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- Trade Delegation to China Sees Opportunities, Challenges in the Clean-Energy Sector
- A Prosperous Trading Partner Looks for U.S. Products and Know-How
- Building a Prosperous and Sustainable Future for the Americas
- Short Takes
- Trade Calendar
- Featured Trade Event: Trade Mission to Iraq
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Trade Delegation to China Sees Opportunities, Challenges in the Clean Energy Sector
Representatives from 24 U.S. businesses in the clean-energy sector visited China in May 2010 and participated in the administration’s first cabinet-level business development mission, led by Secretary of Commerce Gary Locke. They experienced firsthand the many opportunities—and numerous challenges—that await them in this burgeoning market.
by John Ward
Secretary of Commerce Gary Locke led a delegation of representatives from 24 U.S. companies to China on May 16–21, 2010. Clean energy, the focus of this weeklong trade mission, is a sector that holds great importance for the future economic well-being of the United States and China.
At the start of the mission on May 16, Locke spoke at a press conference in Hong Kong about the importance of developing clean-energy resources. “With global energy demand slated to double by 2050, we’re going to have to mobilize every innovative company and every bright mind we can behind discovering cleaner, greener energy solutions.… The United States and China—as the world’s two biggest emitters of carbon—have a moral responsibility to lead the world in this effort.”
Growing Demand Fuels Expansion
An Agreement on Wine and a Visit to the Shanghai Expo 2010
Aside from its focus on clean energy, the visit to China by Secretary Locke was an occasion to mark significant achievements in two other areas of U.S.–Chinese commercial relations. In Hong Kong on May 17, Locke and Rita Lau, Hong Kong secretary of commerce and economic development, signed a memorandum of understanding that supports the marketing and promotion of wine from both countries. The memorandum follows the 2008 elimination of Hong Kong’s excise tax on wine.
Later, in Shanghai on May 19, Locke and the trade delegation visited the U.S. pavilion at the Shanghai Expo, the world’s fair that opened recently in that city (see related stories in the July 2009 and August 2009 issues of International Trade Update). The theme of the U.S. pavilion is “Rising to the Challenge.” According to the pavilion’s organizers, it will demonstrate “the dynamic and emotional story about the American spirit of perseverance, innovation, and community building.” The U.S. pavilion is expected to draw 6 million visitors before the close of the expo on October 31, 2010.
On May 19, 2010, Secretary of Commerce Gary Locke (center) and members of a U.S. business delegation visited the U.S. pavilion at the Shanghai Expo. Accompanying Locke was José H. Villarreal (right), the commissioner general of the U.S. pavilion. (Photo courtesy USA Pavilion)
As China continues to expand its economy, the domestic demand for energy has experienced dramatic growth. China’s central planners have attempted to accommodate this increased demand by setting targets for reducing the emissions of pollutants and for increasing the use of renewable sources of energy. In addition to expanding ties with resource-rich countries, China is taking a number of steps to reduce emissions of pollutants in key sectors, including the following:
- Renewable energy. The Chinese government has mandated that 15 percent of its energy come from renewable sources by 2020.
- Nuclear energy. China currently has 11 nuclear reactors with an additional 20 under construction.
- Coal. Today, 80 percent of China’s electricity is generated by coal. The government has allocated significant funds for reducing emissions and for increasing efficiency.
- Clean technology. China’s current Five-Year Plan sets targets for reducing the emissions of major pollutants, such as sulfur dioxide, nitrogen oxide, and carbon dioxide by 10 percent.
- Transmission infrastructure: with electricity consumption forecast to grow 7 percent annually through 2020, China’s power grid is in need of significant upgrades and expansion.
Three Cities, One Message
Those specific energy needs were drivers of the trade delegation’s agenda as the members spent time in three major Chinese cities: Hong Kong, Shanghai, and Beijing.
The first stop was Hong Kong, which is a special administrative region of China and a key center of commerce. The delegation participated in a forum at the Green Technology Showcase, had one-on-one meetings with representatives of Hong Kong businesses, and visited the Hong Kong Science and Technology Park.
In Shanghai, China’s largest city, the delegates met with Yu Zhengsheng, the Shanghai Municipal Committee party secretary, and with representatives of Chinese green companies. They also participated in site visits to Pratt & Whitney’s engine facility and a Dow Chemical Company facility. There were also meetings with companies participating in the U.S.–China Energy Cooperation Program, which is a public–private partnership that deploys the expertise of U.S. companies to help develop clean-energy solutions.
On May 20 and 21, the delegation’s final stop was the capital city of Beijing. The delegation met with senior Chinese government officials, visited the China Business Innovation Center, and participated in a town hall meeting with students and scientists at Tsinghua University.
Despite the many potential opportunities encountered by the U.S. delegation during its visit, companies that are seeking to do business in China face several policy and regulatory impediments. Those issues include a lack of transparency in government decision-making processes, China’s recently announced “indigenous innovation” product accreditation system, inconsistent market access at the provincial and local levels, and the need to strengthen the protection and enforcement of intellectual property rights.
Locke spoke about those trade impediments during his speech in Shanghai on May 19 to the American Chamber of Commerce and the U.S.–China Business Council. Speaking specifically about transparency, Locke noted that “businesses frequently don’t know what the rules are, how they are enforced, or how decisions are made.… Especially in the energy sector, where upfront capital investment can be in the hundreds of millions of dollars and have multidecade time horizons, this uncertainty has the potential to inhibit foreign corporate investment in China.”
Future Growth, with U.S. Help
For More Information
The Department of Commerce has a number of programs to assist U.S. businesses of any size that wish to enter the Chinese market. Those programs include a network of commercial officers in five Chinese cities, trade specialists located in more than 100 U.S. Export Assistance Centers located throughout the United States, and the China Business Information Center. For more information, go to www.export.gov or call the Trade Information Center at 1-800-USA-TRAD(E) (1-800-872-8723).
Although those challenges to doing business in China can be daunting, they are not insurmountable. In fact, many U.S. companies are finding markets in which they not only grow but prosper, often with the help of the U.S. Department of Commerce and other federal agencies (see sidebar).
Trade between the United States and China can work to everyone’s mutual advantage. “When … American companies find success here in Beijing, it creates economic value throughout the supply chain in China and in manufacturing towns across America,” said Locke. “That is the definition of a win–win for the United States and for China.… In today’s global economy—where ideas are just as likely to be discovered in Beijing as in Boston—we need to do everything we can to keep markets open and to allow for the free flow of capital and ideas across our borders.”
John Ward is a writer in the International Trade Administration’s Office of Public Affairs. Steven Chan of the International Trade Administration’s Market Access and Compliance unit assisted with this report.
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