2014 ends on positive note for US, China(3)

Economic ties

Henry Levine, a senior adviser at the Washington-based consultancy Albright Stonebridge Group and a former deputy assistant secretary of commerce for Asia, said that the negative impact of China tends to be exaggerated in the US, especially on US-China economic and trade ties.

While imports from China hurt certain US companies and industries, Levine believes the positive impact is more profound. He cites raising the standard of living in the US thanks to inexpensive Chinese goods, and the ability for the US Federal Reserve to keep interest rates low because the goods from China keep down inflation pressure.

"There is a natural political process (in the US) to accentuate the negative and downplay the positive," he told a seminar at the Brookings on Dec 19.

A US-China Business Council survey found that 83 percent of responding members said their operations in China are profitable, a figure consistent with prior years. And 70 percent reported that their China operations were performing better or the same as their overall global operations. Almost three-quarters of US firms increased their revenues in China in 2013 while only 15 percent reported a decrease.

David Dollar, a senior fellow at Brookings, agreed. An expert on Chinese economy and US-China economic relations, he noted that a successful Bilateral Investment Treaty (BIT) will greatly help open the Chinese service industry market to US companies.

The Chinese government hopes that a BIT could help better protect the growing Chinese foreign direct investment in the US, which many Chinese see as subject to unfair and nontransparent review by the Committee on Foreign Investment in the United States (CFIUS), an inter-government agency in the US.

Senior Chinese officials have called for an early conclusion of the BIT negotiations, a move that is widely supported by the business communities in both China and the US.

China and the US are now each other's major trading partners with bilateral trade exceeding $520 billion in 2013. Two-way investment exceeded $100 billion, according to China's Ministry of Commerce.

Many, such as Dollar from Brookings, believe China's reform plan rolled out at the Third Plenum of the 18th Central Committee of the Communist Party of China a year ago will not only inject momentum to a sustainable development of the Chinese economy but benefit US companies with huge opportunities.

Dollar said China's reform agenda is not only good for the Chinese economy, but will also set a good foundation for US-China economic relations.

People to people ties

Li of Brookings emphasized that people should not overlook the significance of the reciprocal visa agreement reached during Obama's trip to Beijing when the two countries agreed to extend business and tourist visas to 10 years and student visa to five years.

"It has linked the relationship of the two countries at a higher level and its impact and value may not be able to be predicted at the moment," he said.

There are now about 10,000 people flying between China and the US each day. In the 2013/2014 academic year, 270,000 Chinese mainland students were studying in universities and colleges in the US, up 16.5 percent over the previous year, according to a November report by the Institute of International Education.

Meanwhile, the number of Chinese tourists coming to the US has exceeded 2 million a year. Their average spending of $7,200 dwarfed the $4,500 by the average foreign tourist, according to the US Travel Association.

For many Chinese middle class, the current US holiday season is time for them to come to the US to shop 'til they drop.

Shao Qiwei, director of China's National Tourism Bureau, estimated that there will be 60 million Chinese visiting the US in the coming six years.

US Commerce Secretary Penny Pritzker said in Chicago on Dec 17 that with the change in visa policy, 7.3 million Chinese visitors are expected to travel to the US by 2021, contributing nearly $8.5 billion per year to the US economy and supporting as many as 440,000 jobs.