Evan G. Greenberg: China and the United States must find a way to cooperate and compete

Source: WFF    

Published: 2020-12-07

“Thank you for inviting me to the World Finance Forum Wuhan Summit and the 3rd World Finance Forum. It’s an honor to attend the event held in Wuhan, albeit remotely.” On December 4, 2020, Mr. Evan Greenberg, former Chairman of the U.S.-China Trade Commission, Chairman and CEO of Chubb, said at the Third World Financial Forum Wuhan Summit, hosted by the World Finance Forum and co-hosted by the Center for BRICS and Global Governance.

The following is the keynote address of Mr. Evan Greenberg at the World Finance Forum Wuhan Summit and the 3rd World Finance Forum:

Distinguished guests, ladies and gentlemen, good morning. Thank you for inviting me to the World Finance Forum Wuhan Summit and the 3rd World Finance Forum. It’s an honor to attend the event held in Wuhan, albeit remotely.

I would like to take this opportunity to commend the people of Wuhan, who set a heroic example in winning the fight against the COVID-19 outbreak, and to the nation overall for its successful control of the pandemic. Earlier this year, as the outbreak became known to the world, my company Chubb was proud to provide assistance in the form of critical medical supplies and clinical trial liability insurance coverage on a pro bono basis to qualified Chinese medical research and development entities.

The theme of this year’s conference challenges us to envision a post-epidemic era. Sadly, we are not yet in a post-epidemic era although the world urgently needs to get to one. Doing so will require new and greater levels of cooperation and healthy competition among the nations of the world that have been sorely missing in recent memory.

First, getting to a post-pandemic world will require all major countries putting in place and enforcing their own national standards to control the COVID-19 virus, such as testing, digital tracing, masking and social distancing. China has done a good job of that in keeping with their culture and system of governance.

It will require global cooperation to control the virus including health protocols, global surveillance and forensic capability standards. I believe the United States, Europe and China are the three regions of the world that have the influence, size and resources to lead that effort.  

Globalization, while it produces consequences, particularly in developed economies, which must be addressed and managed to support those who are disrupted, especially labor, has lifted more out of poverty than any other economic system. In a post-pandemic world, we should continue to embrace globalization, not just in words but in our actions. That requires re-committing to the rules of engagement in global commerce and restoring the confidence in the system that comes from leadership by our major nations, including the United States and China.  

Market-oriented global commerce and investment-conducted according to rules that all parties have adopted and enforced—rely on the predictability and confidence that comes from such leadership. It means a notion of reciprocity in terms of openness, equal treatment and adherence to commonly accepted rules.

To do its part, the United States should commit to upholding and advancing multilateral trade and investment agreements—including a market-oriented rules-based order following accepted norms of conduct.  

The U.S. can accomplish this with a two-pronged approach: First, advance trade and investment agreements focused on Asia and Europe, which should address, among other things, the critical issue of digital technology and cross-border data flows.  Second, the U.S. should play a leading role to support the reform process at the World Trade Organization.

On the digital front, the United States should negotiate with trading partners on rules of engagement for technology and data flows, including intellectual property protections, technology standards, national security protections and privacy. By establishing the predictability and rules of competition, we can protect national security interests by also facilitating 21st century business practices and cross-border commerce among the like-minded.

A post-pandemic priority needs to focus on cooperation and competition. For the United States, that means reinvigorating American competitiveness and breaking the tactical pattern of tit-for-tat behavior with China.  

Another post-pandemic priority is to find more ways to invest in digital and physical infrastructure—rails, ports and 5G digital communication. The United States, for example, is woefully underinvested, and this inhibits productivity and growth. To incentivize capital investment by the private sector, particularly in 5G, requires considerable government support.

Similarly, the U.S. government has a role to play in helping to finance and develop innovations in the foundational technologies, especially quantum, biotech, smart batteries, and others vital to the U.S. economic future. To be clear, this is not government funding in the application of technology, which should be left 100% to the private sector. Support can be achieved without picking winners and losers.   

Another priority for world leaders is to address the growing wealth gap around the world. Globalization and technology have led to an increase in overall global prosperity. But they have also led to declining living standards for many, particularly in the developed world, and created enormous wealth for a few. Capital has disproportionately benefited versus labor.  

We should strive for a more even distribution of income among people, and not simply through forced redistribution. This can be achieved through efforts such as skills training and education to equip a greater percentage of our population to flourish.

Lastly, in a post-pandemic world, we should encourage the private sector—our businesses—to decarbonize to mitigate climate change. The economy is as susceptible to climate issues as the natural world is. Putting in place policies that promote faster conversion to more carbon-neutral natural gas in the sectors of energy, utilities and transportation, and investing in more efficient transmission capability is key.

There is no doubt that one of the most important post-pandemic priorities, not just for the United States and China but for the world, is to restore active diplomatic engagement between our two nations. Our two countries represent the most important bilateral relationship in the world and we must find a way to cooperate and to compete productively and not destructively.  

Both countries should appoint representatives who are very knowledgeable in diplomacy and in each other’s respective countries and have the trust of their Presidents.

Our first objective is to understand more clearly how we each view the world today – our countries’ place in that world, our priorities and our respective concerns; understand where our objectives create mutual interest and where they diverge; and understand how our respective behaviors and priorities create concern for the other.

We should be able to answer the fundamental question, “What kind of relationship do we want to have?” It should allow us to frame an agenda for cooperation in areas of mutual interest, starting with simple ones for confidence-building; begin to solve problems that can be solved between ourselves; and achieve better understanding and a means to defer problems that cannot be addressed now.

Despite increasing trade friction, principally around technology and rules of engagement, and calls for economic disengagement in both countries, many American companies remain committed to the China market for the long term. According to a US China Business Council survey, 83% of US companies counted China as among the top five priorities for their company’s global strategy.

Relations between our two countries have been at a recent low point, with a great deal of tension and uncertainty as to the future direction of our relationship. The relationship needs to be managed with greater diplomacy and dialogue between our governments. The business and investing community has a role to play in encouraging both governments.

The Phase One agreement provides a degree of positive news, stability and confidence in the China investment environment by freezing additional tariff increases and opening the market wider for financial services investment and protections of intellectual property.

Phase One is an example of how dialogue and negotiations can begin to resolve longstanding challenges and lead to tangible progress for investment liberalization.  Any future bilateral dialogue or negotiation should be equally results-driven.

The Phase One deal was particularly beneficial for the financial services sector.  China’s commitment to begin leveling the playing field in a meaningful way in financial services is a bright spot in an otherwise challenging investment environment.  China has done this because they recognize it’s in their own interest.

In the area of technology, both countries are behaving in either a more predatory or protectionist fashion to gain or maintain advantage in areas deemed important to their national security or national interest. The definition of national security is a question. Military and internal security? Health related? Competitive profile linked to industrial policy priorities? Are these all legitimate definitions?

We have decoupled already in important areas of technology, driven to a degree by our cultural and social value differences—telecommunications and social media platforms, by example. Should we accept Balkanization of investment in areas of technologies, mutual access and integration due to these social notions of incompatibility?

In my judgment, we need clear thinking-again, rules of the road, which should be defined thoughtfully. In opportunities around investment, reciprocity is also an important notion. If one country uses a more restrictive definition, the other can’t be expected to simply remain open.

Investment protections—protected by rule of law—with an independent, impartial judiciary process and institutions and clear regulation, remain fundamental. Our countries were close at one time to finishing a bilateral investment treaty. At the end of the day, the more we invest in each other, the more we invest in each other’s future wellbeing and the prosperity of our people.

We believe Phase 2 negotiations between the US and China should not be unnecessarily delayed in order to tackle critical issues which were not addressed in Phase 1.

To conclude, this year’s conference asks us to consider how we will redefine the future world economic and financial order. We must first ask ourselves, what kind of world do we want going forward? One that breaks apart into two separate spheres or one that is more unified and globalized? Which one would serve the interests of our respective people better?  

I prefer the one where we find our way over time towards cooperation and competition with a framework of better understanding and with the mechanisms of communication for where we disagree.

Thank you.