Financial Times | 13 December 2007
China and US to speed treaty on investing
By Richard McGregor in Xianghe
The US and China have agreed to accelerate talks on a bilateral investment treaty amid concern in Beijing that the Chinese are being blocked from buying into US companies and assets.
Carlos Gutierrez, the US commerce secretary, said on Thursday after the close of the twice-yearly top-level dialogue between the two countries that the issue had been discussed at length at the meeting outside Beijing.
China’s concerns date from the failed 2005 purchase by CNOOC, a state energy company, of Unocal, a US oil and gas company. They have been aggravated of late by the threat of barriers to purchases by its newly established sovereign wealth fund.
A communiqué included, at Beijing’s request, a commitment from the US that Chinese banks would be treated like other foreign lenders if they wished “to acquire stakes” in US banks.
China is watching closely how Washington handles Huawei Technology’s role in a takeover - led by Bain Capital - of 3Com, a US telecoms equipment maker which supplies security equipment to the US government.
Hank Paulson, the US Treasury secretary, said concessions made by China to liberalise its financial services sector at the meeting were “modest” but headed in the right direction.
China has agreed to lift a moratorium on overseas entry into its increasingly lucrative securities sector but has yet to detail what type of business foreigners will be able to do, beyond underwriting new share issuances.
China has also delayed announcing how much equity foreigners would be allowed to hold in brokerages - currently 33 per cent - saying that regulators would report before the next meeting in June. The US wants the cap lifted to 49 per cent.
China did agree to allow foreign investors in China to list on local stock markets and to issue local currency bonds, a move welcomed by Mr Paulson.