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6 White Paper on the Business Environment in China
1.6 Update on U.S.-China Trade & Investment
President Xi Jinping’s USA State Visit and coveted BIT deal.
US-China Business Investment Treaty (BIT) A total of 94 CEOs signed a letter to Xi and President
TRecent Developments Obama, urging them to complete the BIT.
he U.S. and China have made progress in bilateral China has been showing signs of willingness to ease some
investment treaty-related talks connected with President
Xi Jinping’s visit to Washington. Senior U.S. officials said they market restrictions, according to The Hill. For instance, in June
were able to get China to shrink the list of sectors it is seeking 2015, Beijing permitted foreign investors to own 100 percent
to exclude from the BIT. Mr. Obama and Mr. Xi reaffirmed of e-commerce companies in China for the first time. In the
their commitment to the investment treaty as a “top econom- coming months, officials removed mandates that foreigners
ic priority,” the White House said in a statement. 8 buying real estate pay their capital in full before borrowing
money in China. Officials have also removed similar barriers in
The Wall Street Journal reports that China’s latest formal manufacturing. China’s Ministry of Commerce released a draft
offer in the marathon BIT negotiations—involving 21 rounds law that experts view as a positive overhaul of its current laws on
dating back to 2008—still contained more than 35 industry foreign investment. 12
sectors it wants kept off limits to foreigners, said Myron
Brilliant, international vice president of the U.S. Chamber of There are still serious obstacles ahead. Most importantly,
Commerce, which he added is considered an unacceptable both sides have yet to agree on sectors in which investments will
number for U.S. companies. 8 not be allowed. Even though Chinese and U.S. negotiators have
recently exchanged the so-called “negative lists” naming these
While the BIT has been quietly inching forward for nearly a off-limits industries, the two sides are far apart. During China’s
decade, since 2008, on the U.S. side, its progress has perceived to State Visit to the US, both Presidents Obama and Xi reiterated
have accelerated in recent months. If completed and approved that a “high-quality” BIT will be the most important item on
by Congress, the deal would roll back technical barriers and the bilateral economic agenda. 11
investment restrictions that are limiting access to lucrative
markets in both countries, similar to an investment chapter of The Hill points out the U.S.-China BIT has the potential
a free-trade deal. to be a win-win agreement to provide broad legal protections,
market-opening and dispute settlement mechanisms for foreign
Given China’s stature as the world’s second-largest econo- direct investment (FDI) flows in both directions. China already
my, the deal would have a massive impact on U.S. businesses, has over 100 BITs with other nations, so current and potential
but it has largely been overshadowed by the massive Trans-Pa- U.S. investors are presently at a disadvantage in competing for
cific Partnership (TPP). Still, companies, industry groups and investment opportunities in China. The Hill adds: “This is not
unions have been clamoring to make their mark on the deal. a one-way street; Chinese investors are already investing, and
looking to invest more, in the U.S., which we should welcome
Fortune 500 companies and corporate associations includ- to help increase investment, jobs and economic growth here at
ing the U.S. Chamber of Commerce, the National Association home.” 12
of Manufacturers and the Financial Services Forum, which rep-
resents the chief executives of the 18 largest financial institu- Manisha Singh, an international lawyer and former Deputy
tions operating in the United States, have reported lobbying on Assistant Secretary at the U.S. Department of State, makes
the BIT in disclosure forms. In meetings with negotiators, the a compelling argument in Forbes: “China is a part of the
corporate world has been communicating three main concerns: American economic equation and U.S. policy makers must find
being able to have market access in a country that often favors ways to acknowledge this fact. The BIT will not compensate for
its state-run enterprises, the ability to compete fairly with oth- violations of international trade laws or immediately remedy
ers in the country, and ensuring that China has a transparent the portion of the trade deficit attributable to China. It would,
regulatory process. however, create a new set of rules to give U.S. investors greater
ability to access a market with enormous potential and provide
Lobbying on the deal approached a crescendo during Presi- a certain set of remedies if they are not accorded fair treatment.
dent Xi Jinping’s stateside visit. He attended events that includ- In light of global economic and geopolitical realities as well
ed high-powered CEOs from various sectors of the economy, as our own best interest, our posture toward China should be
attempting to assuage distrust and promising progress on the one of thoughtful, strategic engagement rather than one of
76
1.6 Update on U.S.-China Trade & Investment
President Xi Jinping’s USA State Visit and coveted BIT deal.
US-China Business Investment Treaty (BIT) A total of 94 CEOs signed a letter to Xi and President
TRecent Developments Obama, urging them to complete the BIT.
he U.S. and China have made progress in bilateral China has been showing signs of willingness to ease some
investment treaty-related talks connected with President
Xi Jinping’s visit to Washington. Senior U.S. officials said they market restrictions, according to The Hill. For instance, in June
were able to get China to shrink the list of sectors it is seeking 2015, Beijing permitted foreign investors to own 100 percent
to exclude from the BIT. Mr. Obama and Mr. Xi reaffirmed of e-commerce companies in China for the first time. In the
their commitment to the investment treaty as a “top econom- coming months, officials removed mandates that foreigners
ic priority,” the White House said in a statement. 8 buying real estate pay their capital in full before borrowing
money in China. Officials have also removed similar barriers in
The Wall Street Journal reports that China’s latest formal manufacturing. China’s Ministry of Commerce released a draft
offer in the marathon BIT negotiations—involving 21 rounds law that experts view as a positive overhaul of its current laws on
dating back to 2008—still contained more than 35 industry foreign investment. 12
sectors it wants kept off limits to foreigners, said Myron
Brilliant, international vice president of the U.S. Chamber of There are still serious obstacles ahead. Most importantly,
Commerce, which he added is considered an unacceptable both sides have yet to agree on sectors in which investments will
number for U.S. companies. 8 not be allowed. Even though Chinese and U.S. negotiators have
recently exchanged the so-called “negative lists” naming these
While the BIT has been quietly inching forward for nearly a off-limits industries, the two sides are far apart. During China’s
decade, since 2008, on the U.S. side, its progress has perceived to State Visit to the US, both Presidents Obama and Xi reiterated
have accelerated in recent months. If completed and approved that a “high-quality” BIT will be the most important item on
by Congress, the deal would roll back technical barriers and the bilateral economic agenda. 11
investment restrictions that are limiting access to lucrative
markets in both countries, similar to an investment chapter of The Hill points out the U.S.-China BIT has the potential
a free-trade deal. to be a win-win agreement to provide broad legal protections,
market-opening and dispute settlement mechanisms for foreign
Given China’s stature as the world’s second-largest econo- direct investment (FDI) flows in both directions. China already
my, the deal would have a massive impact on U.S. businesses, has over 100 BITs with other nations, so current and potential
but it has largely been overshadowed by the massive Trans-Pa- U.S. investors are presently at a disadvantage in competing for
cific Partnership (TPP). Still, companies, industry groups and investment opportunities in China. The Hill adds: “This is not
unions have been clamoring to make their mark on the deal. a one-way street; Chinese investors are already investing, and
looking to invest more, in the U.S., which we should welcome
Fortune 500 companies and corporate associations includ- to help increase investment, jobs and economic growth here at
ing the U.S. Chamber of Commerce, the National Association home.” 12
of Manufacturers and the Financial Services Forum, which rep-
resents the chief executives of the 18 largest financial institu- Manisha Singh, an international lawyer and former Deputy
tions operating in the United States, have reported lobbying on Assistant Secretary at the U.S. Department of State, makes
the BIT in disclosure forms. In meetings with negotiators, the a compelling argument in Forbes: “China is a part of the
corporate world has been communicating three main concerns: American economic equation and U.S. policy makers must find
being able to have market access in a country that often favors ways to acknowledge this fact. The BIT will not compensate for
its state-run enterprises, the ability to compete fairly with oth- violations of international trade laws or immediately remedy
ers in the country, and ensuring that China has a transparent the portion of the trade deficit attributable to China. It would,
regulatory process. however, create a new set of rules to give U.S. investors greater
ability to access a market with enormous potential and provide
Lobbying on the deal approached a crescendo during Presi- a certain set of remedies if they are not accorded fair treatment.
dent Xi Jinping’s stateside visit. He attended events that includ- In light of global economic and geopolitical realities as well
ed high-powered CEOs from various sectors of the economy, as our own best interest, our posture toward China should be
attempting to assuage distrust and promising progress on the one of thoughtful, strategic engagement rather than one of
76
