The Metropolitan
Corporate Counsel
PECIAL SECTIO
S
Chinese Ambassador Speaks Of Globalization’s Promise
Providing broad perspective to our cov-
erage of China, the Editor offers recent
comments from the Hon. Zhang Yesui,
Ambassador of the People’s Republic of
China to the United States.
History Of The People’s Republic of
China
China has gone through an extraordi-
nary journey since it was founded, par-
ticularly during the past 32 years of
reform and opening-up. Overall, the
economy has grown significantly, result-
ing in greatly improved living standards,
better educational levels and enhanced
cultural sophistication for the Chinese
people.
The average life expectancy is up
from 35 to 73 years. Illiteracy is down
from 80 percent to below 3.5 percent.
Between 1978 and 2009, China's per
capita GDP has grown by over 12 times,
with more than 200 million people in
rural areas being lifted out of poverty.
Globally, China is playing an active
international role as never seen before.
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China
The Globalization Process
In spite of the heavy blow to the
world economy by the international
financial crisis, the main trend of eco-
nomic globalization is unchanged due
to the persistence of three major dri-
vers: scientific and technological
advances, cross-border trade and
investment, and international industrial
restructuring. Technological advances
with environmental protection, new
energy and low-carbon economy, as
well as technology at its core, will con-
tinue to drive the new round of global-
ization. Response to the international
financial crisis has given rise to a pro-
found industrial restructuring and
global reallocation of resources.
The effects of economic globaliza-
tion as a double-edged sword have
become more obvious. On the one
hand, the worldwide flow and distribu-
tion of elements of production has
undoubtedly lowered costs, increased
efficiency and further improved overall
productivity. On the other hand, global-
ization has aggravated world economic
imbalance. There is growing public dis-
content and suspicion in many coun-
tries, and the mood for trade and invest-
ment protection is on the rise. Thus, we
recognize the risks of excessive finan-
cial globalization.
While pursuing positive develop-
ment within China, we also are making
contributions to the global economy.
The Chinese economy has become an
increasingly important engine for world
economic growth. It is estimated that
China will account for more than 30
percent of world economic growth in
2010. In the wake of the international
financial crisis, China was one of the
first to recover and has played an
important role in promoting an early
recovery worldwide.
Integration Into The Global
Economy
Since the policy of reform and open-
ing up was adopted in 1978, China has
actively participated in international
division of labor and cooperation,
attracted foreign capital, advanced
technology and management expertise,
upgraded industrial structure and
improved economic patterns. China's
economic development over the past 30
years essentially is attributable to
reform and opening up, but at the same
time, it has also benefited from oppor-
tunities presented by economic global-
ization.
As China's economy integrates with
the world economy, it is exposed to the
risks and challenges associated with
globalization. Fluctuations in the inter-
national financial market have signifi-
cantly decreased the assets of many
Chinese companies and individuals.
Hon. Zhang Yesui
The rise and fall of international energy
and food prices also directly affect the
life of the Chinese people. Although
China's GDP is one of the biggest in the
world, its per capita GDP is only 3,700
dollars, less than 10 percent of the per
capital GDP in the U.S. and ranking
behind 100 other countries. Every year,
24 million people need jobs in Chinese
cities. China faces challenges from an
irrational economic structure, weak sci-
entific innovation as well as environ-
mental concerns and resource con-
straints. The uneven development
between urban and rural areas and
among different regions creates an
imbalanced economic and social devel-
opment. These challenges are becoming
more acute in the context of globaliza-
tion.
China And U.S. Alignment Of
Interests
In this age of globalization, the inter-
ests of China and the U.S. have never
been more aligned. We are one
another's second largest trading partner.
China has been the fastest growing mar-
ket for U.S. export, and U.S. export to
China has grown by 330 percent over
the past decade. It grew by 33.8 percent
in the first three quarters of this year.
The U.S. is the number one source of
foreign investment in China, and
investment from Chinese businesses in
the U.S. also has increased.
Economic and trade ties between
China and the U.S. are mutually benefi-
cial and include the following tangible
benefits to the U.S. First, the rapid
expansion of U.S. export to China has
created many job opportunities in the
U.S. According to U.S. Commerce Sec-
retary Gary Locke, for every one per-
cent increase in U.S. export to Asia,
100,000 new jobs are created. It is esti-
mated that between 2001 and 2007,
U.S. export to China created 2.57 mil-
lion new U.S. jobs. Research by Mor-
N
gan Stanley concluded that four to eight
million U.S. jobs are closely associated
with China-U.S. trade.
Second, China's export of quality
and affordable commodities to the U.S.
not only promotes China's economic
growth, but also meets the needs of
American consumers. A total of over
600 billion dollars have been saved in
the past 10 years, according to one esti-
mate. One study by the U.S.-China
Business Council shows that trade with
China has boosted economic growth
and lowered the inflation rate for the
U.S., resulting in an increase of approx-
imately 1,000 dollars in real disposable
annual income per U.S. household.
Third, investment by Chinese com-
panies in the U.S. has helped to create
many local jobs. For example, China
Ocean Shipping Company (COSCO)
started direct service to Boston in 2002,
which saved Boston’s port from being
closed down and preserved 9,000 jobs.
Fourth, for many American compa-
nies, China operations are the highlight
of growth and, for some, the only busi-
ness generating profits. According to
AmCham-China's 2010 White Paper on
the State of American Business in
China, 71 percent of U.S. companies
operating in China made profits in 2009
and 91 percent are optimistic about the
five-year prospects. In 2009, General
Motors filed for bankruptcy in the U.S.,
but its sales in China went up by 67 per-
cent, making China its second biggest
overseas market.
Trade Relations
Given the fact that China-U.S. busi-
ness ties are growing so fast in so many
areas on such a large scale, problems
and frictions are hardly avoidable. The
key is to address them properly through
dialogue and consultation. There are
some in the U.S. who believe that the
trade imbalance is caused by the under-
valued exchange rate of the Renminbi
(RMB). In fact, the root cause of the
trade imbalance is structural differences
in trade and investment, not the RMB
exchange rate. It is precisely the result
of international division of labor and
industrial transfer in the era of global-
ization.
China does not seek trade surplus.
China has a surplus in trade of goods,
but runs a deficit in trade of services.
China has a surplus in trade with the
U.S. and Europe, but runs a deficit in
trade with Japan, Republic of Korea and
ASEAN countries. The majority of
China's exports to the U.S. are labor-
intensive, low value-added consumer
goods. Many of them are no longer pro-
duced in the U.S. and would have to be
Please turn to page 36
Page 36
GW Law School
Continued from page 31
businessman Vinod Gupta, was instru-
mental in establishing the IIT Kharag-
pur business school, which is named
after him. Vin shared in the vision of
educating the brilliant graduates from
the IIT and other scientists and engi-
neers from around India in the field of
law, with an emphasis in IP law, so that
they could be equipped to work as
lawyers on IP matters. Once the idea
was defined, we were asked to help
identify topics for the curriculum at the
new law school and also to help in other
respects, such as identifying course
materials and aiding in the establish-
ment of the library.
Editor: How has India’s legal profes-
sion changed owing to the influx of
foreign investment?
Karamanian: This is a very interesting
and timely issue due to a recent legal
challenge to the role of foreign attor-
neys in India. We are watching with
interest the developments concerning
liberalization of the legal market in
India for U.S. lawyers. India has a very
established, sophisticated and large bar.
Lawyers in India, like lawyers in the
United States, are well-versed in many
aspects of business law. A recent article
noted that the focus on IP law in India
has led to the rise of Indian law firms
and lawyers specializing in IP law, and
it seems some of them are doing very
well financially. Also, the increased
flow of trans-border transactions has led
to a greater interest in arbitration and
other forms of alternative dispute reso-
lution. We are seeing more of our LLM
graduates from India gravitating
towards the major law firms in India and
working on matters relating to foreign
investment. It remains to be seen how
these developments will affect foreign
lawyers.
Editor: Based on Raj Davé’s recom-
mendations, a mock trial was
arranged in India with presentations
by U.S. lawyers presenting a patent
law case before a U.S. judge and jury
under U.S. law and another trial by
Indian lawyers before an Indian
judge under Indian law.
Karamanian: Nearly every year we
have held a mock trial the day before
the IP summit. The audience consists
largely of students from Indian law
schools. The trial is a useful educational
tool as it allows for the comparison of
the presentation of a case under U.S.
law by U.S. lawyers and then under
Indian law by Indian lawyers. It has
been interesting to see the similarity
between the two systems, particularly as
to the cross-examination of witnesses.
The U.S. delegates have also enjoyed
watching the outstanding arguments by
some of India’s leading advocates.
Editor: Please describe the Indian
Studies Center at GW Law and how
it interrelates with the India Project.
Karamanian: It’s important to have a
full-fledged center at GW Law that
The Metropolitan Corporate Counsel
examines a wide range of legal issues
relating to India. A few years ago we
hosted in Washington, DC a major con-
stitutional law conference involving
India that featured leading lawyers from
India, including Fali Nariman, Abishek
Singhvi, and Prashant Bhushan, as well
as lawyers and academics from the
United States. The center will pull
together and manage the many different
aspects of our Indian activities, such as
student moot court competitions, stu-
dent exchanges, conferences and other
collaborative activities with our Indian
counterparts. Gauri Rasgotra, a lawyer
from India, served as the first head of
our India Project, and we are delighted
that Rina Pal has now taken over. The
center will also look for more opportu-
nities for our students in India. For
example, last academic year, we sent
two of our students to Gujarat National
Law University to compete in its moot
court competition – and the team won.
Members of the winning team were
given the opportunity to intern at the
law firm of Lakshmikumaran & Sridha-
ran in New Delhi and Jocelyn Bond of
the team is at the firm now. We are send-
ing another team this coming year to the
Gujarat National Law University as
well as a team to the K.K. Luthra
Memorial Moot Competition at the Uni-
versity of Delhi, Faculty of Law.
Editor: What was the effect of Presi-
dent Obama’s trip to India?
Karamanian: President Obama’s
recent visit heightened the focus on
India. Mind you, President William
Clinton and President George W. Bush
were also both highly engaged with
India, so it is nice to see that President
Obama is building on the previously
established momentum. An important
aspect of the U.S.-India relationship is
education. Both the United States and
India, the world’s two largest democra-
cies, have very strong institutions in
higher education. Over the past year,
India’s Minister of Human Resources
Development, Kapil Sibal, has visited
the United States to discuss collabora-
tive educational opportunities. GW Law
has built meaningful relations with
leading Indian law faculties over the last
seven years. We measure our progress
by the outstanding Indian students we
have enrolled at GW Law and the qual-
ity of the programming and other col-
laborative activities we have held with
Indian law faculties and lawyers.
Editor: What are your plans for the
future?
Karamanian: On the IP front, we are
looking in 2011 to host a roundtable that
would allow for a wider range of partic-
ipants with the expectation of a more
academic treatment of some of the
issues. Our hope is that the roundtable
will lead to published papers. We will
continue with our outreach to the busi-
ness community, legal professionals,
the universities and other constituen-
cies, including members of the NGO
community. Also, we are organizing
more activities with our counterparts at
Indian law schools, such as exchanges,
moot court competitions, and joint pub-
lications.
Chinese Ambassador
Continued from page 35
purchased from other countries. Appre-
ciation of the RMB will not solve the
issue of trade imbalance for the U.S.,
nor will it noticeably reduce the U.S.
unemployment rate. From 2005 to
2008, the RMB has appreciated by 21.1
percent against U.S. dollar, but the U.S.
trade deficit continued to grow during
this period. This proves that the RMB
exchange rate is not the cause of trade
imbalance. China will further advance
the reform of its exchange rate regime,
but external pressure can only be coun-
terproductive.
The Importance Of Robust China-
U.S. Relations
China-U.S. cooperation has assumed
greater international significance. In
response to the international financial
crisis, China and the U.S. have stepped
up macro economic coordination,
worked together within the G20 frame-
work, and made important contribution
to economic recovery in both countries
and in the world. We have also had pro-
ductive consultation and cooperation on
a series of regional and global issues
such as counter-terrorism, non-prolifer-
ation, climate change, the Korean and
Iranian nuclear issues.
President Hu Jintao and President
Obama have agreed to work together to
build a positive, cooperative and com-
prehensive China-U.S. relationship for
the 21st century. This has set the direc-
tion for our bilateral relations. The
China-U.S. relationship will grow more
solid and stronger as our two countries
share more common strategic interests
and cooperate with each other in more
areas.
Core Strategies For China-U.S.
Relations
We stand for a comprehensive
approach to ease the trade imbalance
between China and the U.S. Both sides
will be losers in a trade currency war. In
my view, it is of vital importance for us
to cooperate in three areas.
First, we must continue to support
each other's economic restructuring.
China seeks to achieve economic
growth through boosting domestic
demand. The 12th Five-Year Plan,
which is being drafted, lays emphasis
on continued effort to expand domestic
demand, transform the mode of eco-
nomic development and embark on the
path of balanced development. The size
of China's domestic market is expected
to surpass two trillion U.S. dollars this
year, far more than China's total export.
At the same time, the U.S. is changing
its high spending, low saving mode of
growth. We should support one
another’s restructuring efforts and
explore cooperation in such areas as
clean energy, energy conservation and
emission reduction, environmental pro-
tection, infrastructure and modern ser-
vices industry.
Second, we need to increase U.S.
COMING IN J A N U A R Y : Focus on the UK
December 2010
export of hi-tech products to China.
China is prepared to further increase its
import from the U.S.; however, among
our 2008 hi-tech product imports, only
6.9 percent were from the U.S. This is
out of proportion, considering the U.S.
is the leading nation in science and
technology. U.S. export to China will be
greatly enhanced if restriction on high-
tech export to China is eased and real
efforts are made to promote free trade.
Third, we should encourage Chinese
businesses to invest in the U.S. Many
Chinese companies face obstacles and
uncertainties when making investment
in the U.S. We must create a level play-
ing field and encourage more Chinese
companies to invest in the U.S., which
will be conducive to job creation and
economic growth.
Broader Opportunities For
Cooperation
Educational and cultural exchanges
can serve as an important bridge
between China and the U.S. At present,
120,000 Chinese students are studying
in the U.S. Currently, there are about
20,000 American students studying in
China. The U.S. government has
launched a 100,000 Strong Initiative by
which it will send 100,000 American
students to China in four years. We wel-
come more American students to study
and conduct research in China. I was
pleased to learn that University of
Nebraska (UNL) president, James Mil-
liken, is visiting China. His first trip to
China represents a major step to
enhance exchanges and cooperation
with Chinese universities. I hope that
the Joint PhD programs, the Joint R&D
projects and the Confucius Institute that
the UNL has in partnership with Chi-
nese universities will be more and more
successful, thus making fresh contribu-
tion to the growth of our educational
and cultural exchanges and friendship
between our two countries.
Globalization’s Promise
Global efforts are needed to address
the challenges of globalization. It is
necessary to make globalization more
universally beneficial, coordinated and
balanced. Global governance – with
corresponding rules, regulations and
mechanisms that can rise to global chal-
lenges – needs to be improved. The
establishment of the G20 provided a
unique platform for enhanced global
governance. The reforms of the IMF
and World Bank are also necessary
steps to improve international coopera-
tion.
The Chinese Embassy embraces the
commitment to fostering expansive and
productive China-U.S. relations. We
encourage exchange and dialogue at all
levels, and it is our sincere hope to serve
as a bridge for friendship and deeper
mutual understanding between the Chi-
nese and American people. I welcome
all to visit the official website of the
Chinese Embassy in the United States:
http://www.china-embassy.org/eng/,
and I encourage all interest in China and
China-U.S. relations.