U.S.-China Economic and Security Review Commission, "Hearing: U.S.-China Economic Challenges," February 21, 2014

Friday, February 21, 2014
Room 608, Dirksen Office Building
1st Street Southeast
Washington, DC 20002

Hearing Co-Chairs: Commissioners Michael R. Wessel and Daniel M. Slane

OPENING STATEMENT OF COMMISSIONER MICHAEL R. WESSEL

I want to thank our witnesses for being here today, and for the time they have put into their excellent written testimony, and for the time they will spend with us today. Each of their written statements will be submitted for the record and will be available online at the Commission’s website.

Today’s hearing addresses three important topics: What impact has the U.S.-China relationship had on U.S. jobs? How should we assess U.S. trade law enforcement efforts with China?  And, finally, what are the competitive challenges posed by Chinese state-owned enterprises and non-market economic forces?

Today’s three panels raise many of the issues at the core of the U.S.-China economic relationship. Recently, the Commerce Department released data on the annual trade deficit with China and, once again, the deficit reached a new annual high in 2013. While U.S. exports to China are up, these exports are swamped by a flood of Chinese imports into the U.S. market.   And, China is not just exporting toys and textiles. China now ships more advanced technology products to us then we send to them: last year, the U.S. bilateral deficit in these products reached almost $117 billion.

This hearing also comes at an important time as our nation’s trade agenda is more active than at any time in history. Negotiations for a Trans Pacific Partnership, a Transatlantic Trade and Investment Partnership, a Bilateral Investment Treaty with China, an International Services Agreement, an Environmental Goods Agreement and other negotiations are well underway.   The Administration is expected to try to start agreements with Latin America and Africa as well.

Today’s hearing also comes amid pervasive economic uncertainty.. The unemployment rate has been coming down but that’s partly because so many discouraged job seekers have given up looking. Many people are wondering what Washington is going to do, if anything. Certainly, some are hoping that Washington won’t act.

Trade plays a role in all of this. No one is saying that trade is the only factor. Certainly, technology, productivity, and other factors are important.

But, we hope to have a discussion about what the impact of trade with China has had on jobs here in the U.S. We also want to discuss what role trade enforcement may play in addressing some of the problems that have arisen and what’s working, and what isn’t, and what improvements, if any, can be made.

Finally, we will hear about the unique challenges posed by Chinese state-owned enterprises and the non-market economic forces from China.   This topic is an important one as Chinese SOEs continue to consolidate and grow in economic power.  They are becoming, year-by-year, more important players in the international economy. The non-market economic forces have other implications beyond Chinese SOEs as well that need to be discussed. On their own, these topics are important. But, as the Administration is reportedly negotiating a chapter in the TPP to create new rules and disciplines on SOEs, the rules that are set there will, presumably, be the template for how they intend to deal with China. What approach is in America’s interest?

I want to thank our staff for the work that goes into preparing for these hearings.

Panel I:  The Impact of the U.S.-China Relationship on U.S. Jobs
Dr. Robert Scott, Director of Trade and Manufacturing Policy Research, Economic Policy Institute
Dr. Oded Shenkar, Ford Motor Company Chair in Global Business Management, Fisher School of Business, Ohio State University
Dr. Peter K. Schott, Professor of Economics, Yale University

Panel II: Assessment of U.S. Trade Law Enforcement Effort with China
Mr. Dan DiMicco, Chairman Emeritus, Nucor Corporation
Ms. Elizabeth Drake, Partner, Stewart and Stewart
Dr. Philip I. Levy, Senior Fellow, The Chicago Council on Global Affairs

Panel III: Chinese State-Owned Enterprises and Non-Market Economics Competitive Challenges
Dr. Willy C. Shih, Robert and Jane Cizik Professor of Management Practice in Business Administration, Harvard Business School
Dr. Adam Hersh, Senior economist and China specialist, Center for American Progress
Mr. Joel Backaler, Director, Frontier Strategy Group