Remarks
Robert D. Hormats
Under Secretary for Economic Growth, Energy, and the Environment
Washington, DC
September 21, 2012


As prepared

Thank you, Ken, for that kind introduction.

It was one year ago this month that I met with Brenda Foster, Robert Roche, and your team from the Shanghai American Chamber of Commerce here in Washington.

During that meeting, I heard for the first time of your ambitious plans to promote bilateral trade and investment connections between U.S. small- and medium-sized enterprises (SMEs) and their counterparts in China’s Yangtze River Delta.

So I’m very pleased to be here today for this inaugural SME Roundtable hosted by the Shanghai American Chamber of Commerce.

It’s fitting that the Shanghai AmCham would host this event.

As we have seen in recent years, the American Chambers of Commerce overseas are playing a greater and more critical role in developing business relationships.

And nowhere is this more true than in Shanghai where your organization is the largest and fastest growing AmCham in Asia.

Today, I want to focus on how your efforts and this inaugural SME Roundtable fit into three key objectives at the State Department:

  • Enhancing the U.S.-China bilateral relationship;

  • Promoting sub-national dialogue between U.S. states and Chinese provinces or municipalities like Shanghai; and

  • Providing jobs in the United States by facilitating U.S. exports and attracting Chinese investment, particularly by small- and medium-sized enterprises.



U.S.-China Bilateral Relations

The United States seeks to enhance bilateral engagement with China in all areas and build a positive, cooperative, and comprehensive relationship with China.

In the economic arena, we are endeavoring to increase both the quality and quantity of trade and investment between our two countries.

There is no doubt that two-way trade and investment has benefited both the United States and China enormously, and we both depend on it for our growth and prosperity.

As Secretary Clinton pointed out in Hong Kong last July, “economic progress depends on strong diplomatic ties” and “diplomatic progress depends on strong economic ties.”

And we continue to endeavor to build stronger economic ties with China.

Historically over the past 30 years, much of this work has focused on ensuring market access for U.S. firms in China.

In addition, we have prioritized the protection of intellectual property rights for American companies in China, as well as encouraging Chinese regulatory authorities to act consistently with international norms.

Our Embassies and Consulates in China, including the U.S. Consulate General in Shanghai, continue to focus on these issues.

We hope U.S. firms, including SMEs, will be able to benefit from a better trade and investment environment in the future.

At the same time, we also are focusing greater attention on increasing Chinese investment in the United States.

In Chinese parlance, this focus is a “win-win.”

Chinese investment here would help balance our economies, contribute to domestic jobs and growth in the United States, and support China’s more outward orientation.

It’s important to note that the United States is an open investment destination, and we welcome Chinese investment.

The United States welcomes foreign direct investment and provides foreign investors fair, equitable, and nondiscriminatory treatment, consistent with our long-standing open investment policy.

Both the United States and China can and should work harder to make clear that the United States is open to Chinese investment.

Sub-National Dialogue

And that brings me to my second point.

The most productive way to promote two-way trade and investment between the United States and China is by bringing together our state and provincial government officials, as well as local business representatives, as they are the best positioned to build these connections.

And that’s one of the reasons I believe the work of the Shanghai AmCham is so important.

Because you are in the best position – particularly through your new SME Center – both to strengthen collaboration between local governments in East China and the United States and to connect Chinese SMEs from the Yangtze River Delta region with counterparts in the United States and vice versa.

In doing so, your initiative will create new opportunities for both U.S. and Chinese companies.

Through the U.S.-China Investment Forum, our Governors Forums, and in other sub-national engagements, our states and provinces explore new ways to enhance cooperation, including in the area of business promotion.

The State Department will continue to attach great importance to promoting these sub-national exchanges.

By taking the lead on enhancing these exchanges, the Shanghai AmCham is at the forefront of this engagement.

And we want to support your efforts in this critically important area.


SMEs and Jobs Diplomacy

And it’s critically important because improving linkages between U.S. SMEs and Chinese SMEs will create more jobs in the United States.

According to the Department of Commerce – and you’ll hear from my friend and colleague Under Secretary Sanchez in a moment – U.S. SMEs (those companies with fewer than 500 employees) in 2010 accounted for more than 97 percent of all U.S. exporters.

And we’ve seen tremendous growth in exports by U.S. SMEs to China.

In 2010, more than 29,000 U.S. SMEs exported to China – more than nine times the number of small- and medium-sized firms who exported to China in 1992.

Ninety-two percent of all U.S. exporters to China in 2010 were SMEs.

In 1992, only 77 percent of U.S. exporters to China were SMEs.

So the trend is hard to ignore.

At the same time, as all of you understand very well, Chinese companies, including SMEs, are “going out” and investing abroad in a more comprehensive way than ever before.

China’s 12th Five Year Plan encourages this outbound investment.

And SMEs are so paramount in the Chinese leadership’s thinking that there also is a sub-plan, the “12th Five Year Plan for SME Growth.”

According to a speech by Ambassador Cheng Jingye in Vienna a couple of months ago, China “aims to work vigorously to create an environment that is good for SMEs’ development,” including by encouraging them to invest abroad.

So your initiative also taps into a Chinese government priority.

And the end result will be more jobs in the United States.

Conclusion

In closing, I just want to say that this SME Roundtable and the new SME Center are in strong parallel with our policy priorities.

So we want to do whatever we can to support you.

I know it will not be easy.

Deng Xiaoping is known for having referred to his economic reform program as “crossing the river by feeling the stones.”

As you cross into unchartered territory with this initiative, you are doing much the same.

But you understand, as Deng did, the important challenges we are facing, and that those challenges require pragmatic solutions.

So I congratulate you on getting to this point, which is several “stones” ahead of where you were at this point last year.

And I’m excited about your next step when you officially launch the SME Center in Shanghai in November.

And I’ll look forward to hearing more about your progress in the future.

Thank you very much.