Calling on the Government of the People's Republic of China to remove barriers to United States financial services firms doing business in China.

Mr. Speaker, I appreciate the very important work the gentleman from Georgia (Mr. Marshall) is doing on this, and the bipartisan cooperation we have.

It is really disappointing that we have to bring this resolution forward. It does not speak well of the government of the People's Republic of China that this is necessary, because they are trying to have it both ways in an inappropriate manner.

On the one hand, China insists on being treated with the respect due a great world power. And they are proud of their economic strength, and they say to America, in fact, they try to have it both ways in two ways. Maybe they're trying to have it four ways, because what they tell us is, open up, economic competition is the way. If we are selling more goods in your country than you are selling in ours, that's because we're doing a better job of it. And so they want respect as a world power, and they want an openness in the economy, but only in one way, because when it comes to areas of economic activity where they don't have that overwhelming advantage, where, frankly, cheap labor doesn't buy you a lot, where our technology and our level of sophistication works to our advantage, all the arguments they've used go out the window. Now they're no longer this great world power. They're a poor country that has to shelter its banking activity from the United States and others. They don't single us out. They shut out much of the world.

The argument that you should open up your economy and let economic forces play out, without imposing political barriers, that apparently works with manufacturing of their goods, but that's exactly the argument they repudiate when we talk about our financial institutions.

I would add that there is, of course, another example of this with regard to the intellectual property failings in China, but we're here to focus on the financial services. And so what we are saying to the Government of China is, essentially, I guess I would say this, they may be credited with one of the great engineering feats in history, even more impressive than the Great Wall of China, is turning the Pacific Ocean

into a one-way street, because when it comes to allowing the forces of economic competition to determine outcomes, where they would have an advantage, they're all for it. But where we say, look, we have these very important financial institutions, as my two colleagues have mentioned, institutions which will benefit the Chinese, which will help with the savings rate.

The gentleman from Georgia has made it clear. This isn't an assault on China by the outsiders. This is something that would be of interest to the Chinese because the Chinese use the same argument to us. They say, look what we're doing for you. We're giving you these cheaper products. Don't turn them down.

Well, I don't understand why that doesn't translate into their doing the same thing.

And so you cannot, I think, in this world consistently, at the same time, be a complete free trader where you have an advantage, but a mercantilist and protectionist and restrictionist society where you think somebody else might have the advantage.

But this resolution is aimed only partly at China. It is also a directive from this House. And I hope, with a very large vote, and I hope our colleagues in the Senate will do it, to the United States regulators, to the Securities Exchange Commission, to the bank regulators, to the Federal Reserve, the Secretary of the Treasury: do unto others as they do unto us in the financial area. Do not allow the Chinese financial institutions a freedom to operate in the United States that they would deny to us. And I want to stress that.

There have been criticisms that have come from China and from some in the United States who say, yes, China sells a lot, but don't be restrictive. The answer is openness.

Well, this is the test. Is openness a two-way ocean?

And if the Chinese continue to resist living by the doctrine they preach to us, then the United States regulators, those in the United States who decide whether Chinese institutions can have access here, really, in their own interest, should take account of that because if you continue to have a situation in which Chinese financial institutions are allowed activity in the U.S. that the Chinese Government denies to American institutions in China, I believe this body will go beyond a resolution. And I can tell you that the committee that I chair will begin to consider, then, legislative changes. And we're often told that you can't legislate that because of the WTO. But here we're asking them to live up to their WTO responsibilities. And if this continues, I will consult with our colleagues in the Ways and Means Committee, and I think we will try to put some binding legislation here. I hope it doesn't come to that.

And I thank the gentleman from Georgia (Mr. Marshall) for taking the initiative here and the gentleman from Illinois (Mr. Roskam) and others. This is, I hope, unanimous, but certainly overwhelming, it was unanimous in the Committee on Financial Services' request.

And the gentleman from Georgia read a very impressive list. Every important entity of financial institutions in the United States was on the letters that the gentleman from Georgia read.

So we hope that the Chinese Government will listen. And if they don't, we hope the United States regulators will listen, because we are only asking here that the Chinese live by the doctrines that they profess to believe in. And we believe that this is something that is in the mutual interest of both countries.

I submit the following exchange of correspondence regarding H. Res. 552.

Hon. Barney Frank,

Chairman, Committee on Financial Services,

Washington, DC.

Dear Mr. Chairman: I am writing to you concerning the bill,

H. Res. 552, calling on the Government of the People's

Republic of China to remove barriers to United States

financial services firms doing business in China. I

understand there are certain provisions of this legislation

as it will be presented to the full House that fall within

the Rule X jurisdiction of the Committee on Foreign Affairs.

In the interest of permitting your Committee to proceed

expeditiously to floor consideration of this important

legislation, I am willing to waive this Committee's right to

sequential referral. I do so with the understanding that by

waiving consideration of the bill, the Committee on Foreign

Affairs does not waive any future jurisdictional claim over

the subject matters contained in the legislation which fall

within its Rule X jurisdiction.

I would ask that you place this letter into the

Congressional Record when the House has H. Res. 552 under

consideration.

Sincerely,

Tom Lantos,

Chairman.

Mr. Speaker, I misspoke. I said that this has passed our committee unanimously. I was reminded by our very able staff that the committee sentiment was so overwhelming that we unanimously decided we didn't even have to take it up in committee. So this did not pass the committee unanimously; this bypassed the committee unanimously.

Mr. Speaker, I move to suspend the rules and agree to the resolution (H. Res. 552) calling on the Government of the People's Republic of China to remove barriers to United States financial services firms doing business in China.

Mr. Speaker, I ask unanimous consent that all Members may have 5 legislative days within which to revise and extend their remarks on this legislation and to insert extraneous material thereon.

Mr. Speaker, I would ask to insert into the Record three letters that we have received in support of this legislation.

One letter comes from Engage China dated September 4, 2007. Engage China is a consortium which includes these organizations: The American Banker's Association, the American Council of Life Insurers, American Insurance Association, The Council of Insurance Agents and Brokers, Bankers Association for Finance and Trade, Financial Services Forum, Financial Services Roundtable, Investment Company Institutes, Securities Industry and Financial Markets Association.

The second letter, also dated September 4, comes from The Financial Services Forum; and the third letter, dated August 31, comes from The Investment Company Institute.

September 4, 2007.

Hon. Barney Frank,

Rayburn House Office Building,

Washington, DC.

Hon. Spencer Bachus,

Rayburn House Office Building,

Washington, DC.

Hon. Jim Marshall,

Cannon House Office Building,

Washington, DC.

Hon. Peter Roskam,

Cannon House Office Building,

Washington, DC.

Dear Chairman Frank, Ranking Member Bachus, Congressman

Marshall, and Congressman Roskam: As Chairman of the Engage

China coalition, I write to applaud the focus on the critical

importance of expanded access to China's financial sector in

H. Res. 552. As members of the House Financial Services

Committee, your leadership on this crucial issue is greatly

appreciated.

Engage China is a coalition of eight financial services

trade associations united in our

view that active engagement with China remains the most

constructive means of ensuring that our two nations mutually

benefit from our growing economic relationship, and that

common challenges are effectively addressed.

The coalition is strongly of the view that a more open,

competitive, and effective financial sector in China is a

prerequisite to successfully addressing issues that have

complicated the U.S.-China economic relationship--

particularly currency reform and the trade imbalance. For

example, access to sophisticated derivative products and

hedging techniques will help Chinese banks, securities firms,

and other businesses avoid the risks of a more volatile,

market-determined currency. Similarly, financial products and

services such as mortgages, credit cards, personal loans,

pensions, and retirement savings and insurance products--to

which most Chinese currently do not have access--would

dramatically reduce the need for excessive savings and

facilitate greater consumption.

The fastest way for China to develop the modern financial

system it needs is to import it--that is, by opening its

financial sector to greater participation by foreign

financial services firms. By providing the products and

services that China's citizens and businesses need to save,

invest, insure against risk, raise standards of living, and

consume at higher levels, foreign financial institutions

(including U.S. providers) would help create what every U.S.

manufacturer and services provider wants--a China that is

less dependent on exports, more consumption-driven and,

therefore, an enormously important and expanding market for

American products and services.

Thank you for your work on this important issue. We very

much appreciate your interest in opening China's financial

sector to greater participation by U.S. financial services

firms. We look forward to working with the Committee and the

rest of the Congress to ensure expanded financial market

access in China and other emerging markets.

Sincerely,

Rob Nichols,

President and COO, Financial Services Forum, Chairman,

Engage China Coalition.

Mr. Chairman, to the remarks made by the gentleman from Illinois (Mr. Roskam), I would simply add that the Chinese economy at the moment is not very diverse. It's actually fairly fragile. It's quite large, but it's way too dependent upon manufacturing and the consumption of others, not its own consumers, but consumers throughout the world. If there's a downturn elsewhere in the world, it dramatically impacts the Chinese economy. And it is not in the interest of the globe, frankly, to have an economy that's as large as China's and as fragile as China's. So from our own economic perspective, it's good to cause the Chinese market to diversify.

In addition, as it stands now in China, there is a very thin middle class. The availability of American financial products can help expand the size of that middle class. And it is middle classes that head governments in good directions, that insist that governments be responsible and responsive to the people, that head governments more toward being democratic governments. So there's another reason that this is a very wise move, not only for the United States, but also for the Chinese Government.

I yield such time as he might consume to the chairman of the committee, who does a great job as our chairman, the gentleman from Massachusetts (Mr. Frank).

Mr. Speaker, I yield 30 seconds to Chairman Frank of Massachusetts.

Mr. Speaker, I yield myself such time as I may consume.

I want to just take this opportunity to make an observation. This is absolutely the right thing to do. A deal is a deal. It is not a one-way street. We give accommodations; they agree to accommodations in exchange. They have got to live up to the accommodations that they have, in fact, agreed upon. If they don't, we need to take some action.

But I do want to not associate myself enthusiastically with one aspect of the arguments in favor of this, and that is that somehow we have got to turn the Chinese into better consumers. No question improving consumption can lead to some of the benefits that we have already discussed. But also adding another billion heavy consumers here and another billion heavy consumers there may not necessarily be in our best interest from a global perspective, and somehow we have got to find a balance here.

It is clear there is a large swath of the Chinese populace that could use some of the financial tools that we could make readily available to them and, as a result, wind up moving into the middle class. It is certainly something we should support and encourage.

But, frankly, that the Chinese save a lot is not necessarily a terribly bad thing. I think we all agree that Americans don't save enough and too many Americans get into trouble as a result of the fact that they don't save enough. Credit is not so wonderful for all, and somehow there needs to be a balance that is reached in our effort to improve the globe.

Mr. Speaker, I yield back the balance of my time.

Mr. Speaker, on that I demand the yeas and nays.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I'm pleased to rise today in strong support of House Resolution 552, a measure calling on the government of the People's Republic of China to remove barriers to the United States financial service firms doing business in China. And I'm pleased to partner with Chairman Frank, Ranking Member Bachus, and the gentleman from Georgia (Mr. Marshall) on what I think is a really important initiative.

Some of my prepared remarks, Mr. Speaker, would be cumulative in light of the gentleman's remarks, but let me just kind of fill in some other aspects and highlight a couple of the points that he made.

First of all, these are all commitments that the Chinese Government has made. This is not negotiating a new set of agreements. This is not contemplating something that hasn't literally been agreed to before. All we're doing in this resolution is putting the Chinese Government on notice, A, that we're watching; and, B, that we have expectation that they're going to do exactly what they committed themselves to do.

Secondly, you know, if you look at what the gentleman from Georgia described, that is, the Chinese economy, there are some that suggest that of 1.3 billion individuals, Mr. Speaker, only 1 million Chinese individuals currently have use of credit cards in China, compared to 480 million people who have access to cell phones.

Now, if you begin to think about where this can go, right now the Chinese economy is somewhat held back in a way, because the Chinese consumers and the Chinese financial markets don't have these kinds of tools, and they have a savings rate that almost takes our breath away. About a third of the savings, you know, they're saving at about 33 percent, which, what does that mean? That means that those dollars or that currency is not available to purchase things, particularly from the United States, which, as the gentleman pointed out, creates a very difficult situation in terms of our trade deficit.

I view the Chinese economy almost like a potted plant, Mr. Speaker; a plant that, at first glance, may look to be flourishing, but over a period of time, as that plant matures, and as it develops, it reaches a point at which the roots need to go deeper. And I think that this is the point in the Chinese economic growth where China's roots need to go deeper. They need to go deeper into the ground. And our financial services sector, Mr. Speaker, is robust and dynamic, and offers something that I think is a great opportunity.

But the unnatural truncating, the unnatural prohibition of the Chinese Government of prohibiting American firms to come in, I think, ultimately has a negative impact on our economy, has a negative impact on our growth, and certainly has a negative impact on the 700 million people who are in China and who are still living in poverty.

And I just want to highlight an aspect of this that has an impact on my district, because I represent a district outside of Chicago that employs about 68,000 individuals, about 1,100 manufacturing firms, who are really suffering and struggling based on the currency manipulation issue that the gentleman outlined. This is a way out. This is a way to move forward. And I think it is incumbent upon us, and I very much appreciate the gentleman's work on this in a bipartisan way. It is incumbent upon us to move forward and to urge and cajole and push and give a sharp word to the Chinese Government that they need to make these reforms and do these things to which they've previously committed.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I don't have any additional speakers. Let me just yield myself another minute or two just to say this in closing.

We have before us, really, two competing economic systems that are playing out essentially. We have our system, which has a very high view of the individual, free people making free decisions within a free market. That is the great strength of the American system. We show great deference and great respect to the free market on balance.

China, however, is in some sort of transition right now, where they've not had that high view of the individual. They've not had that high view of the free market, and they're beginning this process of more or less dabbling in it. This is the call for them to stop the dabbling, as it relates to the financial services sector, and to fully embrace those things, those concepts that they propound around the world.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I have no further requests for time, and I yield back the balance of my time.

Mr. Speaker, I rise in opposition to H. Res. 552, ``Calling on the Government of the People's Republic of China to remove barriers to United States financial services firms doing business in China.''

Attempting to force the hand of the Chinese government by requiring them to open their markets to United States financial services firms is akin to playing with fire. Politicians today fail to realize just how deeply our profligate fiscal and monetary policies of the past three decades have left us in debt to China. The Chinese government holds over one trillion dollars in reserves, leaving the future of the dollar highly vulnerable to the continued Chinese demand.

While I am in favor of unencumbered free trade, free trade cannot be enforced through threats or by resorting to international protectionist organizations such as the WTO. Even if the Chinese are recalcitrant in opening up their markets, it is not the role of the United States government to lecture the Chinese government on what it should or should not do in its own economy.

H. Res. 552 is a blatant encroachment on the sovereignty of the Chinese government. Were the Chinese government to pressure us into allowing greater access to the United States market for Chinese financial services firms, or to pressure us into allowing the sale of firms in strategic sectors of the market, we would justifiably resist this pressure.

Diplomatic efforts cannot work through blustering language and vague retaliatory threats. It requires an awareness both of the many benefits of trade with China and the fact that our current trade imbalances are largely the responsibility of our trade policies. We must understand that China is not a 98-pound weakling who can be bossed around. If we treat other countries with respect and as equal partners, we might be pleased to find that our requests receive a more attentive ear.

Madam Speaker, on rollcall No. 850, I was in a meeting in my district at the National Security Agency with NSA Director, General Alexander. Had I been present, I would have voted ``yea.''