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Remarks at the Committee of 100 Common Ground Annual Conference, Pasadena, California

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AS PREPARED FOR DELIVERY
Friday, April 20, 2012
OFFICE OF PUBLIC AFFAIRS
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Commerce Secretary John Bryson
Remarks at the Committee of 100 Common Ground Annual Conference, Pasadena, California

Thank you, Chairman Ng, for your leadership and friendship. Thank you to the Committee of 100 for the invitation to help close out your conference. I heard that you had a wonderful gala last night. Mike Milken set the stage by discussing education, immigration, and health–all critical issues for both the U.S. and China. 

You also heard from LA’s top university leaders as well as local Congresswoman Judy Chu who is making such a difference here and in Washington. Today your lineup was equally impressive.  

As the top Chinese-American leaders across a number of industries and fields, you reflect the tapestry of contributions that 3.8 million Chinese-Americans make to the world.

And it’s clear that each of you plays a crucial role in building a strong bridge between the U.S. and China.

I want to congratulate the Committee on releasing the new public perceptions survey. I have not had a chance to fully review it. But I know that a large portion relates to our economic and commercial relationship. That’s what I’d like to discuss today.

It’s clear that the world’s two largest economies are becoming more intertwined each day. Your mission “to bring a Chinese-American perspective to issues concerning Asian Americans and U.S.-China relations” relates directly to that.

There can be little doubt that we must continue–with intensity–to build a mutually-beneficial and a balanced economic relationship between the U.S. and China.

If you look back, we have already come a long way.

As you know, this year marks the 40thanniversary of President Nixon’s historic trip to China. At that time, he rightly predicted that a bridge would be built between China and the U.S. But I think that even he would be amazed by just how far we have come. 

China has lifted hundreds of millions of its people out of poverty. China is now the second-largest economy in the world and America’s second-largest trading partner. Our bilateral trade topped $500 billion last year.

Consider this: Over the past three years, President Obama and President Hu have met ten times. Also, we are working together as members of the G-20 and APEC. And, we maintain two bilateral dialogues: the Joint Commission on Commerce and Trade, which I co-lead with Vice Premier Wang Qishan, and the Strategic and Economic Dialogue which I will join in less than two weeks from now in China with Secretaries Geithner and Clinton.

And, in February, Vice President Biden and I met with Vice President Xi during his visit to Washington and Los Angeles.

The focus throughout his trip was our economic and trade relations, and how we can move forward to mutual benefit in this global economy in which there is opportunity for us both to lead the way. 

Today, it’s clear that China and the U.S. have benefitted greatly from our growing economic relationship.

Now we must take further steps to unlock our full potential with balanced growth.

We face great challenges but even greater opportunities as we work to find this “common ground.”  

And the prosperity and well-being of people in China, America, and–in fact–around the world will be deeply affected by how well we cooperate and lead together.

I would now like to talk about some ways we can do just that.

First, it’s clear that American manufacturing will remain a key part of the U.S.-China relationship.

I lead the administration’s efforts across the federal government in manufacturing. The president himself has been driving home the importance of the U.S. manufacturing base. Seventy percent of America’s R&D and 90 percent of America’s patents are in manufacturing–so preserving and strengthening this sector is essential.

Already, we are seeing a comeback of sorts. After a decade in which we lost nearly six million manufacturing jobs, we’ve now added nearly half a million in the past 25 months. 

Importantly, these tend to be high-paying jobs with good benefits for middle-class, working families throughout America’s diverse communities.

We need to build on that momentum. That’s why the president has proposed a number of plans that support corporate tax reform, education and training, R&D, and more.

This is also good news for Chinese-Americans who lead or work at manufacturing companies like GE and Dell which are represented on this Committee. And it’s good for China, too. 

China should welcome American-made goods to address its growing needs, just as the U.S. is open to Chinese-made goods. And, of course, China’s growing middle class wants access to our consumer products and services more than ever before.

And that leads me to exports. 

U.S. goods exported to China have grown by almost 50 percent over the past two years. They topped $100 billion for the first time in 2011. 

The Commerce Department’s 120 commercial service officers in China have contributed to that growth. And I should note that is twice the number we have in any other country.

However, the goods trade deficit with China grew by about 30 percent. This imbalance means that we must continue to work harder to help U.S. exports reach China. Leveling the playing field is an important way to do that.

I’ll give one example of that. I often hear of U.S. businesses wanting to sell to China, but they have concerns surrounding their intellectual property–including trade secret protection and being forced to transfer their technology. As you know, U.S. competiveness is driven in large part by ideas and innovations that are protected by intellectual property. And China knows that it cannot become an innovation-driven economy without stronger respect for IP.

During last year’s Joint Commission on Commerce and Trade, I had intense discussions with Vice Premier Wang Qishan. We’re making progress in this area. For example, he is leading a high-level leadership structure to strengthen IP enforcement, provincial leaders will be measured based on IP enforcement in their regions, and China has accelerated the deadlines for provinces and municipal governments to use only legal software.

American businesses look forward intensely to even more commitments like this that are backed up with action.

On a broader level, I was pleased that during Vice President Xi’s visit, China made a general commitment to expand imports and promote more balanced trade. Already, we see the potential for greater U.S. entertainment services exports and enhanced cultural exchange as Disney brings an iconic American experience to Shanghai in the coming few years.

In addition, during the Xi visit, China agreed to open up its auto liability insurance market to foreign companies. That’s important because China’s auto market is the largest in the world. And, as I’m sure was mentioned in the previous panel, China will now allow more films and fairer compensation for movies distributed in China. That’s important because China had a 29 percent rise in box office earnings in 2011 alone.

If there is one thing that Chinese and American people have in common, it is that we love our movies!

All of these steps to balance our trade relationship are good for China, good for America, and good for the global economy.  

Let me turn now to direct investment. U.S. companies have substantial investments in China totaling over $60 billion. I’m sure that includes some of those represented here today.

These firms stand ready to invest even more–especially if China supports more openness and transparency in approving foreign investments.

The other side of that equation is equally important.

Overall foreign direct investment in the U.S. has been strong–with $228 billion in 2010, up sharply from 2009.

Building on that is one of my top priorities. So I’m thrilled to see more CEOs from around the world choosing to put their next factory here. This is due to our productivity, our IP protection, our universities, our R&D base, our deep supply chains and–of course–our talented workforce.

In particular, it’s encouraging to see more Chinese companies looking to invest here.

China’s investment in the U.S. to date is only around $6 billion–one-tenth of the U.S. investment in China. That’s relatively small compared to many other countries.

However, China is now becoming the fastest-growing source of investment into the U.S.

And with respect to that our message is clear: We welcome Chinese companies that see the benefits of choosing the U.S. when they build facilities and create new jobs.

Let me take you one step further into that. SelectUSA–an initiative strongly supported by President Obama and being carried out by the Commerce Department–is the first, coordinated effort by our government to encourage more foreign direct investment in the U.S.

As I mentioned earlier, we have 120 commercial service officers in China. In addition to their traditional role of promoting U.S. exports, they’ve now been trained to help China’s business leaders invest more in the U.S. They will serve as an information clearinghouse. They will help when companies face confusion, delays or obstacles–at federal as well as state and local levels. And they will help after those companies have invested.

Moving forward, the Commerce Department will provide more opportunities to make the person-to-person connections that help get these deals done–and I think it is likely that many of you are getting deals done right here at this conference.

On that note, I want to invite the business leaders here today to the First SelectUSA Investment Summit this September in Washington.   

Companies from around the world will meet with U.S. officials at all levels of government.

In all of these areas–manufacturing, exports and direct investment–our common theme is growth through balance. It’s no longer appropriate or sustainable to think of our bilateral relationship as one in which China simply produces and America simply consumes.

Instead, both of our governments must take steps to move our respective economies toward a more healthy balance of consumption, savings, investment, production and exports. In addition, as the largest economies in the World Trade Organization, no one has a greater stake in an open, rules-based global trading system than the U.S. and China.

We must each lead by example. That means that both countries must live up to our commitments in order to ensure a strong global economy.

So, we are watching the steps that China is taking in regard to its currency trading band. And as Secretary Geithner said last week, it is very important for us that China continue–and take further steps–to allow their exchange rate to rise against the dollar.

The administration is keenly aware that many members of Congress are increasingly outspoken–as recently as yesterday–on currency, as well as trade imbalance issues which I mentioned earlier.

Before I close, I would like to reference a speech that President Obama gave last year emphasizing that the U.S. is “a Pacific power.” He said, “the U.S. will play a larger and long-term role in shaping this region and its future by upholding core principles–in close partnership with our allies and friends.”

Already, the administration has enhanced America’s ties with Japan, Korea, Thailand and the Philippines. We’ve broadened our relationships with emerging powers like India, Indonesia, Vietnam and Singapore. And we’ve reengaged with Burma.

More broadly, we’ve become more active in the East Asia Summit and ASEAN, and we are moving forward with the Trans-Pacific Partnership–a high-caliber trade agreement.

In short, the administration is working around-the-clock to do everything possible to advance prosperity and security throughout the Asia Pacific. A cornerstone of that effort is a positive and cooperative relationship with China.

In closing, we face together both considerable challenges but also great potential in the future of the U.S.-China relationship. We cannot afford to stand still or be content with the progress we have made together.

Now more than ever, we must ensure a strong foundation for our relationship to grow and thrive. The next generation is counting on us.

And I am optimistic that indeed we can–especially through the strong support, guidance and leadership of the very accomplished members of this distinctive Committee.

In this, the Year of the Dragon, let’s recommit ourselves to bringing strength, prosperity, and good fortune to the people of both the U.S. and China.