Secretary of Commerce Donald Evans
Press Conference Transcript

St. Regis Hotel, Beijing, China

DONALD EVANS: Well, good afternoon, everybody. I thank all of you for coming. I'm delighted to be back in China. The U.S. remains -- this administration, the Bush administration remains very committed to continued strength in the economic and political relationship between our two countries. I've had a very good stay, although I'm not quite finished with my meetings. I had a chance yesterday to meet with Minister Bo of the Ministry of Commerce. I will meet later on today with Premier Wen. I very much look forward to that. He's my friend. I've had a number of meetings with him now over the last three years or so. Also I look forward to having a meeting with Vice Premier Wu Yi, Madam Wu Yi.

I'm here because we want to continue the constructive dialogue we have underway between Chinese leadership and American leadership. I think probably I've had more meetings at the highest of levels as well as down through the working levels of our government over the last four years during the Bush administration than probably any previous administration of America. We want to see the economy of China continue to grow and prosper. We want the economy of America to continue to grow and prosper. Our two economies are now some of the strongest economic engines in the world. We're leading the world in growth and we hope the other countries of the world will begin to catch up. But we have a strengthening relationship.

We also will always have challenges and issues that must be faced. Part of opening up markets around the world and expanding trading relationships is to make sure that as we provide market access for our respective trading partners that we are on a -- participating and competing on a level playing field. That has been one of the topics of this trip. We met today at the Ambassador's Roundtable on IPR protection. It's an issue of critical importance to the continuing development of our economic relationship. It's also of critical importance to creating the conditions for long-term economic growth in any economy, any place in the world.

And also this meeting is a part of the continuing dialogue to make sure that China continues to move toward honoring their commitments to their WTO accession. We look forward to American companies taking advantage of or certainly participating in China's recent opening of their wholesale and retail distribution systems.

We look forward to our direct-selling enterprises in the U.S. to continue to be able to expand their organizations and enterprises here in the U.S. The U.S. is very much a believer in competition. We think competition is very healthy but it must be fair competition. We all must play by the same rules. But competition does lead to -- it's been our experience that competition leads to innovation, innovation leads to higher productivity, and higher productivity will lead to economic growth and more jobs. And that's what we're all interested in, is creating not only more jobs or better jobs for the good people of China, as well as the good people of America.

We look forward to continuing to develop a high level of standards in our economic relationship and partnership, and it becoming a very strong and stable relationship. That will be in the best interest of both countries, as well as the entire world. That ends my brief opening remarks. Now I'd be more than happy to take any questions that you might have.

QUESTION: Thanks a lot. Dear Mr. Secretary, may I know what you talked about with Madam Wu Yi and other Chinese officials? Specifically, did you press the Stark-QQ automobile issue, the direct sales law, and also the Pfizer issue, and what are their responses? Thank you very much.

DONALD EVANS: Well, all three of those issues have been discussed and we will continue to discuss them. As I mentioned, I have not yet had my formal meeting with Vice Premier Madam Wu Yi, nor have I met with Premier Wen yet. But I mentioned all three of those topics today at the IPR Roundtable discussion. And I will bring those up again. I think what I would say to you is that we had a very successful JCCT meeting in America in April of 2004. China made some commitments. Vice Premier Madam Wu made some commitments here to what they would accomplish by year-end with respect to strengthening intellectual property enforcement and intellectual property protection.

I am pleased to say that those commitments, in terms of getting a process in place to toughen up on IPR protection in this country, are well underway under the leadership of the Vice Premier. Results are what matters. And at the end of the day we must see the trend of increasing piracy and counterfeiting and stealing be reversed. And it can happen. It happens -- it's happened in other countries around the world. It's happened in Hong Kong. I feel a strong commitment to do that.

It's no small task and no small challenge. We must stay very focused on it. We must stay very diligent. But I would say to you that having been in office for some four years, having participated in a number of joint meetings between Chinese leadership and American leadership on commerce and trade issues, I think we had one of the most successful meetings we've had this last spring. And we're building on that. We will continue to build on it and we'll continue to stay very focused on it. And what we told them is that these particular cases were very disturbing. And we hoped that they could be handled in an expeditious, transparent manner.

QUESTION: Secretary Evans, I understand that you met Minister Bo Xilai yesterday. And did you bring up these issues with him and what were his responses? And then secondly, I heard that he gave you an evaluation of 70 percent performance versus 30, similar to how Deng Xiaoping rated the previous Chairman Mao. So how do you react to that? Thank you.

DONALD EVANS: Well, I guess the way I react to it is, you know, I'd be very pleased if they reduced their intellectual property counterfeiting and piracy by 70 percent. If they were able to decrease that by 70 percent, I think that would be a very strong accomplishment. I did bring those two cases to his attention. We talked about them. He understands the serious nature of the issues, not only with respect to the companies involved, but this kind of signal that it will send back to other potential investors, not only in America but around the world. And to me they seemed to be pretty clear-cut cases, but we'll let the courts proceed and we'll just hope that they'll proceed in a very transparent, open way.

QUESTION: Since your last visit in China, I think the deficit of trade was rising again and there's some research saying that more jobs are lost in the United States because of that. So what's the way out? What did you discuss to do on the (unintelligible)?

DONALD EVANS: Well, the American economy happens to be very, very strong right now. We have more Americans working today than ever in the history of our country. We've been growing at about 4 percent. Inflation is in check. Interest rates are low. Homeownership is at a record high. I can just keep going on and on and on. And so I would say to you that when you look at an economy, you must look at the whole picture. And the whole picture for the American economy right now is very promising. It's very healthy. We have had very impressive job growth in our economy and I'm very optimistic that we will continue to be one of the real economic engines in the world for the foreseeable future.

When it comes to trade deficits, we focus more on making sure that we're all playing by the same rules, making sure that the countries, as they integrate into the global economy, are making the kinds of structural changes that they need to make to create an environment for long-term economic growth, making sure that they're honoring their obligations under their accession to the WTO. Making sure that they continue to move toward opening up their markets and making sure that they understand that America will not tolerate countries putting in place non-tariff kind of barriers that would discriminate against foreign competition in favor of domestic companies.

And so what we will stay focused on are the structural kinds of issues that we think are very important for other countries to have in place. Economic policies, fiscal policies, monetary policies, regulatory policies that mean they're creating the environment for long-term growth and meaning that they're creating an environment that leads to a level playing field for their trading partners. It is troubling when other countries subsidize companies in their own country. That's not part of a level playing field. And so we keep close eyes on how other countries may be subsidizing our potential competition. We keep a close eye on the free flow of capital. We keep a close eye on non-performing loans in other countries. And are non-performing loans being called or are they being waived? And companies being given special privileges. I mean, that's what it's important to stay focused on. And also staying focused on your own economy and how strong it is. In America the economy is very, very strong right now. And job creation is very healthy right now.

QUESTION: Thank you very much. Firstly, I'd like to know how do you comment on what China has done to improve the IPR protection? And secondly, in your long speech you said that U.S. focuses more on results rather than process. So in your opinion, if it is not process, what will lead to results? And in your eyes, what will be the results you'd like to see rather than process?

DONALD EVANS: Well, you know, let me be clear. You know, part of getting the results is getting the process right to begin with. And I commend the Vice Premier again for making commitments as to how they would strengthen the enforcement structure here in China, and the process by which she would go about doing that, and making commitments to get that accomplished in a relatively short order of time which was by the end of the year.

And so, you know, the process of getting the correct enforcement structure in place is important and hopefully will lead to the kind of results that we think are acceptable and, to begin with, the kind of result that is acceptable is to reverse the trend of dramatically growing counterfeiting and piracy and stealing that is taking place in markets and countries around the world, including right here in China. There's billions and billions of dollars that are being lost to American companies and other companies around the world because of piracy and counterfeiting.

And as important, we're just trying to provide constructive criticism as to what's in the best long-term interest of this economy, for the good people of this country. I mean, one of the things I've been most impressed with in this country over the last four years are the brilliant minds, the brilliant people that are here, the very good people that are here, going to a number of universities across China, talking to students that will no doubt be entrepreneurs and innovators and small business owners. And it's important that their copyrights be protected and their trademarks be protected and their patents be protected, because that's the only way to create the environment for long-term growth in a country.

So it's not just about America and protecting American patents and American trademarks and copyrights. That's part of it, but really the big picture for everybody is the cooperative spirit -- you know, we talk about win-win kind of cooperation. And this isn't a zero-sum game where somebody else has to lose so somebody else can win. This idea that somehow if you trade with one country, it could cost you jobs -- you have to look at the whole picture. And the whole picture of free and open trade means a much stronger global economy and means more jobs and higher paying jobs all around the world. So I think that is what we need to stay focused on.

QUESTION: I just wanted to check. The two disturbing examples you were talking about earlier, can you expand a little bit on what they were and, also, whether you expect to raise them with Wen Jiabao and Wu Yi later today.

DONALD EVANS: Well, look, I'm not going to get into details of the case. I really believe that belongs in the judicial system. And so I'm not going to get immersed and prejudge the process. But yes, I will raise those issues with the Vice Premier as well as the Premier. And we'll tell them what I have told others, that you know, we -- the way to create the environment for growth and opportunity and hope in economies is to create a friendly environment for investment. A friendly environment for capital. And a part of creating that friendly environment for capital and investment is the protection of people's property. It's fundamental to the success of any economic system in the world. The two fundamental principles on what a successful economy's will rest on will be knowledge and education, information, if you will, and protection of property rights.

And so if outside investors, as well as the entrepreneurs, innovators, small business owners of China feel like their property is not being protected and can be stolen, then, the incentives are not in the right place to be innovative, to be creative or to invest capital and build and grow and add prosperity.

QUESTION: Secretary Evans, except the intellectual property rights, what are the largest remaining problems for the Sino-U.S. trade relations?

DONALD EVANS: Well, let me say this to you: any time you have a relationship with anyone or any organization or any trading partner, there are always issues to be discussed. And I think it's important that you be mindful of and be focused on, also, the great progress. And I would consider it great progress that the trading between the United States and China continues to grow. It's considered progress that China happens to be the fastest growing export market of any country in the world for the U.S., although there's still a significant trade deficit. I understand that. But let's get the structure right so that there is a level playing field for everybody. And you mention intellectual property rights as being one of the issues of concern. It is. It's a big one. Also there is concern about the behavior of State-owned enterprises and whether or not, and in what form, they are being subsidized, which I would say would create unfair competition for other countries around the world.

I would say the fact that there are a number of enterprises that have non-performing loans that continue to be on the books of banks throughout the country, creates some degree of favoritism to those companies. What I say we need would be the free market spirit of sound economic policies, free flow of capital. We continue to talk about the importance of China moving to a flexible exchange rate. We happen to believe that economies around the world perform best when there's free trade, when there's a free flow of capital and free market forces determine exchange rates. And so those are some of the issues that are on the list that we will continue to talk about.

QUESTION: The Chinese Government has decided to levy an export tax on some kinds of textile products from this year. And could you give comment on that and other positive measures the Chinese government has taken?

DONALD EVANS: Well, the global textile industry has been going through a transition for a number of decades now. And that transition continues. The transition, I would say, took a new step, a new significant step January of this year when all quotas were lifted around the world. And companies around the world, including the United States, have been adjusting to the transition and the changes of economic forces in that industry. I think it was interesting that China decided to take a few steps to try and mitigate the transition for other companies around the world. Showed a degree of -- some degree of sensitivity to the transition that is taking place in the world.

But these quotas have been lifted. Much has already happened in the world in terms of companies adjusting to the transformation. I don't want to discount the steps. I just don't think the steps of putting a few cents' tax on exports or a few of the other steps are going to have any meaningful kind of impact to the ultimate structure of the textile industry in the world, because the economic forces are basically too powerful. Companies are wise to make decisions, plans, strategies on looking at the broad economic forces and where the industry is likely to be five and ten years from now, and plan accordingly. And they have been doing that.

QUESTION: Mr. Secretary, first of all, we thank you for what you have done in your term to promote the trade relationship between the two countries. But one pity is that the so-called Chinese market economy's status has not yet been achieved during your term. Do you foresee this could be done during your successor's term?

DONALD EVANS: Well, I don't know. That's really in the hands of the Chinese leadership and the Chinese Government. But what we have done is, again -- I think one of the important outcomes of the JCCT meeting in April 2005 was to have a working group, a structural reform working group that is already made so that the government clearly understands the requirement for being declared a market economy status. And that group has met and it will continue to meet and have dialogue. And I don't want there to be any confusion at all as to what is expected, what is required in order for the economy to be declared a market economy. I hope it will but it's really up to them.

UNIDENTIFIED SPEAKER: Last question.

QUESTION: Do you think President Bush will continue placing the Sino-U.S. relationship on the plateau above the reach of domestic politics?

DONALD EVANS: Absolutely. I mean, he certainly made it very, very clear to the world and to the American people that he is going to continue to make decisions based on principle and not politics. In the fall of 2004 there was a tremendous amount of pressure to take some steps that he felt would be harmful to the U.S.-Sino relationship. Maybe he could have enjoyed some political points or maybe could have had some political advantage by taking some of the measures that many were suggesting that he ought to pursue. He refused to do it. He refused to do it because he's a man of principle. He's a man of integrity. He's a man that has got a vision for working with the world to lead this world to a place of peace and freedom and prosperity and hope for everybody.

And you don't do that by playing politics with important global relationships. He puts the importance of the integrity and the trust and the confidence of the relationship between U.S. and China at the very highest level of his agenda and certainly above any political campaign. And I would say that in my view, that the U.S.-China relationship right now certainly is healthy and is good and is constructive and open and the level of trust is as high as any time I've seen in my lifetime. And we want to continue to make sure that happens. Thank you very much.