General Brent Scowcroft, president of the Scowcroft Group and former national security advisor for presidents Gerald Ford and George H.W. Bush, offered the keynote at the luncheon of the US-China Business Council’s (USCBC) 40th Annual Membership Meeting, expressing optimism and confidence in the future of the US-China relationship. His remarks can be read on the USCBC website. More than 80 executives from 62 member companies attended the event held in Washington, DC on June 4.
Helen Qiao, chief economist for Greater China at Morgan Stanley, kicked off the morning session with her analysis of the trends of China’s economy. She expressed concern that it is not clear who is in charge of economic policy at the moment. “I’m not exactly sure, and this is not something that I’m very used to,” she said. “In the previous 10 years, it was very clear. It was just Premier Wen [Jiabao], and he was given 100 percent of the trust.” However, her forecast for 2013 GDP growth remains above consensus at 8.2 percent. From 2011 to 2020, Qiao believes the Chinese economy will grow at an average rate of 7.6 percent.
Qiao ended her speech by saying that contrary to popular belief, for China to solve its most pressing problems, including pollution, traffic congestion, food security, and quality of medical and educational services, the government must continue to invest. “China has to invest more before it can consume more,” she said. When asked about her outlook for foreign companies operating in China, she was fairly optimistic saying that the current slowdown could spur policy changes.
Scott Kennedy, director of the Research Center for Chinese Politics and Business and professor at Indiana University, and Christopher Johnson, former analyst at the Central Intelligence Agency and current senior advisor and Freeman Chair in China Studies at the Center for Strategic and International Studies, offered their takes on China’s new leadership. Kennedy led off saying that the new administration looks good on paper and has the confidence of the business community. He believes the new leadership realizes changes need to be made, but they could face many obstacles along the way. The biggest challenge they face, Kennedy says, is separating the government from the party. He expects more policy guidance to come from the next meeting of the Chinese Communist Party Congress, known as the “third plenum,” which is expected to convene in October.
Johnson shared Kennedy’s optimism on the new leadership, and said he thought the leadership would focus mostly on domestic stability. In addition, he said he believed China was sending an important message that they were becoming a traditional global power with official visits to Europe, Russia, and Central America.
USCBC Vice President of China Operations Piper Stover then covered the top issues currently facing member companies. Since January, the top member inquiries received were about the leadership transition and its impact on business, the direction of the economy and investment climate, the impact of environmental regulations and standards, the ever-changing human resources environment, and about how best to carry out government affairs in China. She said businesses are experiencing gridlock with bigger investments as the new leadership at all levels settles. She noted that members are seeing noticeable results from the central government’s corruption crackdown. Stover also covered some of the latest reform efforts from the Chinese leadership, which include discussions on areas such as interest rate liberalization, the exchange rate, and what reforms will be made to China’s large state-owned enterprises. She says the jury is still out about what these reforms mean. For government affairs executives in China, Stover says to adjust expectations for future meetings and bring solutions that help solve China’s problems to the table when discussing company plans in China.
USCBC also hosted a panel on cybersecurity focused specifically on company concerns and responses to commercial-focused cyber attacks. The panel included Chris Porter, managing principal of Verizon RISK, John McClurg, vice president and chief security officer for Dell Inc., and Jim Hutton, director of global security for Procter & Gamble Co. Porter discussed Verizon’s new report detailing its analysis of global data breaches, and McClurg and Hutton gave their analysis and suggestions for ways companies can prevent theft of intellectual property.