We all go to a lot of meetings and we listen to a lot of speeches. For this occasion, we deliberately limited the size of this gathering. We will try to keep speechmaking to a minimum, because it is the free and open exchange between us that will prove most valuable.

Before saying anything more, I want to give our excellent U.S. delegation an opportunity to identify themselves and their companies. [Self-introductions of U.S. participants.]

I hope this dialogue further demonstrates the U.S. Chamber's longstanding commitment to China.

We led the campaign to secure Congressional support for permanent normal trade relations and were strong backers of China's entry into the World Trade Organization.

We have pledged to do whatever we can to be of assistance as China implements its WTO commitments, just as we promised the United States Congress we would report regularly on China's progress.

We are working closely with our excellent American Chambers in China and in Hong Kong. We help our member companies find success here and try to address any problems they are having.

As the leading voice against protectionism in the United States, the Chamber is helping to insure that the U.S. market remains open to fairly traded goods manufactured and exported by Chinese companies.

And let me add that the Chinese Ambassador to the United States and his wife have been to my house for dinner – and my wife Liz and I have been to their house for dinner. They serve pretty good food there!

We meet at a very interesting time in U.S.-China relations. There are many positive things to talk about, and we must never overlook this as we work through the inevitable disagreements and strains that always come up in any meaningful bilateral relationship.

On political and security issues, our two countries enjoy the most cooperative relationship we have had in recent times.

We have coordinated efforts to combat terrorism and to contain the threat coming from the Korean peninsula.

On the economic front, both our economies have weathered potentially severe disruptions. Significant challenges remain – but today China continues its impressive growth and the American economy is really starting to pick up steam. We'll have a discussion about this shortly.

Not too long ago, the most common refrain we heard from U.S. companies doing business in China went something like this – "huge market, great potential, but no one's making any money there."

Today many companies are making money in China. In a recent membership survey conducted by the American Chambers of Commerce in Beijing and Shanghai, responding companies reported strong sales and financial performance from their China operations. 75% said they were profitable – and 70% said their profit margins here exceeded or were comparable to global margins.

So many good things are happening in our relationship right now. But there are also some problems.

We face a challenging political environment in the United States right now.

Opponents of China's WTO accession, political detractors of the bilateral relationship, and anti-trade forces are seizing every opportunity to drive a wedge between us. China's currency peg and the large trade deficit are convenient arguments for those who would like to see our trade with China rolled back.

Others, who are legitimately concerned about the loss of U.S. manufacturing jobs, have mistakenly placed much of the blame on China and the U.S. companies who make investments in China.

There are many factors troubling American manufacturing today – including an antiquated tax system, over-regulation and excessive litigation – but these are often overlooked.

As we seek to build support for expanded U.S.-China trade – and fend off drastic punitive legislation in the Congress — it would be very helpful to have a positive WTO message to share with our political and business leaders.

While we believe the Chinese government has taken some important steps to meet its WTO obligations, we have concerns about a loss of momentum.

Regulatory transparency remains a key concern. And more must be done to combat counterfeiting and the theft of intellectual property.

There are questions about China's compliance with its commitment to offer foreign companies trading and distribution rights.

Excessive capitalization requirements in the insurance, banking, telecom, and other sectors also concern us, as do government actions that have held back the potential growth in agricultural trade.

As for the recent focus on the Chinese currency, the Chamber welcomes the dialogue that has been opened between Treasury Secretary Snow and his Chinese counterparts. We believe that currency exchange rates are best left to market forces – and movement in that direction by a number of countries, including China, would be helpful.

But those in my country who believe that revaluing a currency will single-handedly close a trade gap or rejuvenate manufacturing have little evidence to back up their position. Nothing in trade, economics or life is that simple!

So yes we meet at an interesting time. Before us are great opportunities and significant challenges. I know I speak for our outstanding U.S. participants in this dialogue when I say we are committed to the U.S.-China relationship and we are very much looking forward to discussing the issues of importance with our Chinese colleagues.

Thank you very much.