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Pushing for earlier completion of their marathon talks on a Bilateral Investment Treaty (BIT), both China and the United States have placed high hopes on President Xi Jinping's Sept. 22-25state visit for a breakthrough.
But, as stumbling blocks in the way are not easy to remove, painstaking efforts from the world's first and second largest economies are demanded to conclude the BIT talks at an earlier date, so as to benefit both countries and the global economy.
A treaty of mutual benefit
The two countries confirmed the BIT negotiations as "a top priority" in their economic relationship, hoping to further boost economic cooperation and achieve a win-win result through investment liberalization.
Officials and experts from both sides believe that a high- standard BIT will not only benefit the top two economies in terms of boosting mutual investment and job opportunities, but also conduce to the global economy.
Nathan Sheets, undersecretary for international affairs at the U.S. Treasury, stressed the benefits that U.S. investors will harvest. "Such an agreement could be a game changer in terms of unlocking new opportunities and leveling the playing field for U.S. firms and investors," he said in April.
"A high-standard BIT, with strong provisions for market openings and equal treatment, would greatly benefit the commercial relationship," U.S.-China Business Council President John Frisbie said two months later.
Geoffrey Sant, special counsel of Dorsey & Whitney LLP, spoke out his similar opinion in a recent interview with Xinhua.
"A BIT would be extremely beneficial to both nations by more closely intertwining the two nations' economies," he said. "Chinese investors in the United States will benefit from U.S. growth, and U.S. investors in China will benefit from Chinese growth."
Such a treaty will help address a number of investment concerns of the United States and China, and investors from both countries will get better access to each other's markets, said Yukon Huang, former World Bank's country director for China and senior associate with the Asia Program of the Carnegie Endowment for International Peace.
Li Daokui, director of Tsinghua University's Center for China in the World Economy, has seen some other advantages the treaty will bring about to the two countries.
China and the United States are complementary in many areas, especially in capital, Li told Xinhua recently.
The United States needs large capital for infrastructure construction so as to prompt its economic recovery, while China, with relatively abundant funds, has already become a net exporter of capital, he said. Also, the Chinese government has been following a strategy of "going out" to encourage firms to invest overseas.
On a broader scale, the China-U.S.relationship cries out for a stabilizer to address sensitive and complicated issues emerging in the development of bilateral ties, the Chinese economist said, adding that the BIT will serve as such a stabilizer in the future.
High hopes from both sides
The BIT talks started in 2008 when China and the United States sought to increase mutual investment. But little progress had been made before they agreed in 2013 to conduct negotiations on the basis of pre-establishment national treatment with the negative list approach, which outlines sectors closed to foreign investment.
A new phase of talks opened in June, as the two sides made an "important milestone" exchange of initial offers of negative lists. Last month, negotiators discussed profoundly the pending second negative lists in Beijing at the 20th round of BIT talks.
Xi's state visit to the United States, the first since he took office in 2013, has been regarded widely as a golden opportunity to make major advancement in the negotiations, as the issue is expected to top the agenda of a planned meeting between Xi and his U.S. host, President Barack Obama.
Ahead of the summit, government officials and scholars, among others, from both countries expressed optimism about a positive result in the BIT talks.
Chinese Vice Finance Minister Zhu Guangyao said in June that China hopes to conclude the negotiations under the Obama administration, which will end in January 2017.
Zhu voiced the hope that the second negative list offers will produce substantial improvement so that the two heads of state could confirm "major progress" at their summit and give further clear instructions to both negotiating teams to move on.
U.S. Treasury Secretary Jacob Lew believed that the summit could inject new momentum to the BIT talks. "I think the fact that there's a leaders' meeting happening will focus all of the efforts to make progress for that," he said earlier.
U.S.-China Business Council President John Frisbie has urged both governments to "double their efforts to advance the negotiations" on the treaty as much as possible before Xi's visit.
David Denoon, New York University professor of Politics & Economics and director of NYU Center on U.S.-China Relations, echoed Frisbie in a recent interview with Xinhua.
"The two of them (Xi and Obama) can cooperate together to reach some agreements here. Also, I think the bilateral investment treaty should move as far as possible," he said.
It would be "a very healthy thing" if the two leaders could show some real progress towards reaching the treaty, said Fred Bergsten, a senior fellow and director emeritus at the Washington-based Peterson Institute for International Economics (PIIE).
"President Xi's visit is an important step, maybe a final one, to push ahead with the BIT talks, as both leaders have strong willingness to achieve a breakthrough," said Li Daokui, director of Tsinghua University's Center for China in the World Economy.
The Chinese expert predicted that Obama "will make a big issue on international affairs, including the BIT," as the end of "his presidential term" is approaching.
Joint efforts to crack nuts
Though both sides share a strong aspiration for a treaty to facilitate and boost bilateral investment, the BIT negotiations have by no means advanced as smoothly as expected given complicated situations.
Further unremitting efforts from both countries are called for to crack the hardest nuts -- to hammer out shorter and better negative lists from both sides, among other difficulties.
Denoon said "there are many areas on the negative list in China and many areas on the negative list in this country," adding "how to get a good trade among those is not easy to work on."
The negative list approach, generally viewed as more liberal to foreign investment, means that all sectors are open to foreign investment except those listed, while the positive list approach, adopted by China for many years, means that only listed sectors are accessible to foreign investment.
Zhang Xiangchen, Chinese deputy international trade representative and assistant minister of commerce, told reporters in June that "the negative list issue is more difficult for China," as it "represents a new challenge" and will "fundamentally change the foreign investment administration regime in China."
To produce the negative list and speed up the process of the negotiations, China has done tremendous work.An inter-ministerial mechanism in the State Council have been established, and "tens of thousands of laws, regulations and rules" governing foreign investment with the positive list approach have been reviewed, according to the official.
For the United States, aside from an improved negative list, its investment environment for Chinese enterprises calls for urgent improvement.
Many Chinese companies have been put to the Committee on Foreign Investment in the United States (CFIUS), an inter-agency organization tasked to review foreign investors' acquisition activities in the country, for national security reasons.
The number of Chinese companies subject to such reviews is disproportionately high considering China's relatively small investment scale in the United States.
As a result, Chinese firms are facing rising uncertainties and restraints when investing in the U.S. soil.
Jeffery Schott, senior fellow at the PIIE, said there is a need to improve the transparency of the CFIUS. "What the BIT can do is to increase the transparency of the CFIUS procedure to ensure that it is a narrowed focus."
China hopes that the U.S. side could treat Chinese enterprises equally, remove its discriminating practices, and drop the wrong hypothesis that all Chinese investments have a governmental background with untold political and military motives, Li said.
