05.22.07

On Senate Floor, Cantwell Speaks on U.S.-China Energy Cooperation

WASHINGTON, DC - Tuesday, U.S. Senator Maria Cantwell (D-WA) spoke on the Senate floor on energy policy for the U.S. and China

"Madam President, I am coming to the floor this morning to talk about energy policy. I know the Presiding Officer very much understands the importance of energy policy and has represented a State in a region of the country that has been a key component to the U.S. energy strategy. My own State, Washington State, with our long history, with our hydro system, is starting to become a leader in alternative energy and certainly in renewable energy.

"But I rise today to talk about the beginning of the U.S.-China Strategic Economic Dialogue that is an ongoing bilateral forum between the United States and China. I think it will help lay the foundation for important, productive, and mutually beneficial ties between our two countries.

"I appreciate that Treasury Secretary Paulson and Vice Premier Wu are starting that discussion today. I hope energy will be among the issues they talk about.

"I am under no illusion that we have big challenges in working with China and particularly in embracing a concept I believe is very strategic to how the United States operates in a global economy, that is 'coopetition' - you look at those with whom you are competing and also look for ways in which you can cooperate and have strategic benefits by working together. I think that 'coopetition' is exactly the policy we ought to embrace with China as it relates to energy, and it is very important we use this Strategic Economic Dialogue to move forward on that issue.

"I know they are going to talk about lots of different issues. It is not as if Washington State agrees with China on all issues. I know the currency issue will be part of the discussion. I know there are intellectual property rights and agricultural issues, there are restrictions on Washington products, and many things that will be discussed as part of a larger economic dialogue. But I think it is important to understand the Washington State experience. If you juxtapose our experience to that of the United States, and the U.S. trade imbalance with China, I venture to say Washington State almost has a trade surplus with China. That is, if you look at various aspects of our economic numbers, Washington State and China have been good trading partners.

"Back last year, China was the largest export market for Washington State. We sent $6.8 billion in exports to China. Approximately two-thirds of Washington State's agricultural exports went to Asia and 17 percent to China: apples, potatoes, cherries, and a variety of other products. And Washington State companies have been aggressive at pursuing opportunities in China for a long time. I don't know if it is the proximity of our State to China and the fact that we both look to the Pacific, I don't know if it is the large Chinese-American population that resides in the State, or just the long cultural history on which we continue to build. But Washington State companies have been aggressively pursuing opportunities in China for years.

"In fact, Boeing signed its first contract with the Chinese Government for 10 707 jetliners in 1972, shortly after President Nixon made his first visit there. It is amazing that today 60 percent of China's commercial aircraft are Boeing planes.

"That relationship has grown over a long period of time, and we have benefited. In fact, in 2006 China purchased $7.7 billion dollars' worth of Boeing planes. That represents about 112 orders from different Chinese airlines. Today China is one of the largest opportunities for Boeing. Some have estimated the commercial aircraft market could be as large as $280 billion.

"When we look at these issues, we look at the cooperation and the economic opportunity that has existed for our State.

"Microsoft is another example. It first opened an office in Beijing in 1992. It is no surprise, when President Hu was visiting the United States, he actually came to Everett and Seattle and Redmond and had an opportunity to be hosted by Bill Gates. Microsoft is benefiting greatly from the sales of computers and legally licensed software in China.

"More recently, Starbucks has launched hundreds of stores in China. Who would have thought that a coffee company would go into a tea-drinking country and have so much success. But China represents roughly 20 percent of the new international store growth for Starbucks. It has become Starbucks' most important foreign market.

"My point in saying this is that I hope, as we have a debate about currency -- and I think it is important that we have a debate about currency -- that we also realize that China is a market. It is a market for U.S. products. No export sector could be of greater interest, I believe, than the opportunity in the energy and environmental areas. Today, China accounts for about 40 percent of the increase in world oil demand. The number of passenger vehicles on China's roads has tripled since 2001 and may equal the United States by 2030. The Chinese face this mass internal transformation from growth and modernization. We have the opportunity to help them with that transition. They are trying to keep pace. In fact, China is adding one huge 1,000-megawatt, coal-fired plant to its grid each week. That is like adding enough capacity every year to serve the entire country of Spain. But even with this new capacity, their country is without predictable electricity.

"In 2004, China had power shortages in 24 of its 31 provinces and autonomous regions, so they are dealing with a challenge to deliver energy to various parts of their country.

"What is the opportunity? The International Energy Agency estimated that China will spend $2.3 trillion over the next 25 years just to meet its growing energy demands, and that modernizing its electricity grid will require about $35 billion annually for the foreseeable future. That is where American technology can come in; that is where we can seek new opportunities for U.S. companies. In fact, the same International Energy Agency has talked about the fact that, if we institute demand-side management programs where we can leverage modernizing the electricity grid, we can show that investments of $700 billion in the demand side could avoid almost $1.5 trillion in additional generation, transmission, and distribution costs in China between now and 2030.

"That is an interesting number. By the United States partnering with China, we would have an opportunity to help them save on their energy costs. What does that mean for us as far as the great opportunity? It means increasing exports of U.S. goods and services. It means U.S. opportunities to grow in the areas that I have mentioned. Good opportunities already exist in aerospace and software and coffee but they also can emerge in the energy and environmental sectors.

"It is interesting to think that China realizes that they have a challenge and that they are trying to diversify into an array of more clean energy sources, including wind, solar, biofuels, and clean coal. They are trying to increase productivity and cost savings associated with modernizing the electricity grid.

"I happened to visit Beijing last November with a group of Washington State business leaders that were there to promote long-term opportunities for us to work together. It was then that I realized how much the Chinese Government had embraced and was committed to its goal of cutting energy consumption per unit of GDP by 20 percent by 2010. For that very short period of time they have tremendous energy goals that we, the United States, can help them meet.

"Modernizing the domestic energy infrastructure will require an estimated $35 billion a year. Again, that is an opportunity for the United States, exporting existing U.S. products and services, that could help us turn around the trade imbalance.

"In a speech last month, Premier Wen acknowledged that China must focus on energy conservation and emission reduction in order to both develop the economy and protect the environment. I think this is an opportunity that is before us now as we are part of the Strategic Economic Dialogue with China. Increased U.S.-China cooperation on energy and environment would have tremendous economic, environmental, and security benefits for both our nations. It would help make U.S. companies better positioned for economic opportunities both inside and outside China as we develop standards associated with our energy policy.

"I recently sent a bipartisan letter to the President asking for a comprehensive U.S.-China energy policy and bilateral energy summit. I am proud to say that the bipartisan letter, signed by several of my colleagues on the other side of the aisle -- Senator Smith, Senator Murkowski, Senator Voinovich -- also was signed by the four chairs of important committees -- the Energy Committee, Finance Committee, Foreign Relations, and Homeland Security Committee -- because I believe that they agree that this is an important opportunity for the U.S. and China to work together. In fact, we said, in sending the letter to the President:

"The way we approach global energy issues will affect the international economy and the world's environment for decades to come. A bilateral U.S.-China energy policy and a summit between our nations to focus on ways to cooperate on energy issues would have tremendous economic benefits for both our nations.

"I hope as the Strategic Economic Dialogue goes forward this week that a great deal of focus will be placed on energy. When one of my predecessors, Warren Magnuson, went to China, he said, 'pretending 700 million people in the world do not exist is the wrong approach.' Today it is 1.3 billion people. It is time to understand China's internal transformation, our own global energy needs, and our nations' evolving relationship. It is time to see the great promise in our common interests and time to work together on shared challenges and opportunities involving energy and the environment."

 

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