By Donald L. Evans

'If you want to return to China as our friend,' the man said to me, 'go west.'

The year was 2002.  The event was my first trip to China as U.S. Secretary of Commerce.  The man was President Jiang Zemin. And the advice was designed to help me understand the challenge of rural poverty that China faces.

I took President Jiang's advice.  On my next visit to China, I traveled to a village in Sanyuan County, Shanxi province about an hour and a half north of Xi’an.  There I met two boys named Li Hao and Li Fan.  They were both blind and both lived with their parents in a small two-room house. The Li family was poor and had not lived an easy life.  But despite their challenges, this family had a sense of hope that was truly inspiring.

I have stayed in touch with the Li family. I have visited them several times since.  I have watched the boys grow up.  And I have watched the family’s fortunes improve as China’s economy has grown.  On my last visit, they had added two new rooms onto their home and purchased a cell phone.  To me, the Li family is China.  They represent China's challenges, but also China’s great potential as it integrates more fully into the global economy.

My travels in China through the years have taken me from that rural village in Shanxi province to booming Shanghai and Beijing in the east.  Everywhere I have traveled in China, I have found that America has more in common with China than we have differences.  The people of China want what people everywhere want -- a good job, a great education for their kids, and a greater hope for the future.

In my years as U.S. Commerce Secretary, I had the opportunity to get to know many of China’s leaders, like my good friends Premier Wen Jiabao and Vice Premier Wu Yi, and have been impressed by their dedication to the best interests of the Chinese people -- people like the Li family.

China’s leaders understand that it is in the best interest of the country’s long-term growth -- and the general well-being of its citizens -- to develop a modern, flexible, fully developed financial system to help spur innovation and entrepreneurship, create jobs, and allow Chinese consumers to invest, save, and plan for the future.

The fastest way to modernize China’s financial sector is to allow greater investment by western financial services firms, whose world-class expertise and best practices will help to expand the availability of capital and provide Chinese consumers greater access to a wide range of financial-services products not currently available. 

Greater access to mortgages, consumer loans, retirement savings products, and home, health, and life insurance will help China’s consumers to better balance savings and consumption -- with enormous benefits for the Chinese people. 

The depth and flexibility of the financial sector is also critical to the broader economy’s resilience -- its ability to weather, absorb, and move beyond the inevitable booms and busts of a dynamic economy.  For these reasons, the financial sector is really a “force multiplier -- for progress and development, amplifying and extending the underlying strengths of an economy.  Research conducted by the McKinsey consulting firm indicates that genuine reform of its financial system would expand China’s economic output by as much as 17 percent, or an additional ＄320 billion a year.

Given the unique and critical role an effective and efficient financial sector plays in any economy, reform of China’s financial sector is a prerequisite to China achieving its own economic goals of: 1) maintaining high rates of growth and job creation; 2) encouraging a structural shift from industry to services; 3) promoting the development of domestic consumer demand; 4) reducing poverty; and, 5) ensuring a more equitable distribution of opportunity and prosperity. Financial sector reform is also a prerequisite to meaningfully addressing issues that have complicated the U.S.-China economic relationship, particularly greater currency flexibility and reducing trade imbalances.

As the second U.S.-China Strategic Economic Dialogue has drawn to a close in Washington, much has been accomplished for both our countries, but much more must be done.  China should further ease branching restrictions and caps on foreign investment and ownership; improve financial and regulatory transparency; and, make further steps towards a currency determined by market forces.  As Chinese companies have greater access to U.S. markets and American companies have greater access to China, we will all benefit.  There is not a single successful economy in the world that does not have a financial system open to foreign participation.

Every day the U.S. and Chinese economies grow more interlinked.  Over the last four years the U.S. and China have accounted for half of global economic growth.  China is now America’s second largest trading partner and our fastest growing export market.  Commerce has brought our nations together in ways previously unimagined.  Commerce requires communication; communication leads to mutual understanding; mutual understanding leads to respect; respect leads to friendships; and friendships lead to lasting partnerships.   Open trade is a win-win proposition for our two nations.

Expanded trade and the opening of markets is not just about numbers and economic theories.  Ultimately, it's about people.   It’s about those two blind boys and the millions like them who deserve the feeling of hope and an opportunity for a better future.

The writer is the 34th Secretary of US Department of Commerce