Excerpts from remarks by Robert Nichols, Chairman, Engage China Coalition & President, Financial Services Forum BEIJING — “I was very pleased, but not surprised, to note comments on the eve of his trip to the United States, by His Excellency Hu Jintao who stated: “The strategic significance and global impact of US-China relations have been on the rise.” And “we both stand to gain from a sound US-China relationship, and lose from confrontation. ” Later, during a joint press conference with President Obama, His Excellency stated we need “to increase communication and coordination.” I wholeheartedly agree with President Hu on all counts and have been underscoring and highlighting his comments throughout the week. The economic relationship between the United States and China provides tremendous benefits to both our nations, and the global economy. Indeed, how this critical relationship is managed will determine the pace and nature of global economic growth in the 21st century. The opportunities created by the global economy have been fundamental to China’s ascent, and they remain vital to China’s ability to continue to grow. China needs the United States, and the United States needs China. Both nations and their people benefit substantially from our expanding economic relationship. We have a great deal invested in each other’s success, and thus, we have a great deal invested in each nation’s ability to address its respective challenges. China faces a set of challenges as it transitions toward a more open, market oriented economy. Meanwhile, our nation is facing an array of challenges, too, and I will address those later. Our coalition’s chief priority in our economic relationship with China – seeking a more open financial sector — is one that serves China’s fundamental interests. We applaud China’s goal of reducing reliance on export led growth and encouraging a shift to domestic consumption and investment. The Chinese leadership recognizes that China’s economy is now too large relative to the world economy for it to continue to rely on foreign demand to grow. And the government has adopted a comprehensive program of reforms to rebalance the economy and shift growth to domestic demand. In our view, achieving this important goal requires a world-class financial sector — hence our emphasis on reform and modernization of China’s financial sector and capital markets. Now, I will be the first to acknowledge that China’s reform offers tremendous economic opportunity. As President Hu and his government refocuses the Chinese economy on expanding domestic demand, this creates export opportunities for US business, which ultimately translates into American jobs. But financial reform is also essential to China’s goal of transitioning to a more services-based, consumer-driven economy. Small- and medium-sized businesses have financial product and service needs quite different from large enterprises. Cultivation of a services-based economy, therefore, requires a financial sector able to meet the needs of new services businesses. Similarly, activating the Chinese consumer requires products and services that facilitate savings, investment, the mitigation of risk (insurance), retirement planning, and consumption. The fastest way for China to acquire the financial system it needs to support, facilitate, and fuel a successful transition to a domestically-driven economy focused on services and the consumer is to import it — that is, open its sector to greater participation by foreign financial firms that will bring world-class experience and knowledge with regard to products and services, capitalization, risk management, internal controls, and corporate governance……….. The recent financial crisis and the global economic downturn have only further highlighted the degree to which the U.S. and Chinese economies are interconnected. As the world’s first and second largest economies, the implications of the U.S.-China relationship extend beyond the borders of both countries and will play a large and critical role in the global economic recovery. While current circumstances surrounding the crisis could complicate the relationship, we believe that they also offer a unique opportunity for the U.S. and China to build a more balanced, sustainable, and mutually beneficial relationship. As financial reform and modernization discussions continue within the United States, similar progress within China will lead to more integrated financial systems that will benefit both economies. Thank you very much for inviting me to share these perspectives.”
Engage China Chairman delivers speech in Beijing, China on ways to build upon the critical U.S.-China economic partnership
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