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Remarks at the Conclusion of the Strategic and Economic Dialogue With China

Hillary Rodham Clinton
Secretary of State
Secretary of Treasury Timothy Geithner
Sidney R. Yates Auditorium, Department of the Interior
Washington, DC
May 10, 2011

MR. TONER: First question goes to Matt Pennington of the Associated Press.

QUESTION: Secretary Clinton, do you think the events of the recent months in the Middle East should hold a lesson for China that eventually popular will, will challenge and bring down authoritarian governments? And did you discuss – in either your public or private discussions, did you discuss these issues with your Chinese counterparts, and how did they respond?

SECRETARY CLINTON: First, let me say that we did discuss the events occurring in the Middle East and North Africa. We exchanged impressions and views about how individual nations as well as the region is moving in the pressures for transition, for changes, for political and economic reform. Every nation and every region is different. I think it is very difficult to draw any overall conclusions. In my discussions with State Councilor Dai, I pointed out that, starting in 2002, there were a series of reports done by Arab experts about the development of that region and how it had not kept up with the rest of the world, particularly Asia.

So there was a lot of exchange of ideas, but I don’t think that you can draw any specific conclusions other than to say that the United States supports the aspirations that the people in the Middle East and North Africa have expressed for more freedom, for more opportunity, for a better future for themselves and their families, and we will continue to support the people of the region as they try to realize those aspirations during this transition period.

MR. TONER: Our second question goes to Wei Ran of Xinhua News.

QUESTION: Secretary Clinton, I appreciate for giving me this opportunity. For the Chinese side, its government has always stated that it is sticking to a policy and it will continue to stick to a policy of a peaceful development. And as we all know, that the real purpose of this dialogue, or the purpose of any dialogue, is to enhance mutual understanding and mutual trust. So when this round of dialogue concluded today, could we say that the U.S. side now have a better understanding and better recognition of China’s strategic intent? Thank you.

SECRETARY CLINTON: Thank you for the question. And I agree with you that the purpose of any dialogue is to enhance mutual understanding and mutual trust in the other. I think we’ve made quite a bit of progress in the last three dialogues. This is a work in progress. I think that for both of our nations, with such different histories, cultures, experiences, development models, political systems, it is important that we continue intensive consultations.

And as both of us have said, we do not expect to find agreement on every issue. We know that we approach some of these sensitive matters from a very different perspective than our Chinese counterparts. But I do think it is fair to say – and it’s something that Secretary Geithner said as well in his opening statement – I do think we have a deeper understanding of the viewpoint of the other. I think we have had such an open dialogue on every issue, that we have built trust because we’re not keeping any issue under the table or off the agenda. We are talking about the hard issues, and we’re developing these habits of cooperation across our government.

In addition, this is not just a task for governments. We are placing great emphasis on our people-to-people, our business-to-business contacts and experiences. I was delighted at the lunch that Secretary Geithner and I hosted for a group of American and Chinese business leaders, that they had some of the same comments, even some of the same complaints about their own and other government interference with being able to maximize their business opportunities. So I do think we are reaching a much better understanding, and I think that’s one of the principal purposes of the dialogues.

MR. TONER: Our third question goes to Howard Schneider of Washington Post. Howard.

QUESTION: Thanks. Secretary Geithner, just – I’m curious. A lot of this stuff on the economic issue seems to be kind of pressing industry by industry, market by market, around the indigenous innovation issue. And I’m wondering, are you challenging with them the sort of core logic of indigenous innovation? And if so, what’s their response on that? Are you satisfied or do you just sort of battle it out policy by policy?

SECRETARY GEITHNER: We generally try not to do it sector by sector or business by citizens. I think our approach has been to try to look at the basic design of policy across the Chinese economy. And where we see the potential risk that policy may have the effect of putting foreign innovators, foreign companies, U.S. companies, at a disadvantage, then we encourage China to change those policies and to try to pursue their objective of encouraging the development of Chinese technologies through other means. And I think our general approach on these things is to try to come at the policy at the highest level, and we think that has the most effect.

I think if you look at China and the United States, we have still very, very different economic systems; very, very different traditions of approaching economic policy. And China does still have a largely state-dominated economy, and the government plays a much more active role in the direction of the economy. The financial system, of course, is still fundamentally directed by the state. And China is at the early stages, really, even with all the reforms of the last 30 years, of making that transition to an economy where the best technology wins, where the market and competition is the driving force in allocating capital.

But they’re changing, and I think they recognize that if China’s going to be any stronger in the future, they have to increase the role for the markets, strengthen the incentives for innovation in China, and allow for a more neutral competition. And I think that’s a fundamentally healthy recognition and, as I said in my opening remarks, I think you’re seeing China move in that direction. We think the direction of policy is very promising, and we’ve very confident we’re going to see substantial ongoing improvement in the opportunities that American companies have in the Chinese market, both American companies operating in China and companies that are creating and building things in the United States.

MR. TONER: And our last question is to Li Guanyun of The 21st Century Business Herald.

QUESTION: I have a question for Secretary Geithner. Minister Chen emphasized that the United States should trade Chinese investment into United States much equally. And this afternoon, you have had a dinner with some Chinese entrepreneurs, and I know that some of them is considering to investment – investing in United States. So I mean, as this round of dialogue which United States try to trade more equally to the Chinese investment, and how do you communicate with Chinese investors if there is a (inaudible)?

SECRETARY GEITHNER: Very good question, and it was an important part of our conversations these last two days, not just at lunch. So let me just make it clear. We welcome Chinese investment in the United States, and I am very confident that if you think – if you look over the next several years, you’re going to see Chinese investment in the United States continue to expand very, very rapidly. That will be good for the United States, good for China. Of course, that’s driven by the desire of Chinese companies to have more access to U.S. technology and to try to expand their opportunities in this market, and again, we welcome that. We have an open, nondiscriminatory regime with respect to investment from outside the United States. We treat Chinese companies, Chinese investment like we treat investment from any other country, and we’re going to continue to make sure we preserve that open investment regime, because it’s very important to the basic strengths and dynamism of the United States.

Now, to be fair, we also discussed China’s investment regime, the policies China has in place to screen and limit foreign investment in the United States. And of course, although we recognize China’s interest in expanding opportunities in the U.S. market, it’s worth recognizing that China’s own investment regime is a much more restrictive regime with a much more careful management and set of limitations on the ability of foreign firms to invest and purchase stakes in Chinese companies, but that’s changing, too. And again, I think it’s in China’s interest that change over time, and I expect you’re going to see us continue to look for concrete areas where we can reassure investors in both countries that they’re going to face more opportunities on the investment side both in China and the United States.

MR. TONER: Thank you. That is, unfortunately, all the time we have this afternoon, but we appreciate your participation. Thank you.

PRN: 2011/730

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