Ambassador Baucus Speech to Business Community

June 25, 2014 Beijing China

Thank you Greg.  Thank you so much for those warm remarks.

I want to just tell you how pleased I am to be here.  This is such a wonderful opportunity to do what all of us want to do, that is help us make this world an even better place than it already is.  We’re very lucky.  We in America are lucky to be Americans; Chinese folks are lucky to be Chinese.  It’s really up to us to remember how lucky we are and to use that as a foundation, a basis to move forward.

Part of that in a small way is to thank all of you who have invested, are part of our 4th of July celebration.  Thank you all who are participating.  Thank you very much.  It’s going to be a big event.  Actually we’re going to celebrate, as you know, July 2nd.  Thank you, all your companies who are participating.

At the outset too I want to just tell you how gratified I am to have such a wonderful staff at the embassy.  Before I came over here I was greeted by people who work at the State Department, various other agencies, and they said now Max, when you go over to China you’re going to find that our best people are over in China.  And guess what?  I’ve found that to be true.  We have a great staff, a great team.  I see a lot of them here today.  And let’s just give them a big round of applause.  They do such a great job.

Also I’d very much like to thank you, Greg, Mark, John, Matt for pulling this altogether.  I’m especially pleased that the USCBC President John Frisbee is in town from Washington to help us here today.

Talking to my friends in the business community is one of the greatest pleasures of my job as Ambassador.  Thank you for all that you do on behalf of American business and to deepen U.S.-China relations.

When I decided last year not to seek another term in the United States Senate, I was ready for a new chapter in my life.  I’d been in the Senate for a good number of years.  I wanted to do something new, different, take a deep dive into some new chapter that would be fulfilling, rewarding.

I did not know exactly what I wanted to do, but I did not want to stay in the Senate.  Joining the executive branch, however, was not on my short list.  But when President Obama asked me to serve as Ambassador to China I jumped at the chance.  This is such an exciting and important time to be in China and to work on U.S.-China relations.

I loved my time in the United States Senate. I feel extremely lucky to have been able to represent the State of Montana in the United States Senate.  But I like this job even more.

As many of you know, I’ve been focused on China and especially on trade with China for a long time.  When I was in the Senate I strongly supported permanent normal trade relations with China and then later China’s accession to WTO.  That wasn’t very popular back then, especially with my friends in the Democratic Party.

People said that we should hold China at arm’s length.  They were worried about labor standards, PLA issues, environmental standards, and China’s record on human rights.  I believed then, as I do now, that turning away from China and refusing to engage would do nothing to alleviate those concerns.  And while China’s rise presented certain challenges, it also held out tremendous promise.

I knew that bringing China into the WTO would benefit the United States, benefit China, and benefit the world, and it has.

In the 13 years since China joined the WTO much has changed.  Our bilateral trade is about five times what it was then, over $600 billion last year.  China has grown to be the second largest economy in the world, and the world’s largest trading nation.  Indeed, trade and investment have come to be the foundation, the ballast of the U.S.-China relationship, providing great stability.

Obviously both countries benefit from our trading relationship.  I just think that the work we started back then with WTO remain unfinished.  We still have many challenges that urgently need to be addressed.  I believed then and I believe now that working with China to achieve its goals will help us to achieve our goals.  Today I want to talk a little about that process and what I hope to accomplish while I’m here.

China is again at a critical juncture in its development.  China’s leaders have expressed clearly that this country has no choice but to continue down the road of economic reform and opening.  China’s export and investment-led growth model is experiencing diminishing returns and China’s exploring how to boost domestic consumption along with many other requirements.

Last year’s Third Plenum laid out a blueprint for comprehensive reform of the Chinese economy and President Xi has called for markets to play a decisive role in China’s economy.  I believe that’s exactly what China needs.

Even as China has experienced tremendous growth and development over the last 20 years, new challenges have emerged.  Building a modern, energy efficient, innovative economy that could deliver equitable and sustainable growth requires a new round of broad-based reform of the sort that China undertook to join the WTO.

I believe China now faces a new WTO moment.  Now, as then, the United States and other countries have a role to play in that process.  When I was working with Premier Zhu Rongji on China’s WTO accession he once told me that he needed me to push from the outside so that he could push from the inside.

Times have changed and I don’t believe anyone could push hard enough to make China do something that is not in its interests.  But I clearly recognize the important role that the United States and other countries can play in helping China to implement reforms that lead to sustainable and balanced growth.

As other economies have moved toward greater integration and openness, China wants its economy to continue evolving or risk being left behind.  This means securing an agreement to expand the Information Technology Agreement and joining the Government Procurement Agreement.

I believe that a U.S.-China Bilateral Investment Treaty, commonly known as the BIT, today could do for China’s investment regime what the WTO accession did 15 years ago.  Back then it was trade.  Now the BIT can help open up China’s trade regime, open up its markets especially in the service industries, it will help China rebalance its economy in a more sustainable direction and create better jobs for its growing number of college graduates.

While we still have a lot of work to do toward concluding a BIT, helping to move it forward will be a top priority of mine.  I’m going to work very hard to help make this Bilateral Investment Treaty successful.

Our interests also align closely on the environment.  Not only does China want to open up, it wants to clean up.  Let me tell you a story.

Shortly after I arrived here First Lady Michele Obama visited Beijing and she came by the embassy one day and met with some of the kids in our community.  She asked them how they liked living in China.  One little boy, a bright kid named Max, just like me, [laughter] this one little boy raised his hand and said, “Mrs. Obama, I love it here.  I love China.  I love living in Beijing.  There’s only one thing I don’t like about it, and that’s the air.  The air is really dirty here.”

You obviously don’t have to look very far, today’s weather is not the best, to see that Max has a point.  The United States also faced a crisis in air pollution, soil pollution and water pollution in our recent past.  I’ve worked on many of those issues.

The Cuyahoga River in the State of Ohio was so polluted 50 years ago that it actually caught on fire.  Toxic waste sites dotted the country.  The Potomac River stank.  Confronting our environmental problems wasn’t easy.  People said the economic costs of tough policies would be too high.  But the economic growth did not stop in the U.S., in fact America’s economy grew strongly in the decades after we passed the Clean Air Act and the Clean Water Act.

We only began to make progress after American citizens said we should change, and we did. Now Chinese citizens are demanding a cleaner environment themselves, especially through social media.  It appears that China’s leaders are also starting to listen.  A stronger rule of law and a more empowered civil society would allow China to address pollution more effectively.

The United States and China are already working together to try to help China reduce its emissions.  The United States has experience in this area and can help China learn what works and what doesn’t.  And our companies can make important contributions, working with Chinese partners to bring in the goods and services it needs to make this transition.  We’re now working with China on a Green Goods Agreement in the WTO to help facilitate trade in these products.

I want to see a clean China, a beautiful China, a China that young people like Max want to see, and I promise you that working with China to achieve that goal will remain a top priority of mine during my tenure.

Climate change has emerged as one of the focal points in the U.S.-China relationship.  As the world’s two largest economies, it is unsurprising that we are also the world’s largest energy users and carbon emitters, together responsible for over 40 percent of global CO2 emissions.

The effects of climate change are growing more conspicuous every day.  Floods, forest fires, ocean levels rising, deserts expanding.  This problem is so big and so dire that a solution is not possible without close United States-China cooperation.

We find ourselves at a critical juncture where the choices we make today will decide the kind of world we live in tomorrow.  Our governments recognize this urgency.  Last year President Obama and President Xi agreed to work together with other countries to phase down the production and consumption of hydroflourocarbons.  This small step will have a big impact on our climate, benefiting not only our two countries, but the entire planet.

President Obama recently announced a plan to decrease emissions from U.S. power plants 30 percent by the year 2030.  I now urge China to follow suit and take similar bold steps to reduce their carbon emissions.

Climate change is likely the single biggest threat to our continued prosperity.  The problem is not going to solve itself.  It requires leadership from both countries.  I will do all I can to help make that happen.

Successful cooperation on climate change and other pressing concerns has an important byproduct.  It helps our two countries build trust and better manage areas where we don’t agree, or where our interests are not so closely aligned.  It can serve as a road map for the long term success of the U.S.-China relationship.

Our Presidents’ unprecedented meeting at Sunnylands, California, last summer was an important step in this process.  They spent a lot of time getting to know each other, listening to each other’s concerns.  The meeting helped our Presidents increase understanding and trust, and to candidly discuss difficult issues.

Ensuring that our two countries understand each other is a big part of our engagement with China, and maximizing cooperation with China is a key element of President Obama’s rebalance to the Asia Pacific.

Our Presidents have agreed to work toward a new model of relations.  Although we have some differences in our understanding of that phrase, both countries recognize that nothing in the U.S.-China relationship is preordained.  Conflict between a rising power and an established power is not inevitable.  It’s up to us.

We both agree that stability in the Asia Pacific is the key to 21st Century prosperity, and stability in this region depends in large part on constructive engagement between the U.S. and China.

I will work with China to deepen our engagement on the critical international security challenges like North Korea and Iran, just to name a few, that threaten regional and global stability.

Let me say this as plainly as I can.  The United States welcomes China’s rise.  We welcome it.

A strong, stable, prosperous China that is fully invested in the international system is good for the United States, good for the region, and good for the world.  I believed this 15 years ago when I was working with Zhu Rongji on WTO accession, and I believe it even more strongly now.

I will work with China to deepen our engagement on critical international security challenges like North Korea and Iran, and I will continue to work as hard as I can to make sure the relationship works.

I’ve heard some Chinese friends say the United States is trying to restrict China’s rise, to contain China.  I find that hard to understand.  It is so simply untrue.

U.S. leaders since 1972 have demonstrated through word and deed that we welcome a successful China and want to build the most cooperative relationship possible.  We’ve also emphasized that we want China to support and participate fully in the international rules-based order from which China, and all of us, have benefited so much.

This does not mean we will agree on everything.  The key is to make sure that we manage our differences effectively and constructively, whether they are related to maritime issues or human rights.

Let me give you an example. In the past year China has arrested several moderate voices in China who had peacefully advocated for such basic things as good governance and the rights of ethnic minorities and the rule of law.

We strong believe that individual advocates play an important role in developing civil society.  Protecting basic rights such as freedom of expression enhances social stability and human dignity and it will strengthen the foundation upon which our bilateral relationship is built.

We also have strong disagreements over permissible behavior in the cyber realm.  Cyber-enabled theft of trade secrets by state actors in China has emerged as a major threat to our economic and thus national security.  Besides being criminal in nature, this behavior runs counter to China’s WTO commitments.

We won’t sit idly by when a crime is committed in the real world, so why should we when it happens in cyberspace?  We’ll continue to use diplomatic and legal means to make clear that this type of behavior must stop.

Despite our differences we have no choice but to keep talking, to work our way through these tough challenges.  It’s at moments like these when more, not less, dialogue is needed.

In our discussions with China’s leaders we also remind them of the important contributions that U.S. information technology companies have made to China’s development and that locking them out of China’s market will hurt both of us.

Our annual Strategic and Economic Dialogue with China will take place in just a few weeks. Secretaries Kerry and Lew and many other senior U.S. leaders will come to Beijing to meet with their Chinese counterparts — State Councilor Yang Jiechi and Vice Premier Wang Yang — to name two. The S&ED is our premier forum in talking through tough issues like these.

The main purpose of the S&ED is to bring coherence and predictability to our discussions with China on all the issues at play in the bilateral relationship.  Over the past five years the S&ED has helped to normalize our discussions with China’s leaders and build toward strategic trust, so important in fulfilling this mission.

The S&ED is just a few weeks away, and at it, we will address a number of areas critical to the future of the relationship. I can assure you that we will use the S&ED to advocate aggressively for the things that matter most to the business community.  That is removing investment restrictions, improving IPR protection, increasing transparency, especially in regulatory proceedings, and creating a level playing field for all companies in China.

I have heard your concerns on these issues quite clearly and seeking solutions to them is a top priority for me.  I promise you this, the U.S. business community in China will have no greater friend than Max Baucus. [Applause].

Since coming to China I’ve heard a lot of people talking about the Chinese dream.  I want to close today by telling you about my dream for China.

It’s to see a China that continues to have a healthy, durable relationship with the United States.  One that is bigger than any single issue.

It’s to see the United States and China able to work together on any problem no matter how large or small, to build a better world for Americans, for the Chinese, for everybody.

It’s to see the emergence of a strong, confident China that is welcoming to foreign businesses, treasures its natural environment, and honors the rights of its citizens.  A China that is a responsible stakeholder in the world.  I want to continue the unfinished business I began 20 years ago in the United States Senate.

That is my Chinese dream.  It is also my American dream.

It’s why I came here after, as I said earlier, my long career in Washington instead of going home to Montana.  Being here with all of you, living and working in China, is the adventure of a lifetime.  It’s so important.  It makes me so alive every day.

I look forward to working closely with all of you in the months and years ahead to accomplish our shared goals here in China.

Thank you very much.