Written Remarks by M.R. Greenberg, Chairman & CEO C.V. Starr & Co., Inc.
Good morning. I am pleased to share my thoughts with this distinguished group about the difficulty our two governments have faced in renegotiating our bilateral trading relationship. I think it is important to acknowledge upfront that this dispute has threatened to destabilize arguably the most important bilateral relationship in the world.
Through my many years of doing business in China and involvement in U.S.-China relations, it seems to me the solution to our current predicament is and has been for some time rather clear. When President Nixon visited China in 1972, its economy was marginal to world trade. Today, it is the second largest economy in the world and poised to become the global leader. Compared with the U.S.’s population of roughly 300 million, China has a population of 1.4 billion. Since its economic opening, many Chinese citizens have been educated in the U.S. and then returned to China to become leaders in government and industry. The China of today is fully capable of competing with foreigners in its domestic markets on a level playing field, just as its firms have proven overseas.
As an emerging market, China erected trade barriers to build its nascent industries. This was acceptable to foreign countries like the U.S. for strategic reasons. Foreign companies endured it because of China’s vast potential. Now, discriminatory treatment of foreigners is embedded in the Chinese bureaucracy – in government policies, in regulatory procedures laden with obstacles and delays, in structural impediments, such as turnover in government agencies resulting from forced early retirements, and in the ingrained mindset of Chinese officials.
This all needs to change. While China has made progress in opening its economy to foreign participation, it is difficult for the U.S. and other countries to continue to extend national treatment to Chinese companies when their own firms are not provided the same rights in China. It is in China’s interest to proceed at a faster pace. It should recognize that equal treatment of foreign and domestic firms in China will benefit the Chinese economy and people. It will attract more businesses from around the world, bringing with them new ideas, jobs, and goods and services that will improve the quality of life for China’s citizenry. My company, Starr Insurance, is a good example. Started in Shanghai in 1919, Starr is celebrating its 100th anniversary this year. It was the first American insurance company to operate in China. We left after the revolution, but as head of Starr, I started to visit China in 1975. I met and established a relationship with the Peoples Insurance Company of China (PICC), the country’s only insurer. We signed a Memorandum of Understanding with the PICC and began training many of their people as well as arranging reinsurance of their business to expand their capacity.
Our relationships in China grew, and we helped them in every way possible, believing we would eventually be able to reestablish our business in the country. In 1992, we did, when AIG and its subsidiaries, which had been founded by Starr and were already operating throughout Asia, received eight regional licenses. The first was in Shanghai. We were the only wholly owned foreign life insurer to be awarded operating licenses. We introduced the agency system in China, which caught on. In fact, a past President of China once told me that in doing so we enabled the creation of a million jobs across the country. Simultaneously, the Starr Foundation, which I have served as Chairman for many years, we believe has become one of the largest charitable givers in China, donating over $300 million to healthcare, educational, and cultural related causes and to improving U.S.-China relations.
As the United States and China continue their negotiations, a sense of urgency, mutual respect, and genuine good faith will be absolutely essential in securing a mutually agreed upon path forward. But so will compromise and flexibility. The U.S. opened its economy long ago and did so without an act of Congress. I would assume that our government officials working together should be able to find a way for China to do the same thing.
One mechanism currently being under-utilized in my opinion that could codify and implement such a deal is the World Trade Organization (WTO). China joined the WTO in 2001, something that never would have happened without the diligent efforts of the U.S. Government and business community. I was proud to lead that effort as Chairman of the U.S.-China Business Council. New rule changes and other reforms are needed to update and improve how the WTO operates. That effort should be initiated promptly to restore the body’s integrity and effectiveness as the world’s adjudicator of global trade.
In the end, what is most important for government officials on both sides to understand is that this is about more than just trade. The geopolitical stakes involved are high for both the U.S. and China and globally. I hope that American and Chinese leaders recognize the critical importance now more than ever of maintaining a constructive and open relationship. It should not be viewed as a zero-sum game. Increased and mutually beneficial bilateral cooperation should be pursued in earnest. That would be a stabilizing force, capable of nurturing peace and prosperity, while providing a much-needed source of comfort to countless people in an increasingly uncertain world.
(Note: This is the text of M.R. Greenberg’s prepared remarks for the forum.)