By Mario Mancuso
The US-China relationship is as important as it is hard work. Both of them are large and complex countries, and it's not surprising that there are often differing views about their relationship that encompasses the fortunes of one in every four people on Earth. Given the high stakes and our real differences, there's a temptation to substitute the pageantry of international affairs for real progress.
Because of the temptation it is important that we imbue vitality in bilateral ties by looking for appropriate ways to accomplish meaningful things together.
The US and China have an opportunity to collaborate on a project of enormous bilateral and global significance: to lay the foundation for a vibrant and sustainable clean technology future. While the agreement the US and China signed at the recent Strategic and Economic Dialogue raises some questions, that tentative start should not undermine the larger work of harnessing our collective strengths to foster the rapid, market-driven commercialization and adoption of the most promising clean technologies.
Such a cooperative effort is laudable and achievable - and long overdue. China and the US both are heavily dependent on foreign oil, and together account for almost half of the world's greenhouse gas emissions. But both are showing real progress on a number of fronts, including wind power, carbon capture and sequestration, and "smart grid" electricity transmission to reduce their emissions.
Though there are real issues in managing economic competition and interdependence in this promising growth industry, it's clear that we can do more together than we can alone, and that our combined efforts would accelerate our clean-technology future.
To achieve this, a few practical steps need to be taken by both the governments. As a beginning, our governments should clarify that their role is not to pick winners or protect domestic champions, but to create the framework and conditions for an open, competitive and functioning clean-tech market. For this to happen, the two governments should focus on accomplishing three concrete tasks.
First, they should seek to eliminate arbitrary regulatory barriers to US-China commercial hi-tech trade and work to advance common global technology standards. In the past, China has sharply criticized US export controls despite the fact that those controls apply to less than 1 percent of all hi-tech trade with China.
But to ensure that even those modest controls are not because of US security or foreign policy interests, Washington should reexamine and eliminate them, if necessary. Contrary to widespread perceptions, however, the good news is that no such export controls apply to the export of US commercial clean-tech to China.
Second, China should continue efforts to develop a world-class intellectual property rights (IPR) system. Many leading overseas companies want to cash in on the tremendous opportunities China's clean-tech sector offers.
But many of those firms are hesitant to share the know-how to develop the promising technologies because they are worried over IPR norms. In fact, such companies' decision to stay away from China is one of the biggest constraints to US-China hi-tech trade, and it is a far more consequential "barrier" than export controls.
Though over the past few years China has shown an increased commitment to protecting the IP of foreign firms operating within its borders (for example, there has been a marked rise in IP-related criminal prosecutions), greater IP enforcement efforts are needed, particularly if the aim is to encourage US firms to bring advanced clean-tech into China.
Maintaining a vigorous IP regime is not only important for foreign companies, but also for Chinese investors and entrepreneurs because they, too, develop cutting-edge technology products and services.
Third, the US and China should avoid trade protectionism, though they are justified in regulating inbound foreign direct investment for national security reasons.
Some other rules also make it hard for foreign manufacturers and investors to compete in China. While China's renewable energy standards make it mandatory for every large power firm to have a certain percentage of its generating capacity for renewable energy, they do not say how much electricity must they actually generate.
So power firms can buy the cheapest wind turbines even if they break down frequently because they do not have to generate but only have a certain capacity to generate power. Therein lies the problem. Power generating firms prefer to buy Chinese-owned companies' turbines because they are cheaper than their foreign-brand counterparts.
China and the US both should work for a transparent and level-playing field to enable companies of all origins to develop clean-tech products and services. Subsidizing domestic firms and denying multinationals competitive access to local markets and government procurement contracts go against the clean-tech trade cooperation that the two countries should be committed to.
By taking concrete steps now, our governments can do two important things simultaneously: lay the foundation for a clean-tech future that the world needs, and begin writing the next constructive chapter in one of the most important bilateral relationships in the world.
The author has served as US Under-Secretary of Commerce (Industry and Security) and US Chair of the US-China High Technology and Strategic Trade Working Group.
(China Daily September 10, 2009)
