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Xi's Visit Expected to Step Up Finalizing Negative List

CRJENGLISH 2015-09-24

Beijing and Washington are expected to use Xi Jinping's visit to help finalize negative lists for each-other's respective economies after various rounds of negotiations on a bilateral investment treaty.

Li Lijie's company runs a business-to-business website out of the city of Nanjing.

It's designed to help global buyers source products in China.

Last year, the firm opened branch in Los Angeles in an attempt to tap into the U.S. market.

But Li Lijie says they've run into numerous challenges in trying to figure out what kind of technical products can be sold in the US.

"It really impacts your investment strategy, because if you violate the local rules, especially in the United States, the results can be serious and the consequences huge. Obviously, if we can get a clear explanation, we can avoid this type of risk."

A negative list is an approach which details which areas are off-limits to foreign investors.

It's considered much more efficient than having to pour through massive lists of areas and items which are acceptable.

The current absence of a negative list has already led to problems for Chinese companies investing in the US.

The US government has denied five different plans submitted by Chinese telecom giant Huawei to invest in the country between 2007 and 2012, citing concerns over possible threats to national security.

At the same time, many U.S. firms have also run into problems because of the lack of a negative list in China.

To deal with this, the Chinese and US sides began talking about the potential creation of a bilateral investment treaty around 7-years ago.

However, the two sides only agreed on creating a negative list approach 2-years ago following the 2013 China-U.S. Strategic and Economic Dialogue.

The two sides finally exchanged their initial offers for the negative lists this June.

Revised lists were exchanged during latest round of the treaty talks earlier this month.

Song Guoyou with the Center for American Studies at Fudan University says one of the issues has been the number of items on the proposed negative list.

"The U.S. side expected the Chinese list to be more concise and shorter. In other words, the US side wants more access to the Chinese market for U.S. firms."

Song Guoyou says if they can work through this, the benefits will be huge.

"The United States still faces a moderate economic recovery and relatively high unemployment. At the same time, China is positioned to become one of the most important outbound investors in the world. If the two countries reach an agreement on the BIT, it will certainly boost Chinese investment in the United States."

While it hasn't been confirmed, some observers are suggesting a finalized bilateral investment treaty may be signed as part of Chinese President Xi Jinping's meetings with US President Barack Obama in Washington later this week.