BEIJING — A senior Chinese trade official has a message for U.S. businesses operating in China: We hear your concerns, and we are trying our best. Oh, and we have some concerns of our own.
In a rare interview granted in the run-up to President Xi Jinping’s visit to the United States, Zhang Xiangchen, China’s deputy representative for international trade, shared his thoughts on the nature of U.S.-China trade relations, likening the ties to a boat and trade to the ballast that keeps things “sailing forward smoothly.”
Although there has been much talk about issues such as the South China Sea, cybertheft and the devaluation of the yuan in the lead-up to the visit — “drama, drama, drama,” quipped CNN — Zhang prefers to take a long view, noting that U.S.-China ties are much better now than they used to be, say, 10 or 20 years ago.
With Xi in Seattle, the District, and New York over the next two weeks, Zhang said we can expect positive steps, including progress on state-province economic ties, cooperation on overseas development assistance and talk on a bilateral investment treaty — a potentially landmark agreement that would provide clearer rules for foreign investment.
Zhang declined to comment on when such a deal might be made, noting only that China’s entrance to the World Trade Organization took 15 years and that this treaty is “no less important or complex.”
Although Zhang was careful to emphasize “positive progress,” — “positive” seems to be a key talking point for the carefully choreographed trip — he agreed that when it comes to commercial ties between the world’s two largest economies, there are legitimate concerns on both sides.
“As I often tell U.S. colleagues, good is not perfect,” he said.
To U.S. businesses in China, “not perfect” might feel like something of an understatement. U.S. companies that operate in the country have long complained that their success in the gargantuan Chinese market is undercut by policies that give local companies an advantage, whether by restricting foreign investment, subsidizing local firms or selective targeting in periodic compliance crackdowns.
China’s top leaders have vowed to let the market play a “decisive” role in the years ahead as part of their plan to “comprehensively deepen” economic reform. But the U.S.-China Business Council (USCBC) and others have raised doubts as to whether they are willing to loosen their grip, especially in light of this summer’s stock crisis and the aggressive state intervention that followed.
Zhang said he spends a great deal of time listening to the concerns of the U.S. business community, whether by reading reports by the U.S. Chamber of Commerce or the USCBC or by meeting with businesspeople.
Topping their list of worries, he said, are questions of transparency, reasonableness of regulation and intellectual-property protection. “All these are issues that China meets in the process of its liberalization and opening up, and I also see that the concerns of [those] businesses are reasonable,” he said.
“It’s our job to promote the improvement of China’s investment environment,” he continued. “And we believe that the Chinese government is a pro-business government, and the Chinese government welcomes foreign investment.”
And is China moving fast enough to reform and open its economy?
“I think, historically speaking, we’ve been moving forward steadily,” Zhang said. “If we look back after a few steps, maybe we will feel that we’ve been very quick and very bold.”
Other major areas of concern for U.S. businesses are China’s new laws on national security and nongovernmental organizations, which many worry will give the country’s sweeping security apparatus undue power over foreign firms.
This summer, more than 40 U.S. trade associations and lobby groups, including the U.S. Chamber of Commerce wrote a letter to China’s National People’s Congress complaining that the NGO law could hamper their work.
Zhang said those concerns are “reasonable” but are overblown and reflect a “lack of understanding.” China’s new national security law is “like a hanging sword which will only fall upon those that are engaged in activities that will undermine China’s national security or social stability,” he said.
Besides, he added, China is not the first to implement a national security law and, indeed, in developing the law, “borrowed and learned heavily from international experience, including the U.S. experience.”
Asked about the concerns of Chinese investors and people in business in the United States, Zhang flipped the script, zooming in on how national security reviews in the United States have affected Chinese firms such as Huawei, one of the world's biggest makers of telecommunication equipment.
The Chinese firm hoped to expand into the United States, but it faced strong opposition, with many U.S. voices noting that the company’s founder, Ren Zhengfei, was once in the People’s Liberation Army. In 2012, a year-long House Intelligence Committee investigation into the company found that it was a threat to national security.
Zhang dismissed the move as hypocrisy. U.S. firms in China are sometimes led by former ex-military types, he said. So Ren’s PLA links are “irrelevant.”
Xu Yangjingjing contributed to this report.