OPINION EDITORIAL
Tuesday, January 18, 2011
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Secretary of Commerce Gary Locke
Opinion Editorial, AOL News
"Unlocking the Potential of U.S.-China Economic Cooperation"

We have to keep working to build a commercial environment in China that's friendly to global innovation and international competition, Commerce Secretary Gary Locke says. We are at a turning point in the U.S.-China economic partnership.

For years, China and the United States benefited tremendously from a trade dynamic characterized largely by one country producing and the other consuming, as evidenced by annual trade deficits that routinely ran well over $200 billion.

American consumers got an impressive array of low-cost goods. And in its transition into one of the world's top exporters, China was able to lift millions of its citizens into a fast-growing middle class.

But it's not sustainable. The debt-fueled consumption binge in developed countries such as the United States is over. And countries such as China are beginning to realize that there are limits and drawbacks to purely export-driven growth.

That's why we need a more equitable economic partnership -- a topic that will be central in conversations during Chinese President Hu Jintao's state visit this week to Washington, D.C.

This new partnership is within our reach, and steps toward it are already happening.

Witness Boeing's partnership with Air China and Petro China. They're researching a new generation of innovative aviation biofuels for the Chinese aviation market.

Or look at Duke Energy's collaboration with China's largest energy company, Huaneng, and the Chinese government's Thermal Power Research Institute, which has their scientists and researchers working together to develop cutting-edge solutions for cleaner-burning coal and carbon sequestration.

These are but a few of many examples of America's and China's best minds working together on breakthrough technologies that could open up hundreds of billions of dollars in new commercial opportunities in both China and the United States -- opportunities that could create millions of good, middle-class jobs in both countries.

There is, however, a sobering side to U.S.-China commercial relations: For every story like Duke Energy's or Boeing's there are stories of exasperation from American business leaders concerned about the commercial environment in China.

These concerns are shared by businesses around the world, and the most frequent complaints revolve around lax intellectual property protection, lack of predictability and openness in government decision-making, and a series of policies that unfairly discriminate against foreign companies operating in China.

The complaints are different, but the fundamental problem often boils down to the distance between the promises of China's government and its actions.

Look at intellectual property. Chinese leaders have condemned intellectual property theft in the strongest terms, and we've seen central government laws and regulations written or amended to reflect that sentiment.

But American and other foreign companies, in industries ranging from pharmaceuticals and biotechnology to entertainment, still lose billions of dollars from counterfeiting and IP theft in China every year. To cite just one example, nearly 80 percent of the software used on computers in China is counterfeit, according to the Business Software Alliance.

The United States understands that making progress on these issues can be difficult. When China has millions of people coming in from the countryside looking for work, it isn't necessarily an easy decision to close down a factory producing counterfeit goods, when that factory is providing badly needed jobs.

So these are real and significant challenges. For market reforms to continue in China, it will take constant vigilance -- not just from the United States, but from all countries and businesses around the world that benefit from rules-based trading. We'll also need vigilance from Chinese business and government leaders, who themselves have a strong stake in ensuring that China is friendly to global innovation and international competition.

In the long run, economies with poor intellectual property protections and inconsistent application of market access laws will lose out on generating great new ideas. And they'll lose out on the jobs that come with producing new products -- jobs critical to expanding middle classes.

On balance, the competitive playing field in China is fairer to foreign firms that it was when China first joined the World Trade Organization in 2001, and we commend China for that.

American exports to China were up 34 percent last year compared with 2009 and are expected to top $100 billion next year.

But there's still a long way to go.

That's why we've got to keep working to build a commercial environment in China that is friendly to global innovation and international competition -- because that's the only sure-fire way to ensure continued prosperity for our people.

Ultimately, all that the United States seeks is a level playing field for its companies, where the cost and quality of their products determines whether or not they win business.

Sponsored Links We can't tell exactly what that future will look like.

But we can be certain that it will be a better future if the Chinese and American governments pursue cooperation over confrontation in the economic sphere.

Cooperation that will put millions of our people to work.

Cooperation that will develop technologies to solve the most pressing environmental, economic and social challenges facing the world today.

This is the great opportunity before China and the United States. We just have to seize it.