China, US aim at ‘high-level’ treaty

As Chinese President Xi Jinping begins his first State visit to the US on Tuesday, hopes are high for another breakthrough in the bilateral investment treaty (BIT) negotiation, which analysts say will help both countries safeguard their overseas investments and boost the US manufacturing industry. Chinese Minister of Commerce Gao Hucheng wrote in the People's Daily Monday that the two countries are speeding up the BIT negotiations and have already started negotiation on the negative lists. "The two sides will work to reach a high-level treaty that will benefit both countries as soon as possible to bring benefits to their businesses and people. It will also be an exploration in the improvement of global investment rules," Gao wrote. "Xi's visit comes as Sino-US relations are relatively tense. Ties have been affected by issues concerning Chinese territory and cyber security, so it's more likely that the two countries will see concrete breakthroughs in economic cooperation and climate change, where there are more common interests," Li Wei, a senior research fellow at the National Academy of Development and Strategy under the Renmin University of China, told the Global Times. Revised offers Since 2008, the two countries have gone through 21 rounds of negotiations and have recently exchanged revised offers for the negative lists at the latest meeting. "In order to conclude the BIT negotiations successfully, the two sides will need to reach an agreement on a high standard treaty text and a Chinese negative list that is limited, narrow, and represents a substantial liberalization of the Chinese investment market," a spokeswoman of the US Trade Representative was quoted as saying by Reuters last week. There is no information available on the details of the negative lists, which analysts said would include banned investments in industries involving heavy pollution and national security. "China still expects the US to invest more in high-tech manufacturing, while the US hopes for a more open market in services and the financial sector in China," said Bai Ming, a research fellow at the Chinese Academy of International Trade and Economic Cooperation. Zhang Xiangchen, a deputy negotiation representative of the Ministry of Commerce, told news site yicai.com that both sides had made "important and substantial" changes to the lists. He said that the US mechanism of national security review is a key issue in the BIT negotiation and that China will ask the US to improve transparency in security reviews and simplify the procedures to reduce unnecessary burdens and obstacles for potential investors to the US. Boost global economy Analysts said that an investment treaty between China and the US will serve as a strong bilateral bond whose increased liberalization could help push forward reform in China and boost the economies of the US and the world. "We have noticed that the US is speeding up its economic growth model by expanding its exports and encouraging foreign investment … this will offer opportunities for both countries and the world to seek a new economic growth point," Gao wrote on People's Daily. The US needs a BIT with China to safeguard its overseas investments, Li said. "It will also break down China's multiple barriers to overseas investment, as the US finance and service industries have been seeking opportunities to invest in China." Tu Xinquan, an associate director with the China National Institute of the WTO, told the Global Times that China also needs more investment in the service industry to assist with economy restructuring, as the service sector lacks competition. Once China completes a BIT with the US, it will signal another high-level opening-up to the world, Tu added. "Chinese investors will also help boost the US manufacturing industry." "More importantly, as the world's largest investors, China and the US could help set examples to the world in future treaty negotiations, which will also show China's soft power," Li added.