Secretary's Speech

U.S. Commerce Secretary Carlos M. Gutierrez Remarks to Shanghai American Chamber of Commerce
Shanghai, China

Thank you. I am honored to be here at the Shanghai American Chamber of Commerce, with a terrific delegation of U.S. businesses. We've been traveling in China for several days now and as always, I am impressed with the progress and rapid pace of innovation that is prevalent throughout this nation.

I want to commend you on the important role you play in building strong trade and business relationships between the U.S. and China. I have to say that every time I speak to a Chamber of Commerce, I feel like I'm among friends. I spent my life in the business world tackling the same challenges you face every day, so I have a sense of camaraderie and shared experiences.

As Secretary of Commerce I still get to interact with business leaders around the globe and it is one of the things I most enjoy about this job. And China is such an energetic and vibrant place to do business. So, thank you for having me.

Educational Video Announcement
I want to start by announcing a new initiative we are beginning this week in China. Twenty years ago there were just 11,000 Chinese students in American universities--today there are nearly 63,000. We'd like to see that number continue to grow and the level of educational exchange continue to increase.

In fact, Secretary Margaret Spellings will be here to discuss opportunities for Chinese study in the United States.

We want Chinese students to know that America welcomes them. Our universities, as many in the audience know first-hand, are great launching pads for your career. That's why the Commerce Department, in conjunction with State and Education Departments, have produced a two-part program featuring Chinese students studying in the U.S.

The program will air this Saturday in Shanghai. We plan to bring this program to other nations, but we are starting here first. This is a testament to the strong bond between our nations and the importance we place on educating our young people to participate in the global marketplace.

Trade Mission to China
The AmCham's mission to "promote a healthy business environment in China, strengthen U.S.-China commercial ties and provide high-quality business information and resources," complements the goals of our trade mission this week.

While today's luncheon provides an excellent opportunity for the members of our business delegation to network with AmCham members, I want to also take this time to give you an inside perspective on the view of China from Washington, D.C.

I've been to China many times over the years, and this is my fourth trip since becoming Secretary. I believe that shows the importance this Administration places on strengthening U.S.-China ties.

You know the statistics about China's rapid growth, but there are a few worth highlighting here again:

• Over the past 20 years, China's economy has grown by nearly 10 percent a year and had a total growth in real GDP of over 500 percent.
• Since China joined the WTO in December 2001, U.S. exports to China have been growing by over 20 percent a year.
• China is now America's third-largest trading partner and our fourth-largest export market.

This week we have met with Vice Premier Wu Yi and PM Wen Jiabao. In those meetings we discussed some important issues facing our countries.

Joint Commission on Commerce and Trade (JCCT)
Let me talk for a moment about our last JCCT meeting. As you know, in April we had a very successful meeting. The Chinese made a number of important commitments.

On their own initiative, the Chinese government agreed to require that all PCs made in China, or imported into China, be pre-loaded with legitimate software. Additionally, government agencies are now required to buy computers with pre-loaded, licensed software.

These are significant results that came out of the talks. In the six months since the JCCT meetings, we've seen important progress on each of these fronts, and we've heard anecdotal evidence that software companies are seeing higher sales. But we must continue to press for decisive and specific action.

That is why yesterday in Beijing I announced three specific challenges facing China that need to be addressed in the very near term. They include:

1. Lowering criminal thresholds for prosecuting those involved in commercial piracy and counterfeiting;

2. Allowing greater market access for audiovisual products, and

3. Sharing factories' pirated disc exemplars with the international laboratories that trace pirated optical discs to their source.

These are important improvements in IPR that have gone unaddressed by the Chinese for too long. There are many sectors which have unresolved issues: express delivery services, beef, telecommunications, bulk chemicals and medical devices, just to name a few.

We must continue to work to resolve commercial issues in favor of fair and open competition.

And there are new areas in which we can engage our Chinese friends. I see 2007 as a time of great opportunity for U.S.-China relations, and the chance to work on new initiatives which will continue to move us in the right direction. For example:

• An Open Skies agreement in aviation that will keep ahead of market demand for passenger and cargo capacity as our commercial relationship with China expands over the next decade.
• We can also work to facilitate greater travel and tourism between our countries, which will lead to the United States becoming a preferred tourist destination for Chinese travelers. And we know there is a growing number of Chinese consumers with the means to travel:
• Through August of this year, over 300,000 Chinese tourists visited the U.S.--a 12% increase over last year.

We must continue to work bilaterally on these ongoing issues, and these new opportunities will provide us with ways in which we can achieve even stronger trade and business relationships.

Strategic Economic Dialogue
Let me turn to the Strategic Economic Dialogue for a moment. Next month, I will be returning to China with Hank Paulson, our Treasury Secretary to launch the Dialogue.
It reflects an increasingly sophisticated level of engagement between our nations on economic issues. And, there is no one better than Secretary Paulson to lead this effort. President Bush has great confidence in his ability to steer this dialogue and I share that confidence.

In just a few months on the job, he has indeed been working to put his background to use for American business. The new Dialogue will provide an excellent opportunity to continue building on many of our recent successes.

Additionally, this will implement an important agreement between President Bush and President Hu to establish a high-level bilateral dialogue to promote economic cooperation and the growth of U.S.-China relations.

The Dialogue, along with the JCCT and other initiatives, such as this trade mission, is another example of the significant attention the U.S. is placing on the relationship with China.

The View from Washington
As you know, just last week we held elections in the U.S. It was a highly charged election, which included such key issues as trade deficits, American jobs and economic stability.

The election results foretell what may be greater challenges to those in the U.S. who believe in the value of open markets. However, we are encouraged by initial signs that the new Congress is willing to work with the Administration to advance a positive trade agenda.

I believe it is fair to say that some Americans are anxiously cautious of our growing economic relationship with China. While some of the fear may be misguided, there are things that China can do to help address some of these concerns.

We met with Premier Wen and Vice Premier Wu Yi and Minister Bo. They graciously met with our business delegation. Premier Wen and the senior Chinese leadership agree with us that the best way to close the trade gap is to expand U.S. exports. They have committed to further opening and reforming their market so that U.S. exporters have more access. The best way to fight protectionism is to make sure Americans have fair access.

China's leaders also share our concern with IPR protections. They have made progress, but more must be done. We must show results.

America and China must work together to stem the rising tide of protectionist sentiment in our nations. We must demonstrate to our citizens the benefits that free and fair trade can bring to our economies. We must also show our citizens that we will hold our trading partners accountable on their commitments to open their markets. Promises to open markets must be kept. And we must show them the dangers of over-regulation that burdens the economy and costs jobs. This is not only important for the U.S., but also for China's global partnerships.

hina has important economic partnerships with many nations. Take a look at the European Union. Two decades ago, the EU traded virtually nothing with China. In 2005, two-way trade totaled more than $260 billion.

The ambassador of the European Commission, the EU's executive arm to China, said, "Europe has to accept the fierce competition while China has to ensure it is fair competition." That sentiment can be applied to the U.S. market as well.

China's participation in the global economy has greatly and rapidly changed the course of this nation and the lives of the people here. In 25 years:

• More than 200 million people have been pulled out of poverty.
• Adult illiteracy in China has been cut by two-thirds.
• China's economy has grown an average of 10 percent annually.

And perhaps one of the most staggering statistics of all is that China now trades more with the U.S. in a month than it did with the entire world in a year.

Now is the time for China to fully embrace the world economy. And to fully embrace its ideals and values: rule of law, transparency, fairness and open competition, IPR enforcement.

The eyes of the world are on China. Its growing importance places great responsibility on the shoulders of the Chinese government and its business leaders.

China must demonstrate that it is a responsible stakeholder in the global economy.

Closing
In closing, let me thank you and all the members of the Shanghai AmCham for your leadership in representing U.S. business interests in China.

The members of our business delegation are here to learn from you and your experiences. While China is a very attractive market for American companies, it can also be a very challenging market as you well know. We hope you can help them navigate and prosper in this growing economy.

Your work will benefit not just your business but the partnership between China and the U.S. U.S. Electronic Education Fair for China - Liu Xue USA (68 KB PDF file)