US envoy cautious over hopes for China reforms

Gary Locke told an economic conference in Hong Kong that the U.S.-China relationship remains “fundamentally very, very strong” but said the world's second-largest economy could only benefit from further liberalization.

“Hong Kong is an excellent example of what can be done and how important it is to lead in the economic realm with the principles of openness, freedom and transparency,” he told the conference, organized by U.S. bank Goldman Sachs.

“It is also an example that China can learn from and in doing so, optimize China's own progress and development,” he said.

Locke, a former U.S. commerce secretary and the first Chinese American to hold the post, remained cautious when asked about the prospects of reform under China's newly elected Communist Party leader Xi Jinping, who is set to take over as president in March.

“I believe everyone inside and outside of China is very hopeful but time will only tell, so we're going to have to wait for several months or even a year to really see what the priorities are (for the new leadership),” he said.

Xi was seen to be signaling a push for economic reforms when he chose to visit the southern boomtown of Shenzhen in his first official trip as the ruling party leader in December, where he vowed to continue “reform and opening.”

But Locke said that many industries had expressed concerns over restrictions on investment in China, which they felt were “very troublesome.”

Foreign direct investment in China declined for the first time in three years in 2012, official data showed, and some U.S. businesses have linked it to investment barriers.

Ownership restrictions are imposed in a large number of sectors, although Beijing has moved to ease these limitations.

Hong Kong, a former British colony which returned to Chinese rule in 1997, maintains a semi-autonomous status with its own legal and financial system, as well as a separate currency and free economy.

“I think we really need to try to push for even further opening because it's in the economic self-interest of the Chinese people and the Chinese government,” Locke said.

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