Frank Lavin, U.S. Under Secretary of Commerce for International Trade, spoke to AmCham-China and US-China Business Council members at the American Club on 31 July 06.
He was in town to meet Chinese officials about ongoing market access and compliance issues. He commented that China is expected to replace Japan as the U.S.’s third largest export market by the end of 2006 and that U.S. exports to China grew 36.5% on a base of US$ 41 billion during the first half of 2006.

Lavin said, recent sentiments in China for setting an FDI cap and tightening foreign investment policies were worrisome. “It is precisely the international sector of the Chinese economy that has been most successful,” he said. He added that for China to remain an export superpower, it needed to adopt international standards, those set by a free market rather than by the government. While noting that some protectionist sentiments exist in the U.S., the dominant philosophy was that U.S. economic growth lies in keeping its markets open and encouraging investment abroad, Lavin said. (comments from AMCHAM)
The China Economic Review added other comments – that the greatest challenge American businesses face in China is not lack of intellectual property rights or an undervalued yuan, but the “worrisome trend” of economic nationalism.
Mr. Lavin was in Beijing and Shanghai to address several issues, including US-based Carlyle’s attempted takeover of Xugong Construction Machinery, Citigroup’s bid for a controlling stake in Guangdong Development Bank, and Beijing’s upcoming decision on which 3G technology it will adopt as its standard.
For sure some sensitive and hot issues… I can agree with Lavin’s comments – nothing really new for me. Only now some observers start noticing the increasing trend of economic protectionism. The WTO grace period may come to an end soon but don’t expect the front gates to swing wide open. I made this comment five years ago when China joined the WTO. Just look at the closing doors as far as M&A are concerned.
It doesn’t mean there are no business opportunities – one just has to find the sectors where China agrees to open door to do the business it wants and needs, not the ones foreign companies dream about. That Mr. Lavin will have to understand… China wants to have a say in trade, investment and where it takes the country. It wants to decide its own fate and become more independent. Not that all will be pleased.