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Remarks to the Press on Innovation

Daniel Sullivan, Assistant Secretary for Economic, Energy and Business Affairs
Ira Kasoff, Deputy Assistant Secretary of Commerce
Remarks at the U.S.-China Conference on Innovation and Commercialization
Beijing, China
December 2, 2008

ASSISTANT SECRETARY SULLIVAN: What we wanted to do was briefly lay out some of the goals of this conference and a little bit of background, and already some of the discussions that we’ve had both in the conference and then we’ve also had government to government meetings with the Vice Minister of MOST and these have gone quite well. So I can say I feel very privileged to be back in Beijing. I have been involved in the U.S.-China Strategic Economic Dialogue since its inception. As a matter of fact I was privileged to be on the first trip that Secretary Paulson took to China when he laid the groundwork for this very important dialogue.

If you look at all the outcomes of the Strategic Economic Dialogues -- the first, the second, the third, the fourth -- this one, the leaders have always stressed the importance of innovation as something that was very very critical to the increasing economic vitality of both the United States and China. So there has been as part of the Strategic Economic Dialogue a focus on innovation, both the dialogue and a conference. This conference is what you are seeing today.

The important element of this conference is that the issue of innovation involves not only very complex policies that governments have to lay out, but also important players, governments, the private sector, academic institutions, research institutions. The reason we think this conference and the conference last year was so important is because this conference brings together all of those players to discuss and focus on innovation.

So the goal of the conference today is to examine and advance the common U.S.-China interests in promoting, protecting and commercializing innovation. As you can see, it’s ongoing but already we’ve had very interesting discussions. There is great attendance. It looks like well over 300 participants, both from the United States and China. But I can give you a sense of at least two themes that I think are very important and then Deputy Assistant Secretary Ira Kasoff can also comment on some of the themes.

The first one is the importance of openness. Open economies and competition in terms of promoting innovation.

And of course in the wake of what is a global financial crisis and global economic challenges, the importance of openness, of maintaining open markets, of not raising barriers to trade and investment and services is something that has been highlighted by the participants, but it’s also important to note I had the opportunity to attend the Washington Summit two weeks ago on the financial crisis and world economy where President Hu Jintao, President Bush were there, and the leaders there made a very strong statement on the importance of maintaining an open economy for all the countries, particularly in the wake of our financial challenges. This theme became an important part of the discussion with regard to innovation and how openness and competition and standards that were not focused only on domestic industries, but neutral, international standards, were critical to promoting innovation both in the United States and China and globally.

The other theme, as you can imagine, will be discussed, it’s going on with the panel right now, is the issue of protecting the products that come out of innovation. That is through intellectual property rights protection and other forms of protecting innovations.

My own view, having visited China many times, is that this issue which many see as an area of tension between the United States and China, you have some degree of convergence because as the Chinese economy is becoming more a knowledge-based economy with innovations that are coming from Chinese companies, that desire domestically to protect intellectual property is becoming much stronger in China. We think that’s an important development. It’s clear from some of the participants and some of the government officials that this is the case. I think that’s going to increase, and I think that that will be an area of common convergence. So we’re seeing some of that in the discussions today which I think is a very positive development.

Finally, we think this is going quite well. We have great attendance, as you can see, and I do want to say publicly here that we very much want to express our appreciation for the hospitality, for the leadership of Vice Minister Cao Jianlin and his ministry on hosting this very important element of the Strategic Economic Dialogue. We think that once again, we are having quite a successful conference and we certainly hope to continue this important innovation dialogue as part of the strategic economic dialogue.

I want to now turn the podium over to Deputy Assistant Secretary of Commerce Ira Kasoff. The U.S. Commerce Department, State Department, and MOST are the three government agencies sponsoring this conference.

DEPUTY ASSISTANT SECRETARY KASOFF: Thanks very much, Dan, and thank you all.

Let me just say a few words. I think Assistant Secretary Sullivan did a very good job of summing up the themes of the conference and what we have accomplished so far.

This is, as you know, the second Innovation Forum that we have hosted with the Chinese. I had the pleasure of attending last year, just about one year ago actually, in December. I think it’s an extremely valuable program and one that we very much hope to be able to continue in the future.

Just to add a little bit of perspective, the Department of Commerce which as Mr. Sullivan said is co-sponsor of this conference, works very closely with U.S. companies. The companies have been telling us ever since the conference last December how important this is to them and how much they hope that we will do this again. For them to have an opportunity to interact as they are today with the scientific community in China, the academic community, the business community and the Chinese government, is a very unusual and valuable opportunity.

In addition to the presentations and the discussions that are taking place, a lot of the sort of off-line opportunities at lunch and during the breaks and in the evening at the reception for the two sides to network with each other may be as valuable as the actual presentations and discussion.

So again, we’re very pleased to be here and to be part of this important activity. Thank you.

QUESTION: I’d like to ask some questions about the [inaudible] itself. As the U.S. Minister [inaudible] briefed last month [inaudible] this round of [inaudible] going to invite some members from Obama’s [inaudible]. And do you have any idea how [inaudible] and what is the reason for that.

ASSISTANT SECRETARY SULLIVAN: I don’t know the answer to that question, but we can get back to you on that. I don’t know if an invitation was extended, but let me make another point.

As you know, the transition between this administration and the Obama administration is very close. It’s working. We are consulting and advising and briefing the incoming teams across the different ministries. So this transition is very very closely coordinated and I think from all the reports in the United States it’s going quite well.

But I do not know the answer and I can get back to you on the question of whether there is anyone from the transition team that’s actually traveling as part of the SED, I just don’t know the answer. But I know for a fact that the transition, the incoming Obama transition team, both at the State Department and at the Treasury Department, are thoroughly briefed on the SED and on the importance of the SED.

QUESTION: How do you expect [inaudible] continue on the Obama administration? There are speculations that Obama will carry on this SED, the same things [inaudible]. What is your --

ASSISTANT SECRETARY SULLIVAN: Again, that’s a question and an answer that will ultimately be made by President-Elect Obama’s administration, obviously.

So I would not want to speculate on the specifics of that. I think clearly though, the benefit of deepening our engagement and continuing to deepen the engagement with China, between the United States and China on the broad number of issues covered by the SED I think is something that is recognized pretty broadly in the United States.

But again, how that is carried on, in what manner, that’s obviously a decision for the Obama administration. But highlighting the importance of this dialogue is certainly something that’s been going on in the transition as we have briefed the incoming team.

QUESTION: I’m from [inaudible] Agency. It is reported by the Japanese media that the SED may be upgraded to the premier level. That means, I heard that, but that will be co-chaired by the Vice President Biden. Is that true?

ASSISTANT SECRETARY SULLIVAN: Again, I don’t know the answer. I wouldn’t want to comment on speculation. And as I mentioned, this will be a decision for the incoming Obama administration.

QUESTION: What will be the top [issue] of this fifth SED?

ASSISTANT SECRETARY SULLIVAN: The SED is going to, there’s going to be a number of different areas of focus. As I mentioned here, we’re focusing on the innovation issues. With regard to the SED, do you have the agenda? I’ve looked through this many times, but there will be a focus on of course macroeconomic issues as you can imagine. There’s going to be a lot of focus on cooperation in energy and the environment. Confronting the challenges and opportunities with regard to global trade issues. Promoting investment. As a matter of fact tomorrow as, again, part of the SED, Deputy Assistant Secretary Kasoff and I and others will be participating in the Investment Forum which will be, I will be co-chairing that with Vice Minister Zhang Xiaoqiang from NDRC, and there’s also going to be a discussion on international economic cooperation.

Again, a very full agenda. I know that our senior leadership is looking forward to engaging on these very important issues.

QUESTION: It seems that, it’s very same with the last SED, so what’s so special on this maybe?

ASSISTANT SECRETARY SULLIVAN: First of all, I think you’ve seen with each SED there’s been significant progress in different areas under these topics.

I think something else that’s very important with regard to the SED is the amount of interaction and trust that this has built between different ministries, different senior level officials, and it’s deepening the engagement and the understanding between our two countries. That element of what the SED has done, the work that goes into it in between meetings -- there’s a lot of work that goes into these SED ministerials in between the meetings. That is a very important element of the SED, what it’s accomplished, and we think that that aspect and some of the concrete outcomes are very important.

It also highlights for both our publics in the United States and in China some of these very important areas where we can cooperate. The energy and environment area is one that has huge potential in terms of U.S.-Chinese cooperation, and it’s good that it’s highlighted in the SED and I think you’ll see a lot of important results that come out of the meetings this week.

QUESTION: So what may come out of it?

ASSISTANT SECRETARY SULLIVAN: I don’t want to kind of preempt the meetings. You’ll have to ask the U.S. and Chinese senior officials once they hold their press briefings after their meetings. But as you can see, that’s a robust agenda and I think it demonstrates the importance and the breadth of issues that are important between our two countries and important that we continue to work on these.

QUESTION: From China Daily. It has been reported that there will be some [conflict] in the environment section. Can you confirm that?

ASSISTANT SECRETARY SULLIVAN: Again, I really don’t want to preempt what will be the meetings. I think there will be plenty of opportunity for press briefings between our two countries, and as you know, there’s a lot of preparation that goes into this.

But I can tell you that, as I mentioned, that is a very important area of common interest and common opportunity between our two countries and there certainly will be focused discussion during the SED in that area.

QUESTION: And how do you foresee the new U.S. administration’s China policy? A stable one?

ASSISTANT SECRETARY SULLIVAN: Again, I’d rather not speculate on the positions of the incoming administration.

But again, I can reemphasize because I think it’s an important point, the seriousness and the time and the importance with which the current administration is working with the incoming administration for a smooth transition on all issues. And I can tell you that the transition team briefings focused on the importance of the U.S.-China relationship have been occurring so that transition is going I would say quite well, and it is a big focus. President Bush has talked about how important it is for his administration to work closely with the incoming Obama administration, and that clearly, clearly is happening in Washington right now.

QUESTION: [Inaudible] the U.S. [inaudible] new project [inaudible]. Is that true?

ASSISTANT SECRETARY SULLIVAN: I’m sorry, can you repeat the question? I didn’t understand the question.

QUESTION: Some people mentioned the U.S. [inaudible] ongoing project [inaudible]. Is that true?



DEPUTY ASSISTANT SECRETARY KASOFF: Less resources because of going out of China?


DEPUTY ASSISTANT SECRETARY KASOFF: U.S. research institutes are pulling out of China?

ASSISTANT SECRETARY SULLIVAN: I didn’t hear that comment today.


ASSISTANT SECRETARY SULLIVAN: It’s not something that I’m familiar with.

QUESTION: Actually, today we have an example of professors from Indiana University, from Berkeley University, several professors participating on our panels who have all said that the universities are deeply engaged in cooperation with Chinese universities. So I don’t know if that addresses your question.

QUESTION: What is your timetable in China? What’s your schedule here?

ASSISTANT SECRETARY SULLIVAN: I will be here today finishing this conference. Tomorrow --

QUESTION: -- Beijing today?

ASSISTANT SECRETARY SULLIVAN: Yes. And then as I mentioned, tomorrow we’ll be co-chairing the Investment Forum which again is an important aspect of our relationship that focuses on our investment relationship, sovereign well fund principles, open investment principles. Each country explaining its own investment review mechanism and how that works. So we find this to be, Vice Chairman Zhang Xiaoqiang of NDRC brought a broad interagency team to Washington a few months ago as part of this Investment Forum, and now we have a very strong interagency team that will be engaging in meetings all day tomorrow. Then I will be here for the opening of the Strategic Economic Dialogue. As I said, I’ve been involved in the SED from the beginning and I think that it’s an extremely valuable element of the U.S.-China relationship and has seen a lot of progress.

QUESTION: [Inaudible].

ASSISTANT SECRETARY SULLIVAN: From the U.S. side? We’ll have to get back to you on that. I need to --

DEPUTY ASSISTANT SECRETARY KASOFF: I think they said there are 11 principals from the U.S.

ASSISTANT SECRETARY SULLIVAN: It’s a very senior delegation. I’m not sure if they’re all ministers. We can get back to you on exactly who’s coming, but it’s a very strong delegation.

Thank you very much.

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