Embed Size (px)
Citation preview
42nd Annual Membership Meeting
Conference Schedule
Tuesday, June 2, 2015
Hotel Monaco, 700 F Street NW, Washington, DC
1:00 – 1:30 pm Registration [Athens Room Foyer]
1:30 –1:35 pm Welcome and Results of the USCBC Board of Directors Election [Athens
Room] John Frisbie, President, US-China Business Council
1:35 – 2:15 pm China’s Economic Slowdown and Reforms China’s slowing growth has garnered
a great deal of attention in recent months. Companies also see mixed signals
regarding China’s economic reforms. How is China’s leadership viewing the growth
slowdown and likely policy responses? Is there a consensus around reforms? He Fan, Deputy Director, Institute of World Economics and Politics, Chinese Academy of Social Sciences
2:15 – 2:55 pm
US-China Bilateral Investment Treaty (BIT) A high-standard BIT could transform
the China business environment. What are the prospects for the BIT negotiations
and ratification, and how will companies be impacted?
Michael Smart, Vice President, Rock Creek Global Advisors Andy Olson, Senior Advisor for International Economics and Trade, Senate Foreign Relations Committee
2:55 – 3:15 pm Coffee and Networking Break
3:15 – 4:00 pm Top Operating Issues What is the current operating environment for American
companies in China? How are companies responding to issues such as China’s
implementation of its antimonopoly law, the anticorruption campaign, and new
regulations on technology and cybersecurity?
Ryan Ong, Director, Business Advisory Services, US-China Business Council Jacob Parker, Director and Chief Representative, US-China Business Council, Shanghai
4:00 – 4:30 pm Assessing the State of US-China Economic Relations With the US-China
Strategic and Economic Dialogue and a state visit from Chinese President Xi Jinping
on the horizon, what are the key issues to watch for the US-China relationship?
Rory MacFarquhar, Senior Director for Global Economics and Finance, National Security Council
4:30 pm Adjourn
42nd Annual Membership Meeting Attendee Feedback Form
Thank you for your participation today. USCBC values your feedback. Please take a minute
to describe your overall experience by answering the following questions.
1. What are your primary objectives in attending the Annual Meeting conference?
2. Did the event meet your objectives?
____ Yes
____ No
____ Other? _____________________________________________________________________
3. Did you feel the event provided good value for the price?
____ The price was low for the content provided.
____ The price matched the content.
____ The price was high for the content provided.
____ Other? _____________________________________________________________________
4. On a scale of 1-5 (5 Excellent, 4 Good, 3 Average, 2 Fair, 1 Poor), please rate the value of
the following conference presentations and resources.
____ China’s Economic Slowdown (He Fan)
____ Strategic & Economic Dialogue Preview
____ Top Operating Issues
____ US-China Bilateral Investment Treaty (BIT) (Michael Smart)
____ Networking Opportunities
____ USCBC Meeting Packet Information and Reports
____ Other? _____________________________________________________________________
_____________________________________________________________________
Continued on next page.
5. What other topics are you interested in hearing about at USCBC events this year?
6. Do you have other suggestions for improving the conference?
7. Future Participation
a. Have you previously attended USCBC’s Annual Meeting conference?
____ Yes
____ No
b. Do you plan to participate in this event again in the future, and why/why not?
____ Yes
____ No
____ Why/why not? ________________________________________________________________
(Optional):
Name ________________________________ Company _____________________________________
Thank you!
© 2015, The US-China Business Council
Officers and Directors June 2, 2015
Officers June 2015-June 2016
Chair
Mark Fields * Chief Executive Officer Ford Motor Company
Vice Chairs
Robert A. Iger * Chairman and Chief Executive Officer The Walt Disney Company
Paul D. Conway * Vice Chairman Cargill, Incorporated
Indra K. Nooyi * Chairman and Chief Executive Officer PepsiCo
Secretary-Treasurer
Keith E. Williams * President & CEO UL LLC Counsel
Andrew W. Shoyer Partner Sidley Austin LLP
President
John Frisbie President The US-China Business Council *Also serves as a Director
Directors
Steve Angel Chairman, President & CEO Praxair, Inc.
Mary T. Barra Chief Executive Officer General Motors Company
Mark T. Bertolini Chairman, CEO & President Aetna
Stephen Bird CEO, Global Consumer Bank Citi (as of June 1, 2015)
Gregory H. Boyce Chairman and CEO Peabody Energy
Marc N. Casper President and Chief Executive Officer Thermo Fisher Scientific
The Honorable William S. Cohen Chairman and Chief Executive Officer The Cohen Group
Mary Callahan Erdoes Chief Executive Officer J.P. Morgan Asset Management
© 2015, The US-China Business Council
The Honorable Barbara H. Franklin President and CEO Barbara Franklin Enterprises
Maurice R. Greenberg Chairman & CEO C.V. Starr & Co., Inc.
Marius A. Haas Chief Commercial Officer and President, Enterprise Solutions Dell Inc.
John J. Haley Chairman and Chief Executive Officer Towers Watson
Muhtar Kent Chairman and CEO The Coca-Cola Company
Klaus Kleinfeld Chairman & CEO Alcoa
Ellen Kullman Chair of the Board and Chief Executive Officer DuPont
James Eric Lillie Chief Executive Officer Jarden Corporation
Roberta Lipson Board Chair, United Family Healthcare & Chief Executive Officer and President Chindex International, Inc.
John A. Luke, Jr. Chairman and Chief Executive Officer MeadWestvaco Corporation
Thomas J. Lynch Chairman and CEO TE Connectivity
Doug McMillon President and CEO Wal-Mart Stores, Inc.
Dennis A. Muilenburg Vice Chairman, President and Chief Operating Officer The Boeing Company
Peter Oosterveer Chief Operating Officer Fluor Corporation
Ian C. Read Chairman & Chief Executive Officer Pfizer
Mark C. Rohr Chairman and CEO Celanese
David Rubenstein Co-Founder and Co-Chief Executive Officer The Carlyle Group
Mark Schwartz Vice Chairman and Chairman of Asia Pacific Goldman Sachs
Miles White Chairman and CEO Abbott Laboratories
Darren Woods Senior Vice President Exxon Mobil Corporation
Jesse J. Wu Chairman Johnson & Johnson China
Ray G. Young Chief Financial Officer Archer Daniels Midland Company
© 2015, The US-China Business Council 1
42nd Annual Membership Meeting
List of Attendees
AccuWeather, Inc. Barry Lee Myers
AIG Lauren Scott
Alcoa Benjamin Squires
Applied Materials, Inc. William Morin
Archer Daniels Midland
Company Lorraine Hawley
Barbara Franklin
Enterprises Maureen Noonan
Boeing Kevin Varney
Brunswick Group Jennifer Sukawaty Peter Zysk
Cargill Dominique Harris
Cigna Richard Merski
Citi Kimberley Claman
The Cohen Group Cameron Turley
ConocoPhillips Joshua Corless Michael Glenzer
Corning Incorporated Timothy Regan Debra Waggoner
Davis Wright Tremaine LLP David Silverman
Deere & Co Anku Nath
Dell Rebecca Karnak
DuPont Tiffany Atwell
East Penn Manufacturing
Co. Mark Wels
Eastman Chemical
Company Shaowo Liang
EcoMotors, Inc. Jared Finney
Eli Lilly and Company Harrison Cook Erin Huntington
ExxonMobil Casey Delhotal Scott Sullivan
Ford Motor Company John Kwant James Rowland
GE Aviation Rich Douglas
General Electric Company Orit Frenkel Brad Welling
Goldman Saches Matt Niemeyer
Gulfstream Aerospace Leda Chong
The Hershey Company Gang Xu
ITT Corporation Jennifer Schiavone
Jarden Corporation Kristian Ording
Johns Hopkins–SAIS David Lampton
KPMG LLP Samantha Hsu Brian Wilson
Liberty Mutual Insurance Viji Rangaswami
McLarty Associates James Keith
2 © 2015, The US-China Business Council
MeadWestvaco Alexander Stoddard
Merck Laurel Vogelsang
Monsanto Company Jim Travis
Moody's Investors Service Kathyanne Cohen
Nalco Ramola Musante
P&G Carolyn Brehm
Pacific Trade International
Inc. Miloud Saidi Mei Xu
Perrigo Company John Crabill Sara Estes
Pfizer Jeff Hamilton
Sidley Austin LLP Brenda Jacobs
Smithfield Foods Michael Skahill
Steptoe & Johnson Eric Emerson
Stonebridge Research
Group LLC Barbara Insel
Thermo Fisher Scientific Tim Fenton
UL LLC Karen Grunstra
United Technologies Allison Ford
The Walt Disney Company Michael Castellano
Western Services
Corporation John Smith Donald Utley
Westinghouse Electric
Company Suzanne Duvall
Whirlpool Corporation Sarah Bovim
WR Grace Scott Purnell
Zebra Technologies
Corporation Jim Kaput Kevin Richardson
© 2015, The US-China Business Council 1
42nd Annual Membership Meeting
Speaker Biographies
China’s Economic Slowdown
He Fan Chinese Academy of Social Sciences Dr. He Fan is the deputy director of the Institute of World Economics and Politics, Chinese Academy of Social Sciences. He is also a senior economics fellow at the Institute for New Economic Thinking in New York. Dr. He is one of the most active young economists in China. His fields of interest include Chinese macro-economy, international finance, and international political economy. He is the author or editor of 10 books and more than 100 papers in professional economics journals. Dr. He has worked on a broad range of issues like RMB exchange rate policy, China’s foreign trade and FDI policy, and China’s financial system reform. He is a consultant for the Ministry of Finance, Ministry of Commerce, People’s Bank of China, and Ministry of Foreign Affairs, and is deeply involved in many policy discussions. Dr. He is also a member of the Bellagio group of central bankers and academics (Group Thirty). He was a visiting fellow at Crawford School of Public Policy, Australian National University in 2014. Dr. He has also written extensively for a broader public audience. He is a columnist for many newspaper and magazines. Dr. He is an economics commentator for CCTV2 and a regular guest on Dialogue, CCTV9. He has been interviewed by BBC, CNN, NHK, Financial Times, The Wall Street Journal and other international media.
He was selected as Young Global Leader by the World Economic Forum in 2005, Asian Young Leader by the Asia Society in 2006, and Young Leader by the National Committee of US China Relationship in 2007. Dr. He received his PhD in 2000) and MA in 1996 in economics from the graduate school of the Chinese Academy of Social Sciences. He earned a bachelor's degree in economics from Hainan University in 1993. From 1998-2000, he was a visiting fellow at Harvard University.
US-China Bilateral Investment Treaty
(BIT)
Michael J. Smart Rock Creek Global Advisors Michael J. Smart is a vice president at Rock Creek Global Advisors, an international economic policy advisory firm, where he focuses on international trade and investment policy, including market access and regulatory matters. Smart is currently advising multinational companies, financial institutions, and trade associations on current international trade and investment negotiations, including the Transatlantic Trade and Investment Partnership, the Trans-Pacific Partnership, and Trade in Services Agreement. Smart previously served as international trade counsel on the Democratic staff of the US Senate Committee on Finance. In that role, he advised Chairman Max Baucus (D-MT) and members of the committee on various trade matters, including World Trade Organization (WTO)
2 © 2015, The US-China Business Council
negotiations and dispute settlement, free trade agreements, trade in agricultural products (especially sanitary and phytosanitary regulation), and the trade aspects of legislation to address climate change. Before joining the finance committee, Smart was director for international trade and investment on the staff of the National Security Council at the White House. Smart focused on the Doha Development Agenda, trade in financial services, free trade agreements, and bilateral investment treaties. He also served as the lead White House staff for cabinet-level dialogues with Brazil and India. Smart was previously an associate at the law firm of Sidley Austin LLP, where his practice focused on international trade and investment policy and dispute resolution. He represented companies and governments in WTO, investment treaty, and NAFTA disputes. Earlier in his career, Smart was legislative director for former Congressman Earl Pomeroy (D-ND), a nine-term member of the Committee on Ways and Means. Smart is a member of the board of Directors of the Washington International Trade Association. Smart received his BA in international affairs from The George Washington University (Phi Beta Kappa and magna cum laude) and his JD from Georgetown University Law Center (cum laude).
Andy Olson Senate Foreign Relations Committee
In 2013, Andy Olson moved to the Senate Foreign Relations Committee from the trade and customs law firm of Sandler, Travis and Rosenberg, P.A. He serves as the chief economic advisor on the committee to Ranking Member Bob Corker (R-TN). His committee responsibilities include international trade, investment, sanctions policy, business and commercial issues generally, international financial institutions, energy, environment, oceans, and the United Nations and related international organizations. Previously, Olson served Senator Lindsey
Graham (R-SC) as Republican staff director and senior counsel for the Disaster Recovery Subcommittee of the Senate Homeland Security and Government Affairs Committee and as Senator Graham’s principal advisor on military and homeland security issues. From 2005-09, Olson served in the Office of the U.S. Trade Representative as deputy assistant and assistant U.S. Trade Representative for Congressional Affairs. As one of the president’s chief liaisons with Congress for the administration’s international trade agenda, he worked closely with the U.S. trade representative, White House, and USTR senior staff to develop and implement US trade policy. From 2001-05, Olson advised Senate Majority Leader Bill Frist (R-TN) on foreign policy, trade, and banking issues. From 2001-2003, this included managing Senator Frist’s responsibilities as Ranking Member and Chairman of the Senate Foreign Relations Africa Subcommittee. From 1999-2001, he served as legislative counsel for foreign policy, trade, banking, energy, and tax issues for House Republican Policy Committee Chairman Christopher Cox (R-CA). Olson holds a BA in history and political science from the University of Mississippi in 1990; a JD from the University of Missouri in 1994; and an MA in international affairs from George Washington University in 1998. He is licensed to practice law in Tennessee and the District of Columbia.
Top Operating Issues
Ryan Ong US-China Business Council
Ryan Ong has served as director of Business Advisory Services (BAS) at the US-China Business Council (USCBC) since January 2010, working closely with US member companies to inform and advocate for US companies doing business in China. As head of the BAS division, he leads a team providing targeted research and intelligence on best practices, operational issues, and policy and
© 2015, The US-China Business Council 3
regulatory changes that impact operations in China. He also advocates in the United States and in China on issues that impact the trade and investment climate for US companies. In that role, he covers a range of business and investment issues in the China market, including human resources, administrative licensing, regulatory transparency, industrial policy, and investment issues. He also manages a dedicated portfolio of issues that includes innovation, standards, intellectual property protection, and tax issues. Prior to joining USCBC in 2007, Ong lived and studied in China and held a variety of positions in the public and academic sectors, including Duke University’s Center on Globalization, Governance & Competitiveness, the US Department of State, the Carter Center, and the North Carolina Department of Commerce’s International Trade Division. He holds a BA from the University of North Carolina-Chapel Hill, an MA in international relations from Johns Hopkins University’s School of Advanced International Studies (SAIS), and a certificate in China studies from the Hopkins-Nanjing Center, where he studied Chinese politics, economics, and international relations in Mandarin Chinese. He is proficient in Mandarin Chinese and is a regular speaker and presenter on the China business landscape in both the United States and China.
Jacob Parker US-China Business Council, Shanghai Office Jacob Parker is the director and chief representative at the US-China Business Council’s Shanghai office where he works with members to research, analyze, and speak on topics important to their operations in China. He has worked on a variety of international public and private projects throughout his career. Before joining USCBC, Parker worked as a program manager at Philips Healthcare where he oversaw implementation of ExIm Bank, Nordic Investment Bank, and Ashra Bank international government loan projects for developing medical infrastructure in China. Prior to that, as the director of operations of the USA Pavilion
Shanghai Expo 2010, he was responsible for the set-up, maintenance, and general operation of the pavilion, and for sharing American culture and values with the more than seven million visitors during the six months of operation. Parker earned his BA in economics from the University of Idaho and MA in East Asian languages and literatures from The Ohio State University.
Assessing the State of US-China
Economic Relations
Rory MacFarquhar National Security Council Rory MacFarquhar serves as special assistant to the president and senior director for global economics and finance at the National Security Council (NSC). Prior to joining the NSC, he worked in the Treasury Department as the senior advisor to the assistant secretary for international finance. Before joining the administration, he was managing director and director of economic research for Central and Eastern Europe, the Middle East and Africa at Goldman Sachs, based in Moscow and London. He studied at Yale, Harvard, and the London School of Economics.
Moderators
John Frisbie The US-China Business Council John Frisbie, president of USCBC since November 2004, has more than 25 years of experience in business and government relations with China, including nearly 10 years living and working in Beijing. Frisbie started his career with USCBC in 1986, first working in USCBC’s Washington, DC, office, then as director of China Operations in Beijing from 1988-1993. He joined the General Electric Co. (GE) in 1993 as director for Business Development in China for the company’s diverse set of businesses and then moved to Singapore to assume Asia-wide positions for two GE business units.
4 © 2015, The US-China Business Council
Frisbie repatriated to the United States in 2000, joining the trade consulting practice established by former US Secretary of Commerce Mickey Kantor at Mayer, Brown, Rowe & Maw LLP. Frisbie’s China background includes joint-venture negotiations, trade and investment consulting, policy analysis and advocacy, US and PRC government relations, and media relations. He has spoken at numerous conferences and events and authored reports and articles in the China Business Review—USCBC’s magazine—and in other journals such as Current History, as well as opinion articles in publications such as the Financial Times and the Journal of Commerce. Frisbie received his BA and MBA degrees from the University of Texas at Austin. He received several National Resource Fellowships for language study and is fluent in Mandarin Chinese. He, his wife, son, and daughter live in Bethesda, Maryland.
Erin Ennis The US-China Business Council
Erin Ennis has been senior vice president of USCBC since February2015, after serving as vice president since 2005. In that position, she directs USCBC’s government affairs and advocacy work for member companies and oversees USCBC’s Business Advisory Services. She also leads a coalition of other trade associations on issues of interest to companies doing business with China. Founded in 1973, USCBC provides extensive China-focused information, advisory, and advocacy services, along with comprehensive events, to nearly 250 US corporations operating within the United States and throughout Asia. Prior to joining USCBC, Ennis worked at Kissinger McLarty Associates, the international consulting firm headed by former Secretary of State Henry Kissinger and former White House Chief of Staff Thomas “Mack” McLarty. At Kissinger McLarty, Ennis was responsible for implementing strategies for international business clients on proprietary trade matters, primarily in Vietnam and Japan. Before entering the private sector, Ennis held several positions in the US Government. From
1992-96, Ennis was a legislative aide to former US Senator John Breaux, working on international trade and commerce. She also worked on health care issues during the Senate’s consideration of President Bill Clinton’s health care reform, an issue on which Senator Breaux actively worked to broker a compromise. At the Office of the US Trade Representative from 1996-2000, Ennis first worked in Congressional Affairs on Asia issues, including annual approvals of China’s most favored nation status and the ill-fated 1997 push to renew presidential “fast track” negotiating authority. Beginning in 1998, she was assistant to Deputy US Trade Representative Richard Fisher, who led US trade negotiations and enforcement with Asia, the Americas, and on intellectual property rights. A native of Louisiana, Ennis has a BA from Mount Holyoke College in Massachusetts and an MA in international affairs from Catholic University in Washington, DC. She is an active volunteer for the Mount Holyoke Alumnae Association and the Washington National Cathedral. In 1999, Ms. Ennis completed the Marine Corps Marathon in under a quarter of a day and successfully laid to rest any lingering desire to run future races.
Board of Directors Election Results
Directors Elected by the General Membership and
Announced at the 42nd Annual Membership Meeting, June 2, 2015
Stephen Bird * Chief Executive Officer, Asia Pacific Citi (Note: CEO, Global Consumer Bank as of 6/1/15)
Marc N. Casper ** President and CEO Thermo Fisher Scientific
Mary Callahan Erdoes * Chief Executive Officer J.P. Morgan Asset Management
The Honorable Barbara H. Franklin President and CEO Barbara Franklin Enterprises
Maurice R. Greenberg ** Chairman and CEO C. V. Starr & Co., Inc.
Muhtar Kent Chairman and CEO The Coca-Cola Company
James Eric Lillie Chief Executive Officer Jarden Corporation
Thomas J. Lynch Chairman and CEO TE Connectivity
Doug McMillon President and CEO Wal-Mart Stores, Inc.
Peter Oosterveer Chief Operating Officer Fluor Corporation
Miles White Chairman and CEO Abbott Laboratories
Darren Woods Senior Vice President Exxon Mobil Corporation
* Elected to a first three-year term after completing an interim term
** Elected to a second three-year term
208 Members Firms © 2015, The US-China Business Council 1
USCBC Member Firms (as of 05/28/15)
3M Company The Carlyle Group Daniel J. Edelman, Inc.
ABB Inc. Caterpillar Inc. Edwards Lifesciences LLC
Abbott Laboratories Celanese Acetate LLC Eli Lilly and Company Academic Partnerships Celgene Corporation Emerson
AccuWeather, Inc. CET Academic Programs The Estee Lauder Companies
ACE Group of Insurance Chemtura Corporation Exxon Mobil Corporation
Companies Chevron Factory Mutual Insurance
AECOM Technology Corporation Chindex International, Inc. Company
Aetna Choy-Valentine & Company Faegre Baker Daniels LLP AIG CHS Inc. Federal Express Corporation
Air Products and The Chubb Corporation Finnegan, Henderson, Farabow, Chemicals, Inc. Cigna Garrett & Dunner, LLP
Albright Stonebridge Group Cisco Systems, Inc. First Data Corporation
Alcoa Inc. Citigroup Inc. Fleishman-Hillard Inc.
Allen & Overy LLP The Coca-Cola Company Fluor Corporation
Altria The Cohen Group FMC Corporation
American Express Company Colgate-Palmolive Company Foley & Lardner LLP
Amgen Inc. Commercial Vehicle Group Ford Motor Company
Amway ConocoPhillips Freshfields Bruckhaus Deringer Anheuser-Busch Companies, Inc CooperVision, Inc. Gap Inc.
APCO Worldwide Corning Incorporated General Dynamics
Apple Inc. Covington & Burling LLP General Electric Company Applied Materials, Inc. Crowell & Moring LLP General Motors Corporation
Archer Daniels Midland Company Crown Equipment Corporation Global Strategic Associates, LLC
Ashland Inc. Cummins Inc. Goldman Sachs Group, Inc.
Autodesk, Inc. C.V. Starr & Co., Inc. W.R. Grace & Co.
The Babcock & Wilcox Company Danaher Corporation GreenPoint Group
Baker & McKenzie LLP Davis Wright Tremaine Hanesbrands Inc.
Baker Botts LLP Deere & Company Harley-Davidson, Inc. Bank of America Merrill Lynch Dell Inc. Heidrick & Struggles
Barbara Franklin Enterprises Deloitte LLP The Hershey Company
Baxter International Inc. Dickinson Wright PLLC Hewlett-Packard Company Blue Heron Holdings, LLC The Walt Disney Company Hills & Company
The Boeing Company Dorsey & Whitney LLP Hogan Lovells
Bose Corporation The Dow Chemical Company Honeywell
BP Dow Corning Corporation IBM Corporation
Brinks Hofer Gilson & Lione E. I. du Pont de Nemours & Intel Corporation
Brunswick Group LLP Company International Paper Company
Butler Mfg. Co./BlueScope Steel Dykema Gossett PLLC Intertek
Cabot Corporation East Penn Manufacturing Co., Inc.
Intralox, LLC Cambridge Corporate Training Eastman Chemical Company INVISTA/Koch Industries
Cargill, Incorporated Ecolab ITT Corporation Carlisle Companies Incorporated EcoMotors International Jarden Corporation
Case New Holland Inc. Johnson & Johnson
Johnson Controls
208 Members Firms © 2015, The US-China Business Council 2
Jones Day
JPMorgan Chase & Co.
K&L Gates LLP
Kamsky Associates, Inc.
Robert A. Kapp & Associates, Inc.
Kissinger Associates, Inc.
KPMG LLP
Laureate International Universities
Liberty International Holdings,
Inc.
LinkedIn Corporation
Maritime Products International
Mary Kay Inc.
MasterCard Worldwide
Mayer Brown LLP
McGraw Hill Financial
McLarty Associates
Mead Johnson Nutrition
MeadWestvaco Corporation
Medtronic, Inc.
Merck & Co., Inc.
MetLife, Inc.
Microsoft Corporation
MKBC International
Monsanto Company
Moody's Investors Service
Moore Recycling Associates Inc.
Morgan Stanley
Morrison & Foerster LLP
Nu Skin Enterprises, Inc.
Oldcastle Inc./CRH plc
Oxbow Energy Solutions LLC
Pacific Trade International Inc.
Paul Weiss Rifkind Wharton &
Garrison
Peabody Energy
PepsiCo, Inc.
Pfizer Inc
Physician Referral Network, LLC
Praxair, Inc.
PricewaterhouseCoopers The Procter & Gamble Company
Prudential Financial
Quaker Chemical Corporation
QUALCOMM Incorporated
Reed Smith LLP
Rockwell Automation
The Scowcroft Group
Sherrard, German & Kelly, P.C.
Sidley Austin LLP
A.O. Smith Corporation Smithfield Foods, Inc.
The J.M. Smucker Company
Squire Patton Boggs
Steptoe & Johnson LLP
Stonebridge Research Group, LLC
Synopsys, Inc.
Target Corporation
TE Connectivity
Texas Instruments Incorporated
Thermo Fisher Scientific Inc.
The Timken Company
Towers Watson
Tyco International
Tyson Foods, Inc.
Underwriters Laboratories Inc.
United Technologies Corporation
The Valspar Corporation
The Venetian Resort Hotel Casino
Visa Inc.
Volk Flow Controls, Inc.
Walgreens Boots Alliance, Inc.
Wal-Mart Stores, Inc.
Warburg Pincus LLC
Western Services Corporation
Westinghouse Electric Company,
LLC
Whirlpool Corporation
Wilmer Cutler Pickering Hale and
Dorr LLP
WorldBusiness Capital, Inc.
WPP Group
Xcoal Energy & Resources
Xylem, Inc.
Zebra Technologies Corporation
© 2015, The US-China Business Council 1
USCBC Staff List HEADQUARTERS 1818 N Street, NW, Suite 200 Washington, DC 20036-2470 Tel: 202-429-0340 | Fax: 202-775-2476 E-mail: [email protected] www.uschina.org | www.chinabusinessreview.com
Mr. John Frisbie President [email protected]
Ms. Erin Ennis Senior Vice President [email protected]
Business Advisory Services (BAS)
Mr. Ryan Ong Director, BAS [email protected]
Mr. Matthew Margulies Manager, BAS [email protected]
Mr. Daniel Markus Manager, BAS [email protected]
Ms. Zoë Sophos Research Associate, BAS [email protected]
Government Affairs
Ms. Stephanie Henry
Senior Manager, Government Affairs [email protected]
Communications & Publications
Mr. Marc A. Ross Director, Communications & Publications [email protected]
Ms. Ellen Huber Manager, Communications & Publications Editor, China Business Review (CBR) [email protected]
Programs
Ms. Gloria González-Micklin Director, Programs [email protected]
Ms. Quynh Tonnu Manager, Programs [email protected]
Membership
Ms. Kimberly Kowal Manager, Membership Services [email protected]
Administration
Ms. Jessica Logan, CPA Vice President, Finance and Administration [email protected]
Ms. Karen M. Lam Executive Assistant to the President and Office Manager [email protected]
Ms. Mattie Steward Administrative Assistant [email protected]
© 2015, The US-China Business Council 2
CHINA
Beijing Office CITIC Building, Suite 10-01 19 Jianguomenwai Dajie Beijing 100004, China Tel: 86-10-6592-0727 | Fax: 86-10-6512-5854 E-mail: [email protected]
Mr. John Lenhart Director and Chief Representative, Beijing Office [email protected]
Mr. Jake Laband
Manager, BAS [email protected]
Mr. Nick Marro
Manager, BAS [email protected]
Ms. Sue Hao Senior Manager, Government Affairs [email protected]
Ms. Zhang Lipei Manager of Government Affairs, and Policy Research [email protected]
Shanghai Office 1701 Beijing West Road, Room 1301 Shanghai 200040, China Tel: 86-21-6288-3840 | Fax: 86-21-6288-3841 E-mail: [email protected]
Mr. Jake Parker Director and Chief Representative, Shanghai Office [email protected]
Mr. Owen Haacke Manager, BAS [email protected]
Ms. Lingling Jiang
Senior Manager, Business Advisory Services and Government Affairs [email protected]
Ms. Cindy He Office and Programs Manager [email protected]
Welcome to USCBC’s 42nd Annual Membership Meeting
This packet contains information on today’s conference program,
copies of speaker presentations, as well as recent reporting,
analysis, and other news from USCBC.
Wireless Internet can be accessed with the information below.
1. Select Kimpton Wifi on devices 2. Open internet browser 3. Click “Enter Access Code” 4. Access Code: USCBC
An electronic version of this packet can accessed at
www.uschina.org/Annual-Meeting-2015-Packet.
Read more recent USCBC reports and research at
www.uschina.org/cmi.
Now Online:
USCBC’s Annual
Membership
Survey
The US-China Business Council
(USCBC) has launched its 2015
annual survey of its member
companies on the opportunities
and challenges they face in China's
business environment. The results of
the survey help prioritize the top
issues for USCBC's reporting,
advisory, and advocacy work in the
United States and China on behalf
of its membership.
Member responses to the survey
are crucial to the quality and
effectiveness of USCBC's services.
The survey will close on
Friday, June 12, 2015.
USCBC uses Qualtrics software, which provides unique links for each respondent
that automatically save survey participants' responses as they proceed through
the questionnaire. This enables respondents to exit the survey and return at a later
time to finish answering the questions using the link provided to them in the
invitation email.
USCBC’s survey invitation was distributed on June 1, 2015. If you have misplaced
the survey invitation and need to have the link resent to you, please contact
USCBC Senior Vice President Erin Ennis at [email protected]. Please also feel
free to contact her with any questions, comments, or suggestions.
© 2015, The US-China Business Council
2015-2016 Calendar for US-China-Related Events
June
3 USCBC Board of Directors’ meeting and reception for incoming chair, Washington, DC
7-8 G7 Summit, Germany
18 USCBC China Operations Conference (CHOPS), Beijing
22 Dragon Boat Festival (PRC legal holiday)
Week of 22nd US-China Innovation Dialogue and Strategic & Economic Dialogue, US (to be confirmed)
29-30 House and Senate Recess
July
1-6 House and Senate Recess
3 Independence Day (US legal holiday) (July 4 falls on a Saturday)
August
3-31 House Recess
10-31 Senate Recess
September
TBD US State Visit by PRC President Xi Jinping
1-7 House and Senate Recess
7 Labor Day (US legal holiday)
8-11 China International Fair for Investment and Trade (CIFIT), Xiamen
14 & 23 Senate Recess
15-28 70th Meeting of the United Nations General Assembly, New York City
21-23 House Recess
27 PRC Mid-Autumn Festival (PRC legal holiday)
October
TBD USCBC China Operations Conference (CHOPS), Shanghai
TBD Fifth Plenum of the 18th Communist Party of China (CCP) Congress, Beijing
TBD US Trade Policy Staff Committee hearing on China’s WTO commitments, Washington, DC
1-7 PRC National Holiday (PRC legal holiday)
9-11 Annual meetings of the International Monetary Fund and World Bank, Lima, Peru
12 Columbus Day (US legal holiday)
12-16 House and Senate Recess
15 US Treasury Department report to Congress on exchange rate policies due (actual release date may vary)
November
TBD 10th East Asia Summit, Kuala Lumpur, Malaysia
© 2015, The US-China Business Council 2
9-13 House Recess
11 Veterans’ Day (US legal holiday)
15-16 G20 Leaders’ Summit, Antalya, Turkey
18-19 Asia Pacifc Economic Cooperation (APEC) Leaders’ Meeting, Manila, Philippines
23-27 House and Senate Recess
26 Thanksgiving Day (US legal holiday)
December
2 USCBC Board Meeting & Gala, Washington, DC
TBD PRC Economic Work Conference, Beijing (usually held during the first week of December)
TBD
26th Joint Commission on Commerce and Trade, China (could take place in November-December timeframe; last held late December 2014)
21 US Congress target adjournment date
25 Christmas Day (US legal holiday)
January
1 New Years Day (US legal holiday)
18 Martin Luther King, Jr. Day (US legal holiday)
TBD USCBC Forecast Conference, Washington, DC
February
8 Chinese New Year (PRC legal holiday)
9- 13 PRC Spring Festival Holiday
15 Presidents’ Day (US legal holiday)
March
19-21 China Development Forum, Beijing
TBD PRC National People’s Congress (NPC) meeting, Beijing
31 US Trade Representative National Trade Estimate report due surveying significant foreign barriers to US exports, including those in China (actual release date may vary)
April
4 PRC Qing Ming Holiday (PRC legal holiday)
TBD Bo’Ao Forum for Asia Annual Conference, Hainan, China
15 US Treasury Department report to Congress on exchange rate policies due (actual release date may vary)
15-17 Spring Meetings of the International Monetary Fund and World Bank Group, Washington, DC
30 USTR “Special 301” Report due on IPR practices of US trading partners, including China (actual release date may vary)
May
TBD US-China Innovation Dialogue and Strategic & Economic Dialogue, Beijing (could take place in late May-July timeframe)
TBD China Central Expo
1 PRC Labor Day (PRC legal holiday)
30 Memorial Day (US legal holiday)
31 USCBC Annual Membership meeting, Washington, DC
USA HEAD OFFICE 1818 N Street, NW Suite 200 Washington, DC 20036 BEIJING Tel: 202-429-0340 Fax: 202-775-2476 Email: [email protected] www.uschina.org SHANGHAI
OFFICERS
Chair Ellen Kullman
Vice Chairs
Robert A. Iger Paul D. Conway
Mark Fields
Secretary-Treasurer Keith E. Williams
Counsel
Andrew W. Shoyer Sidley Austin LLP
President
John Frisbie
BOARD OF DIRECTORS
Stephen F. Angel Praxair, Inc.
Mary T. Barra
General Motors Company
Mark T. Bertolini Aetna
Stephen Bird
Citi
Gregory H. Boyce Peabody Energy
Marc N. Casper
Thermo Fisher Scientific
The Honorable William S. Cohen The Cohen Group
Paul D. Conway
Cargill, Incorporated
Michael L. Ducker FedEx Freight
Mary Callahan Erdoes
J. P. Morgan Asset Management
David N. Farr Emerson
Mark Fields
Ford Motor Company
Evan G. Greenberg Ace Limited
Maurice R. Greenberg
C.V. Starr & Co., Inc.
Marius A. Haas Dell Inc.
John J. Haley
Towers Watson Robert A. Iger
The Walt Disney Company Klaus Kleinfeld
Alcoa
Ellen Kullman DuPont Company
Roberta Lipson
Chindex International, Inc. John A. Luke, Jr.
MeadWestvaco Harold McGraw, III
McGraw Hill Financial Indra K. Nooyi
PepsiCo
Frits van Paasschen Starwood Hotels & Resorts Worldwide
Edward J. Rapp
Caterpillar Inc.
Ian C. Read Pfizer
Mark C. Rohr
Celanese
David Rubenstein The Carlyle Group
Mark Schwartz
Goldman Sachs Asia Pacific
Keith E. Williams UL LLC
Jesse J. Wu
Johnson & Johnson
Ray G. Young Archer Daniels Midland Company
The US-China Business Council Board of Directors’
Statement of Priorities in the US-China Commercial Relationship
January 22, 2015
The US-China Business Council (USCBC) supports a strong, mutually beneficial
commercial relationship between the United States and China. The relationship has
made many positive strides over the past three decades, thanks to the collaborative
work of the governments, business communities, and other stakeholders in both
countries. Trade and investment are delivering important benefits to both economies
and are the foundation of the overall US-China relationship.
This is the fourth priorities statement issued by USCBC’s board of directors. We are
pleased that progress has been made on a number of the previous statements’
recommendations, such as increasing Chinese investment in the United States and
reciprocal long-term visas for business travelers. Additional work needs to be done
on other issues, and new concerns have arisen that require the attention of both
governments in order to fully develop commercial ties and bring greater benefits to
each country’s economy, companies, employees, and citizens.
Progress in the bilateral commercial relationship continues to be incremental.
American companies welcome China’s ambitious reform direction, but have yet to
see tangible impact on many areas of concern. We encourage both governments to
develop a broader, long-term strategic vision of the bilateral economic and
commercial relationship. Both governments should pursue an economic
liberalization framework that would comprehensively address opportunities and
challenges in the relationship, rather than approach them incrementally.
USCBC calls upon the US and Chinese governments to work together on the
following priority recommendations and issues in the commercial relationship, and
lends its full support to achieving the goals listed below.
Further Solidify the Foundation for Mutually Beneficial Commercial Relations
Finalize a high-standard Bilateral Investment Treaty (BIT) in 2015 A BIT
provides one of the best opportunities to reduce investment barriers in both
countries and improve protections for US and Chinese investors in each other’s
markets. Finalizing a high-standard BIT with very limited exceptions in the
negative list would provide a forward-looking framework for the commercial
relationship and should be a top priority for both governments.
Prioritize reducing foreign investment ownership restrictions China
maintains foreign investment ownership restrictions across many sectors of its
economy, including manufacturing, services, agriculture, and resources.
US-China Business Council Board of Directors
2015 Priorities Statement
Page 2
Reducing foreign ownership restrictions would allow American companies to contribute more to
China’s economic reform and development goals. In addition, China could build strong support in
the United States for a BIT by taking early steps to reduce investment barriers in areas meaningful to
American companies, and demonstrate a commitment to treat domestic and foreign investors
equally.
Maintain a robust and effective bilateral dialogue The United States and China have established
a robust annual schedule of bilateral meetings at all levels of government that supports expanded
economic and commercial relations and resolves issues of concern. The United States and China
should continue to strengthen this dialogue structure, which includes the US-China Strategic and
Economic Dialogue (S&ED), the US-China Joint Commission on Commerce and Trade (JCCT), the
US-China Innovation Dialogue, and the US-China Investment Forum. The successful meeting in
November 2014 between Presidents Obama and Xi demonstrates the value of an annual presidential
summit. USCBC recommends Presidents Obama and Xi hold a summit in the United States in 2015.
Promote a level playing field for foreign and domestic companies in China USCBC supports the
Chinese government’s desire to expand opportunities for “private capital” and non-state-owned
entities in China, reform state enterprises, and increase competition to spur economic rebalancing.
We encourage the inclusion of “foreign capital” in these expanded opportunities and openings.
China’s policymakers should move toward eliminating terminology such as “foreign-invested
enterprises.” Continued use of this term invites differential treatment for various types of domestic
enterprises versus others, based solely on ownership. Companies legally established under China’s
Company Law should all be treated equally by regulators.
Address cybersecurity threats to commerce Little progress has been made over the past year to
address the commercial aspects of the cybersecurity issue. The current impasse in government-to-
government discussions on cybersecurity threatens to allow this issue to become a long-term irritant
in the relationship. We encourage the two governments to resume more effective dialogue to stop
commercial-focused cyber intrusions, regardless of the source.
In addition, the two governments should identify areas of mutual concern and initiate
programs to address them, such as cooperation to combat criminal activity or deter industrial facility
cyber intrusions that could harm worker or public safety. Leadership by the United States and China
on this issue would have a positive impact globally.
Take steps to build confidence in the bilateral relationship The United States should take several
steps to foster positive momentum and confidence-building in the US-China relationship. In
particular, the United States Congress should approve reforms to the International Monetary Fund to
appropriately acknowledge China’s contributions and responsibilities to the global economy;
eliminate counterproductive China-targeted provisions in US appropriations bills, such as those
restricting the Office of Science and Technology Policy from interactions with its counterparts in
China and China-specific language included in IT procurement risk assessments by the Departments
of Commerce and Justice, the National Academy of Sciences, and the National Aeronautics and
Space Administration; and confirm that it will begin using market economy methodology in China
trade remedy proceedings on or before December 11, 2016, as specified in China’s World Trade
Organization (WTO) entry agreement.
US-China Business Council Board of Directors
2015 Priorities Statement
Page 3
Reduce Trade Barriers and Enforce Globally Accepted Trade Rules
Ensure that government decisions are not politicized Government reviews and decision making
in areas such as investment security and antitrust reviews, government procurement decisions,
administrative licensing, and trade remedies such as anti-dumping and countervailing duties cases
must be fact-based, shielded from political pressures, and non-retaliatory.
Improve transparency and processes in Antimonopoly Law (AML) investigations It should be
expected that China, with its large economy, will develop into the third leg of the global antitrust
regime, along with the United States and the European Union. Nevertheless, foreign and domestic
companies have well-founded concerns about how AML investigations are currently conducted and
decided in China, including fair treatment and nondiscrimination, lack of due process and regulatory
transparency, lengthy time periods for merger reviews, and the determination of remedies and fines.
Antitrust investigations must be transparent, non-discriminatory, follow internationally-accepted due
process procedures, and allow legal counsel participation.
Increase the use of transparent, internationally harmonized standards for goods and services
sold in China’s market The use of internationally harmonized standards in China is one of the best
ways to ensure that Chinese consumers have access to a wide range of choices in the latest products
and services and that Chinese products and services are accepted and competitive internationally. To
more effectively align with international standards, China should use global standards as the basis
for Chinese standards wherever practical and adopt a more science-based, fair, equal, transparent,
and market-led approach to standards setting and development that is open to all companies
regardless of nationality, including domestic, foreign-invested, and foreign-based manufacturers.
Accelerate sensible US export control reforms Export controls are an important part of ensuring
the security of the United States. The Obama administration should continue reform efforts that will
ensure US security is not undermined, while boosting US exports to help support and create jobs. At
the same time, the United States should allow greater exports of items that do not present a security
risk and are already available on open markets from non-US sources.
Conclude the Information Technology Agreement negotiations to expand trade liberalization
USCBC applauds the achievement of a bilateral agreement on the expansion of the WTO
Information Technology Agreement (ITA). We encourage the United States and China to take
further steps to finalize the ITA with the other negotiating parties early in 2015. A comprehensive,
high-standard, commercially-meaningful ITA expansion would provide positive momentum to other
investment and trade negotiations by demonstrating a commitment to openness and providing
benefits to all parties.
Ensure Competitive Neutrality and Improve Transparency
Ensure equal treatment in licensing For each of the past nine years, USCBC’s annual membership
survey has highlighted licensing barriers as one of the top areas of discriminatory treatment in China.
These licenses include business licenses, branch licenses, product approval licenses, import licenses,
and other licenses and permits in sectors such as banking, healthcare, insurance, express delivery,
construction, legal, and value-added telecom services (such as data centers). In many cases, Chinese
companies are able to receive these licenses without the same restrictions or delays faced by foreign
companies and foreign-invested companies. We appreciate the State Council’s recent efforts to
reduce licensing requirements, but to date the licensing barriers impacting foreign companies remain
US-China Business Council Board of Directors
2015 Priorities Statement
Page 4
largely unaddressed. We encourage further efforts to reduce licensing barriers and ensure equal
treatment in licensing reviews and approvals. Licensing and other government approval decisions
should be made without prejudice against type of ownership and without influence from competing
entities.
Ensure equal treatment in government procurement for all legal entities in China, regardless
of ownership China should publicly release the Implementation Regulations of the Government
Procurement Law and finalize the draft Administrative Measures for Government Procurement of
Domestic Products with modifications, to ensure that goods and services provided by all legal
entities in China are treated equally during procurement processes, regardless of ownership. Earlier
drafts of these two regulations required additional modifications to address information technology
products and other areas before they were to be finalized and implemented. If appropriately revised,
the rules would roughly parallel similar rules applied to Chinese companies in the United States.
China should also take the necessary steps to join the WTO’s Government Procurement
Agreement in 2015. Doing so under meaningful terms will positively address many concerns with
“Buy American” and “Buy Chinese” procurement practices in each country, as well as create
additional positive momentum for concluding the BIT.
Ensure equal treatment for American technology products in China China has in the past two
years implemented several policies that effectively exclude US technology companies from
commercial opportunities in China for reasons unrelated to the quality and security of their products
and services. Technology purchasing decisions, whether public or private, should be based on sound
commercial and technical factors, and not politicized.
Further improve rule-making transparency China’s central government has improved rule-
making transparency over the past several years, but further improvements are needed. China should
fully implement its commitment to publish all draft trade and economic related laws, administrative
regulations, and departmental rules for a full 30-day comment period, but it should also consider
going further by posting draft regulations on a designated website for a 60- or 90-day public
comment period.
Strengthen Intellectual Property Rights (IPR) Protection and Adhere to Mutually Beneficial
Innovation Policies
Continue to strengthen China’s IPR regime and enforcement of IPR in China Stronger IPR
protection brings mutual benefits. China should continue to improve its IP legal regime by updating
laws and regulations to reflect the latest developments in IP protection and enforcement. It should
also continue to expand resources devoted to IPR enforcement and adopt stronger deterrents against
IP infringement. Adopting the WTO-consistent deterrent of criminal penalties in cases of
commercial-scale infringement and broadening the use of higher penalties and stronger deterrents in
both civil and criminal cases against all types of IPR infringement—including patent, copyright,
trademark, and trade secrets violations—will benefit all companies and IP rights holders in China.
Improve enforcement against online counterfeiting and piracy Internet platforms are a growing
means for counterfeiters to market and sell counterfeit goods and distribute pirated content, but they
present special challenges for rights-holders and enforcement officials alike. China should increase
enforcement of Internet-related IP rights to ensure its laws and regulations cover areas such as use of
trademarks on websites, trademark-related aspects of domain name registrations, and the use of
websites as platforms for counterfeit and pirated products. Such rules and their enforcement should
US-China Business Council Board of Directors
2015 Priorities Statement
Page 5
establish a framework that promotes accountability while balancing the needs of legitimate IPR
holders and Internet intermediaries.
Strengthen trade secrets protection The protection of trade secrets is a core component of
innovative economies. China can take positive steps to encourage innovation by expanding its efforts
to address trade secrets concerns, including the development of a Trade Secrets Law, broader use of
judicial procedures on preliminary injunctions and evidence preservation orders, and reducing the
high evidentiary burden that plaintiffs face during trade secrets cases.
Protect IPR and technology during government review processes China should ensure that
government reviews of patents are consistent with international patent practice, do not require
unnecessary examination data, and do not unreasonably reject applications or revoke existing patents
under discriminatory criteria.
Follow internationally proven, effective innovation incentives In place of discriminatory
government procurement preferences, China should pursue several other policy approaches that
would more effectively promote innovation:
o Revise criteria in the existing High- and New-Technology Enterprise (HNTE) program that
currently requires IP ownership in China or a five-year global exclusive license to allow legally
acquired, non-exclusive licensee or usage rights, or exclusive license rights in China only. These
revisions would positively impact company decisions about where to locate innovation activity.
o Ensure equal access to government-funded innovation programs, including programs to allow all
domestic enterprises, including foreign-invested enterprises, to participate in programs to
develop China’s Strategic Emerging Industries (SEIs). Such access would ensure that these
programs succeed by encouraging all interested companies to develop these technologies. An
open environment would also ensure that Chinese companies benefit by being connected to a
global innovation network, which could further spur SEI innovation.
© 2015, The US-China Business Council 1
USCBC China Economic Reform Scorecard – Marginal Improvement; Impact Still Limited June 2015
Executive Summary The latest US-China Business Council (USCBC) assessment of China’s economic reform
efforts finds signs of more reform activity but continues to show that this activity has a limited impact on the top concerns of American companies doing business in China. Recent months have seen both positive and negative signals in key areas, such as investment openings and equal treatment for foreign products.
While China’s top-line reform message of “letting the market play a decisive role” remains compelling, the slow speed of reform in essential areas, as well as signs of protectionism in certain sectors, continues to create uncertainty about whether policy changes will address market access and level playing field concerns of USCBC members.
Since USCBC’s previous assessment in February 2015, several new central government measures have been released that improve, or pledge to make incremental improvement to, the business environment for foreign companies. This progress can be seen in the limited investment openings introduced by updated versions of China’s Catalogue
Impact of Economic Reform on
Foreign Companies (as of April 30, 2015)
*Slight improvement over February 2015; new assessment in black
Guiding Foreign Investment (CGFI) and free trade zone negative list; new requirements for public disclosure of administrative approval authorities for city governments; and recent pilot measures from the State Council opening certain service sectors to foreign investment for a three-year trial period in Beijing. Financial reform has been active, with a decision to open China’s bank card clearing sector to foreign companies; the first public bond default of a state-owned enterprise; greater room for qualified foreign institutional investors to participate in China’s debt and securities markets; and the introduction of a deposit insurance system for banks in China.
At the same time, companies have continued concerns about policies that use “national security” to exclude foreign companies from business opportunities in various sectors, as well as language in new industry development plans (such as “Made in China 2025”) that appear to promote Chinese companies over their foreign counterparts, including domestic legal entities with foreign investment. Additionally, even sectors that have seen reform efforts, such as financial services, have yet to address key concerns on foreign ownership restrictions. The lack of movement on such key concerns highlights the mixed signals China is sending on its reform efforts, and underscores the perception that China is prioritizing internal reforms before addressing external (foreign company) concerns.
Overall, China’s reform efforts have yet to comprehensively address core business issues like foreign investment restrictions, licensing, and other market barriers that often benefit domestic companies. China’s reform program is in its second full year of a timeline that the leadership has indicated will end in 2020. Near-term opportunities for further progress on economic reform could come at the upcoming US-China Strategic & Economic Dialogue (S&ED), during President Xi Jinping’s September 2015 state visit to the United States, or in conjunction with bilateral investment treaty (BIT) negotiations between the United States and China.
© 2015, The US-China Business Council 2
Since the Xi administration came to power in early 2013, senior government officials and agencies have spoken widely about economic reform. The November 2013 Chinese Communist Party (CCP) Third Plenum—the third full meeting of China’s top political leadership during the 18th National Congress—was a turning point in the government’s economic reform effort under President Xi Jinping. Post-plenum documents and official statements said the market should play a “decisive role” in China’s economy –- a change from previous statements that the market should play a “basic role.” Additionally, these same statements said that reforms should focus on improving the legal system, opening more areas to foreign and private investment, and changing how state-owned enterprises (SOE) are owned and operated. While China’s top-line reform message of “letting the market play a decisive role” remains compelling, few concrete policies have emerged to implement the broad areas laid out for reform, and existing signals about reform have been mixed. The slow speed of reform continues to create uncertainty about when—and even whether—policy changes will address the market access and level playing field concerns of USCBC members. USCBC tracks reform developments to address two major questions:
What tangible progress have Chinese government agencies made toward implementing economic reform?
What impact will reforms have on US companies and their operations in China?
To answer these questions, USCBC has compiled a list of reform-related policies since the start of the Xi administration. The current assessment includes 26 months of data from March 2013 through April 2015. These policies are divided into themes, such as the role of the state and the market, foreign investment, and institutional reforms. Given the stated role of the China (Shanghai) Pilot Free Trade Zone (Shanghai FTZ) as the “test lab” for reforms nationwide, this report also analyzes specific Shanghai FTZ-related policy announcements. USCBC will continue to monitor policies developed for the Shanghai FTZ and the three newly opened free trade zones (Fujian, Guangzhou, Tianjin).
This report assesses the impact of China’s reform efforts on foreign company operations by rating individual policies on their direct and immediate impact on foreign company concerns.
Each policy is assessed as having either a “significant impact” (green), “moderate impact” (yellow), “limited impact” (orange), or “no impact” (red) for foreign company operations in China.
USCBC’s overall assessment uses a three-color dashboard, rating China’s reform efforts as either limited, moderate, or significant based on their tangible impact on foreign companies.
For more information about USCBC’s methodology, see Appendix 1. For a fuller list of reform-related policies tracked by USCBC, see Appendix 2.
USCBC Assessment: Slight Improvement, Yet Mixed
Signals Persist
USCBC’s latest assessment of China’s economic reform efforts still indicates “limited” progress, though with some improvement since our February 2015 assessment. This assessment is based on a review of both new and existing policies. Since December 2014, Chinese government agencies have released a few reform-related policies and investment lists detailing responsibilities for government agencies, timelines for action, and specific steps to implement given areas of reform that will positively address certain foreign company concerns. While there continues to be slight progress on reforms in key sectors important to foreign companies, there have also been a series of policies indicating a lack of desire to include foreign
© 2015, The US-China Business Council 3
companies in China’s reform efforts. This has led to a continuation of the mixed signals China is sending to investors regarding its openness and ability to achieve truly market-oriented reform in the near term. Among the regulatory documents working to move China’s reform needle in the right direction were several investment-related developments. An updated version of China’s Catalogue Guiding Foreign Investment (CGFI) released in March 2014 cut back on a large number of sectors with foreign investment restrictions – primarily in the manufacturing and mining sectors. China’s FTZ negative list, now applicable to FTZs in Fujian, Guangdong, Shanghai, and Tianjin, canceled or relaxed restrictions in 18 industry sectors, though many investment restrictions in key sectors remained in place. Although some of these reductions were due to the consolidation of negative list items, these documents did create openings in areas such as aviation, shipbuilding, agriculture, and the automotive industry. A State Council decision that, pending robust implementation, opens the bank card clearing industry to foreign participation, and the first public default of a Chinese state-owned enterprise signal further progress in China’s market access and financial market reforms. Additionally, the State Council issued several regulatory documents improving institutional support for reforms to the business environment. These include State Council opinions calling for online publication of formal lists of local government administrative authorities in an effort to better manage and limit arbitrary exercise of authority by local government officials. Other items include State Council provisions restricting government interference in the courts; a State Council decision to further open Beijing’s service sectors to foreign investment; and the State Council’s introduction of a bank deposit insurance system to encourage competition in the banking sector, along with plans to give banks greater freedom in making investment decisions. However, many of these items do not comprehensively address core foreign company issues. Furthermore, the concurrent introduction of several regulatory documents that effectively promote domestic companies and technology over their foreign counterparts have raised concerns. Chief among these are new rules in the banking sector
requiring the use of “secure and controllable” technologies, a category indicating that foreign companies would not be able to qualify for these standards unless they surrender key technologies to Chinese authorities such as source code and encryption algorithms. Although those regulations have been suspended, other policies related to telecommunications, e-commerce, and smart manufacturing appear to use similar language. Additional policies that introduce national security reviews for foreign investment in FTZs and describe new funds and policies to promote domestic manufacturers also raise concerns about the direction of reform. Similarly, the role of foreign companies in the Made in China 2025 plan, China’s ten-year roadmap for strengthening its manufacturing competitiveness, remains unclear. The May 2015 release of the State Council’s annual reform priorities agenda again highlighted internal issues first, such as addressing reform concerns with SOEs and administrative burdens placed on companies. From a broad perspective, despite the number of reform policies released by Chinese government agencies (more than 350 by USCBC’s latest count), many are still not broad enough in scope, or specific enough in implementing detail, to address foreign company issues. Instead, many of these policies address minor operational issues or are limited to particular sectors. Others do not clearly apply to foreign companies. Senior officials have stated that China’s overall economic reform plans will be implemented through 2020. The Shanghai FTZ was launched in 2013 with a three-year timeframe before its reforms would go nationwide, though some of these policies have already been extended to designated districts in Shanghai. Reform policies still have the potential to address foreign company issues before the above deadlines are reached, even if the practical progress so far has been scant. USCBC encourages Chinese officials to take further steps to actively promote economic reforms that will benefit both foreign and domestic companies. Key steps include establishing concrete policies that liberalize investment, boost the role of the market in the economy, create a level playing field for foreign and domestic firms, and promote further legal reform.
For a copy of the full report, visit www.uschina.org/Annual-Meeting-2015-Packet.
Update: Competition Policy & Enforcement in China May 2015
Executive Summary
China’s competition regulators seem to have paused some controversial Antimonopoly Law (AML) enforcement practices in response to concerns raised in the US-China Business Council’s (USCBC) September competition report and echoed by international government and industry stakeholders. o The National Development and Reform Commission (NDRC) completed only two new pricing
investigations since that time, though both involved foreign companies. NDRC has recently announced new enforcement priorities, indicating plans to resume more high-profile investigations in areas such as abuse of intellectual property rights (IPR) in the near future.
o The Ministry of Commerce (MOFCOM) approved 137 merger and acquisition (M&A) deals in the same time period with no rejections and no conditions imposed on approvals.
o The State Administration of Industry and Commerce (SAIC) announced decisions in five investigations, all involving domestic companies.
At the December 2014 Joint Commission on Commerce and Trade (JCCT), China committed to treat foreign and domestic companies equally in competition enforcement, increase transparency, and allow legal counsel to attend meetings and enforcement proceedings.
A review of public NDRC price investigations reveals several interesting data points: o Chinese companies and foreign companies are both being fined on the basis of revenues in China.
Initial concerns that foreign companies might be fined based on global sales so far are unfounded. o The average fine is 2.5 percent of sales, well below the cap of 10 percent allowed by the AML.
However, foreign companies are being fined at a higher average rate (3.3 percent) than their domestic counterparts (1.9 percent).
USCBC has also updated the data regarding foreign versus domestic cases: o Twenty-five percent of the NDRC’s concluded pricing investigations have involved foreign
companies, while approximately three-quarters have involved Chinese companies. o While 97 percent of M&A deals since 2008 have been approved by MOFCOM without conditions,
all of the 26 rejected or conditionally approved transactions have involved foreign companies. o All of the 22 completed monopoly investigations by the SAIC have involved Chinese companies,
but foreign companies are involved in two ongoing cases yet to be decided.
Despite the pause, it remains to be seen if foreign company concerns have been sustainably resolved. These concerns primarily revolve around how investigations and M&A reviews are conducted and decided, including 1) fair treatment and nondiscrimination; 2) lack of due process and regulatory transparency; 3) lengthy time periods for merger reviews; 4) the role of non-competitive factors in competition enforcement; 5) determination of fines and remedies; and 6) the broad definition of monopoly agreements. Addressing these concerns would also benefit domestic Chinese companies.
Broad questions raised six months ago have not yet been put to rest: Will China use the AML to protect domestic industry rather than promote fair competition? Is the government using the AML to lower prices, rather than letting the “market play the decisive role” as prioritized at the Third Plenum? Decisions and investigations in the coming months may provide further insight.
As the second largest economy in the world, China should and needs to have a well-designed and predictably executed antitrust regime. Government and industry groups in the United States and other countries must work with their counterparts in China to promote further progress toward reaching this mutually beneficial goal.
For a copy of the full report, visit www.uschina.org/Annual-Meeting-2015-Packet.
China 2015 Regulatory Transparency Scorecard March 2015
Executive Summary
Transparency—the openness of government decision-making, the public availability of information, and the solicitation of broad public feedback during the drafting of new laws and regulations—is consistently cited as a top concern in the US-China Business Council’s (USCBC) annual membership survey on China’s business environment. To measure the transparency of China’s lawmaking process, USCBC conducts an annual review of how select PRC government agencies comply with commitments to soliciting public feedback. In particular, all of China’s economic and trade-related central government agencies have agreed to public comment periods of at least 30 days on draft laws, administrative regulations, departmental rules, and regulations that function as regulations and rules. For the fifth straight year, USCBC has found that China’s central government agencies have an inconsistent record and are not fully meeting their regulatory transparency obligations. These obligations include high-level commitments by the National People’s Congress (NPC), China’s legislature, and the State Council, the equivalent of the US cabinet. In 2008, the NPC agreed to solicit public comments on most draft laws and amendments. In 2008, 2011, and again in 2012, the State Council pledged during bilateral dialogues with the United States to release drafts of all economic and trade-related administrative regulations and departmental rules for at least a 30-day public comment period. One challenge in tracking transparency is the lack of clarity about which regulations fall under China’s commitments. USCBC’s report uses two filters for determining what policy documents to include in the report: a “narrow” interpretation that includes document types explicitly labeled as administrative regulations or departmental rules (known in this report as “narrow regulatory documents”), and a “broad” interpretation that includes other documents that have a clear economic regulatory impact (known in this report as “broad regulatory documents”). This year’s report, covering the period from January to December 2014, reveals that compliance remains far below China’s commitments for nearly all government entities. Only China’s State Council showed a notable improvement this year, but it is unclear if this is the start of a dedicated and positive trend, or a one-off result. Major findings of the report include:
Seventy-five percent of narrow regulatory documents were posted by the State Council, just under a 50 percentage point increase from USCBC’s 2013 and 2014 findings. Since 2013, when USCBC began listing data separately for each agency, this is the highest rate of compliance for any entity.
However, the State Council’s record is not as positive for broad regulatory documents. The State Council posted only 30 percent of its broad regulatory documents for public comment in 2014.
Just three of nine laws passed or amended by the NPC were posted for public comment.
None of the seven priority government agencies monitored by USCBC posted more than 30 percent of broad regulatory documents for public comment on the State Council Legislative Affairs Office (SCLAO) website, and most posted less than 15 percent. For narrow regulatory documents, none of the agencies posted more than 62 percent of policies for public comment on the SCLAO website, and most posted less than 35 percent.
USCBC recommends that the Chinese government ensures that all administrative regulations, departmental rules, and regulatory documents are posted on the designated SCLAO information website comment page for at least a 30-day period, as per China’s bilateral commitments and domestic laws and regulations. China should take a further step by permitting a longer comment period of 60 or 90 days, which would allow for higher-quality comment contributions. Finally, lawmakers should define and clarify what types of documents are covered under the State Council’s transparency commitments, making sure to include catalogues, measures, standards, and opinions, all of which can impact industry significantly.
Save the Date: USCBC GALA 2015
December 2, 2015
6:00-9:00 pm
Washington, DC
Save the date and plan to join the US-China Business Council (USCBC) for our 2015 Gala in Washington, DC.
The event will recognize USCBC and its membership’s history of leadership, achievement, and partnership in support of an expanded US-China commercial relationship. The Gala continues to be an important fundraising effort that strengthens USCBC's ability to serve its member companies.
Information on sponsorship packages and benefits, discounted lodging, and other event details are forthcoming at www.uschina.org.
For more information, contact USCBC Director of Programs Gloria González-Micklin (T: 202-429-0340, ext. 211; [email protected]).
