My finance view

The United States and China have agreed to begin talks on an investment pact that U.S. officials hope can give American companies a stronger foothold in Chinese markets ranging from financial services to heavy industry.

The negotiations could easily take more than a year, making it the job of the next U.S. administration — which takes office in January 2009 — to finish the talks and win Senate approval, U.S. officials said on Wednesday.

“We believe that we’ve got a reasonably good chance of being able to negotiate an agreement with China that will meet the high standards typical of U.S. bilateral investment treaties,” a Bush administration official told reporters, speaking on the condition that he not be identified.

But “it’s obviously going to be a very challenging negotiation” because the United States will be pushing China to lower many longstanding investment barriers, such as caps on foreign ownership of Chinese firms, the official said.

“Whether or not we actually conclude an agreement will very much depend on the quality of what we think we can get out of the negotiation,” the official said.

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Washington will press for a comprehensive pact with high standard legal protections for U.S. investors and “national treatment” provisions requiring China to treat American companies the same as Chinese, the official said.

The national treatment issue is expected to be one of the more difficult area of the talks, since China has not included that in previous investment pacts, he said. 

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