China and US swap investment treaty ‘negative lists’

beijing — The United States and China have begun formal talks on demands for market access for an investment treaty, officials from the two countries said on Friday, calling it a new phase in negotiations that could set the scope of an eventual deal.

The initial swapping of “negative lists,” which outline sectors that the world’s two largest economies deem closed to the other side’s investors, begins what is likely to be the most contentious stage of the Bilateral Investment Treaty (BIT) talks launched in 2008.

China has more restrictions on foreign investment than the United States, and US investors hope that a treaty will give them increased access to China’s many state-dominated industries, from financial services to telecommunications.

Chinese and US negotiators met in Beijing for a week of talks beginning on Monday, China’s Ministry of Commerce said in a statement. “During this round of talks, the two sides for the first time exchanged negative list offerings, and formally began negative list negotiations, symbolising that talks have entered a new phase,” the ministry said.

“The two sides will treat the China-US investment agreement as the most important matter in the bilateral trade relationship, and will put all necessary resources into negotiations in order to reach a mutually beneficial and high-level investment agreement,” the ministry said.

The announcement confirms a Reuters report, which said the initial lists, already months overdue, would be exchanged as early as Monday, as officials prepare for high-level talks in Washington in late June.

Foreign business leaders have said Chinese regulations intended to bolster national security have called into question China’s commitments to market reforms and could further restrict foreign access to sensitive sectors.