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Remarks at the American Chamber of Commerce-Beijing, Beijing, China

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Wednesday, July 15, 2009

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Secretary of Commerce Gary Locke
Remarks at the American Chamber of Commerce-Beijing
U.S.-China Business Council
Beijing, China

Thank you for having me here today.

It is great to be back in China for the first time since January, when I was here to celebrate the 30th anniversary of U.S.-China relations.

And it’s great to see so many familiar faces in the audience.

I have arrived in China this week, along with Energy Secretary Steven Chu, to advance what can be one of the most beneficial areas of cooperation in the history of U.S.-China relations: The development, production and deployment of clean energy and energy efficiency technologies.

Clean energy may be the greatest economic opportunity of the 21st century. As two of the world’s most productive and innovative economies, the United States and China are uniquely positioned to create the solar, wind, biofuel and other renewable technologies that the world wants and needs.

Widespread deployment of energy efficiency and clean energy technologies is also the only way our economies can continue to grow while preventing the catastrophic effects of climate change.

And as the two biggest emitters of carbon dioxide, the United States and China have a special responsibility to take action.

I am proud to say that President Obama has already done more to spur the development of energy efficient and renewable energy technologies than any president in the history of the United States. The stimulus package America deployed earlier this year contained $112 billion to advance green priorities, such as the development of a national smart grid, improved efficiency and advanced battery research.

The president’s 2010 budget proposes spending $15 billion every year for the next 10 years in renewable energy research and development. It also calls for the creation of a national cap and trade system for carbon emissions, which will not only mitigate climate change—but will, for the first time, provide a clear market signal to entrepreneurs across America and the world that clean energy can be profitable over the long term.

It’s been said that it’s unjust to ask China and other developing nations to drastically reduce their carbon emissions, when countries like the United States have spent 150 years using coal, oil and other dirty fuels to grow their economies.

That's an understandable point, but one of no concern to Mother Nature. She doesn’t discriminate between carbon that comes from the United States or China, Europe or India.

And she will ignore attempts to explain the sins of the future by pointing out sins others made in the past.

We all share the same atmosphere and if we do not act, we’ll all suffer from the coastal flooding, unpredictable weather, and agricultural damage that is undoubtedly in store if we don't change the way we use energy. As inhabitants of this planet, we will rise or fall together.

I think it’s important here to remember the remarkable contributions the Chinese have made to civilization over thousands of years.

There are countless inventions and innovations, including the abacus and the seismograph, silk and cast iron, the compass and the clock, gunpowder and fireworks, paper and the printing press, acupuncture and herbal medicine.

There is so much to be proud of, and I believe that pride will ultimately guide China’s decisions on climate change. Fifty years from now, it does not want the world community to lay blame for environmental catastrophe at its feet.

There’s still much to be done to avoid that fate, but China’s leaders have begun making important progress confronting the causes of climate change. They should rightly be lauded for taking actions that are commensurate with the energy challenges we face.

Almost 40 percent of China’s domestic economic stimulus is going towards green projects. China has already adopted the most aggressive energy efficiency program in the entire world, and they are on track to exceed many of their renewable energy adoption goals.

But it’s a sign of just how far we have to go, that China and the United States still get about three-quarters of their energy from fossil fuels.

As we take steps together to transition towards a clean energy future, we will also spur the world’s next great growth industry.

But meeting this challenge will require more than just concerted governmental action.

We need to empower U.S. and Chinese entrepreneurs and innovators to create and collaborate free from artificial trade barriers. U.S. companies have considerable advanced technology that could assist China in its clean energy transition—and I am committed to doing whatever it takes to make it easier for American companies to operate here.

In these tough economic times—and concerned as we are about the people we serve—it is tempting to seek refuge in trade and investment protectionism. But history has taught us that such measures are self-defeating and ultimately have a negative impact on long-term economic growth.

Especially in an area like clean energy—where the need for innovation is so great and where ideas are just as likely to be discovered in San Francisco as Shanghai—we can’t afford to close off markets, making it difficult for Chinese or American companies to compete.

Our leaders, President Obama and President Hu, together with leaders of other major economies of the world, reminded us of the need to maintain fair and open markets at the G-20 Summit in London.

And I’d like to briefly discuss a few areas where I think China and the United States can continue striving towards this goal for the mutual benefit of our people.

Because for all our areas of agreement, the United States and China’s trade relationship has to evolve. There are concerns and deep structural issues to be addressed.

Chief among them is a bilateral trade imbalance that simply can't be sustained. Growth predicated on ever increasing Chinese exports being consumed by debt-laden Americans provided years of prosperity—but it also sowed some of the seeds for our current economic problems.

Last year, the U.S. trade deficit with China reached almost $270 billion. In the months and years ahead, President Obama will seek to restore balance to that relationship.

By reforming the way we use energy, curbing looming fiscal deficits and dedicating billions of dollars to short-term stimulus and long-term investments, President Obama is laying the groundwork for more stable and widespread economic growth that will benefit American and Chinese citizens alike.

And the U.S. is encouraged by the reciprocal actions from our Chinese partners, such as the unprecedented stimulus package they implemented to jolt domestic demand.

More, however, can be done.

If China allowed for greater flexibility in its exchange rate and further opened up its domestic markets for imports and foreign direct investment, it would accelerate the world's return to growth. Foreign investment can create jobs for Chinese workers and it can do the same for Americans, which is why the American government welcomes Chinese direct investment in our country.

A freer trade environment should also be accompanied by a recommitment to enforcing international trade laws and agreements. The line between advancing important domestic priorities and protectionism can be blurry, and we should work to avoid crossing it. Unfairly subsidizing domestic companies or denying multinational companies access to local markets and government procurement contracts has the potential to be a serious threat to trade cooperation.

And with knowledge and services being such critical parts of both our economies—and as an absolutely essential component of clean energy innovation—we must also pay special attention to protecting intellectual property rights.

In the past few years, China has made tremendous strides in protecting the IP of American companies operating within its borders. In particular, I would point to China's marked increase in IP-related criminal prosecutions as evidence of the commitment of its leaders. However, American companies in fields as diverse as energy, technology, entertainment and pharmaceuticals still lose billions of dollars every year in China from IP theft. The U.S. Department of Commerce is eager to continue work with our Chinese counterparts to improve these IP enforcement efforts.

This is not just a concern for American companies.As Chinese firms move up the economic value chain in clean energy and energy efficiency development, as well as other areas like financial services, IT and biotech, they too will increasingly count on the protection of their ideas.

These are significant issues—and yet I am confident that the United States and China have enough mutual trust to honestly and forthrightly exchange our concerns.

Later this month, the Departments of the Treasury and State will co-chair the first meeting of the US China Strategic & Economic Dialogue, where we’ll seek to address various areas of immediate and long-term strategic interest.

In October, Ambassador Ron Kirk and I will be co-chairing the U.S.-China Joint Commission on Commerce and Trade. Later in this trip, I’ll be having my first meeting as secretary with my Chinese counterpart in the JCCT, Vice Premier Wang QiShan.

At last year’s meeting, we agreed on a range of issues, from China’s elimination of redundant testing requirements for medical devices, to progress on China’s joining the WTO Government Procurement Agreement, to further cooperation on intellectual property rights protection. This year, I am looking forward to building on these successes and continuing the momentum we've created on this trip to expand our clean energy cooperation.

When you are dealing with issues as complex and difficult as those that we are discussing today, you can’t expect that progress will be easy or immediate.

The United States and China will continue to have our differences. But I believe they can be bridged both by the common values that unite our people and a recognition of the obvious – that our fates are entwined.

When my grandfather came to the United States from China a century ago, he did not know the language or the culture.But he raised my father and my father raised me with a set of beliefs that would be immediately familiar to any child growing up in Boston or Beijing: Hard work, family, a sense of pride in where you come from, and a belief in the possibility of great nations to bend the arc of history.

Today, in 2009, the United States and China have the power and the obligation to alter history for the betterment of all the people on this planet. And they can do it by making clean energy the prime engine of economic growth in the 21st century. I'm looking forward to working with all of you to make our small contribution to this great cause.

Thank you.