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US-China Economic and Security Review Commission, "Hearing: The Evolving U.S.-China Trade & Investment Relationship," June 14, 2012

This hearing was conducted by the U.S.-China Economic and Security Review Commission on June 14, 2012. The U.S.-China Economic and Security Review Commission was created by the United States Congress in October 2000 to monitor, investigate, and submit to Congress an annual report on the national security implications of the bilateral trade and economic relationship between the United States and the People’s Republic of China.
June 14, 2012

Opening Statement of Commissioner Bill Reinsch

At today’s hearing, we will examine The Evolving U.S.-China Trade & Investment
Relationship. In the first panel, we will consider how the bilateral trade balance has changed over time, and we will examine the potential policy implications of promising new methodologies for measuring and understanding the trade balance. Value added measurements of trade are drawing considerable attention for their potential to provide more precise information about the nature of our bilateral trade relationships. In an era when production chains are increasingly global and driven by different countries’ relative technological progress, production costs, access to resources and markets, and trade policies, value added trade data could greatly refine our understanding of the interdependencies in the U.S.-China relationship, and improve our policy choices for addressing competitive challenges.

The challenges that U.S. companies face in their China ventures are, of course,
varied and continue to evolve in response to policy choices, enforcement measures, and a shifting global context. Our second panel will feature testimony from three U.S. businesses grappling with China trade challenges, and will provide an opportunity to gain a fuller understanding of the scope and adequacy of enforcement avenues and tools currently available to businesses here and in China.

Our final panel will broach increasingly relevant and complex questions surrounding inbound Chinese investment, including the U.S. regulatory regime’s capacity to address potential challenges and potential benefits, drawbacks and limitations of recently revived efforts to negotiate a bilateral investment treaty. Chinese cumulative investment in the U.S. in 2011 was approximately $15.9 billion. This was just a fraction of overall foreign investment in the U.S. last year, but China is a growing source of FDI. Chinese investment holds huge potential for creating American jobs so encouraging it makes sense, but it is also in the United States’ interest to fully understand and seek to address transparency and accountability issues that may arise with this investment, particularly investment by Chinese state-owned enterprises.

Download the full hearing transcript, including the presentations, here.