Foreign Policy Blogs

U.S. Fiscal Discipline; Environmental Rules for Outbound Investments

On his trip to China next week, U.S. Secretary of Treasury Timothy Geithner will try to reassure Chinese leaders on U.S. fiscal discipline. Promising to promote U.S. national savings and to reduce national debt, Mr. Geithner hopes to ease Beijing’s anxiety about potential losses in its U.S. investments. He will also emphasize the need for a more balanced and more sustainable global growth, with China and other economies boosting domestic demand to lower the reliance on the U.S. consumption for growth. While praising China for its bold stimulus measures amidst the global financial crisis, Mr. Geithner will urge Beijing to accelerate moves to shift the Chinese economy from export orientation to a stronger focus on domestic demand. Different from previous visits of U.S. treasury officials to Beijing, China’s currency will not be among the top issues for the talks.

China’s Ministry of Environmental Protection together with the Ministry of Commerce drafted guidelines for projects abroad requiring higher environmental standards. Chinese companies investing abroad will be asked to improve their environmental standards and to carry out environmental impact studies. The rules may take effect in a few months, and–if enforced–may affect Chinese investments in Asia, Africa and Latin America. In countries with lower environmental requirements, Chinese investors will have to follow the new standards. The new rules could require investores to install sewage and waste treatment facilities as well as to pay compensation for any environmental damage.

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