Investment deal to boost bilateral and global trade

Negotiations on the China-United States Bilateral Investment Treaty will make up most of the discussions during President Xi Jinping's forthcoming state visit to the US, the Ministry of Commerce said on Sept 16, 2015. [Photo/IC]

A high-standard Bilateral Investment Treaty is a tall order but essential for China and the US to emerge economically stronger from the current global slowdown.

No wonder, just hours after reaching the US on Sept 22, President Xi Jinping said the two countries must conclude such an agreement as soon as possible. This sense of urgency is justified by not only the huge economic challenges both countries have to overcome, separately or jointly, but also the huge benefits a boom in cross-border investment could bring about for the world's two largest economies as well as the rest.

China's entry into the World Trade Organization at the turn of the century expedited the country's rise as a global trading power to create millions of jobs for Chinese workers while lowering commodity prices for billions of consumers around the world.

And China-US trade, which soared from about $100 billion in 2000 to almost $600 billion in 2014, speaks volumes of the vital role trade has played in building closer and stable economic ties between China and the US.

However, with the Chinese economy slowing down after three decades of double-digit growth, it has become increasingly obvious that a driving force other than trade is badly needed to sustain economic growth at home and strengthen economic ties with other countries.

Sitting on foreign exchange reserves of more than $3 trillion, China has gradually developed a keen interest in using some of its financial and industrial resources in overseas markets. As a matter of fact, a large part of China's outbound investment, which exceeded $100 billion for the first time in 2014, has gone into resources or infrastructure projects in developing countries. Yet as more and more Chinese enterprises seek to "go global", they are eager to get equal investment opportunities in developed economies.