China Keen on Free Trade Pact With U.S.

China is eager to begin talks on a free trade pact with the United States and key leaders seem willing to step away from the state capitalism Beijing has been pursuing, a senior U.S executive with access to China’s leadership said on Tuesday.

Maurice Greenberg, chairman of Starr International Company Inc and former AIG chief, met with Premier Wen Jiabao, Wen’s expected successor Li Keqiang and other top official’s during a two-week visit to China.

“The Chinese would negotiate a free trade agreement with the United States and they would start immediately to have talks to see if it can be negotiated,” Greenberg told a think tank conference in Washington, speaking from New York.

Commerce Minister Chen Deming “said he’d start negotiating tomorrow if the U.S. were prepared to do so,” said Greenberg.

“It will take 10 years in my judgment to negotiate a free trade agreement, in the complexities that would be involved,” added the insurance executive and prominent figure in U.S.-China business ties.

Greenberg said he saw no sign the U.S. government was interested in free trade talks with China, adding that although the negotiations would be arduous, they could iron out bilateral trade problems and avoid a trade war.

Meetings with top Chinese leaders convinced Greenberg that they were serious about tackling a major U.S. trade complaint: the rampant violation of patents, trademarks and copyrights by Chinese firms.

“They’re committed to eradicating all intellectual property misbehavior and they’ll be very harsh on those who continue to do it,” he said. “I believe they’re sincere in trying to enforce the rules on intellectual property.”

Premier-designate Li and China’s likely next president, Xi Jinping, were “very smart” and likely to keep China on a reformist path, Greenberg said.

“My own belief is that he’s less devoted to state capitalism than has been their strong trend,” he said of Li.

Greenberg said Beijing appears willing to adjust economic policies, including the favoritism shown to China’s state-owned enterprises (SOEs) that are at the core of most U.S. trade disputes with China.

“There’ll be less emphasis on SOEs than there has been historically, and there’ll be more emphasis on small and medium-sized companies,” said Greenberg.

“They recognize that the SOEs have been sopping up virtually all of the liquidity out of the banks and that small and medium-sized companies have to go to the secondary markets where they pay huge interest rates, which keeps them from developing,” he said.

Greenberg also touched on the scandal in the southwestern Chinese city of Chongqing, whose charismatic leader Bo Xilai was abruptly ousted last month.

“You don’t go around trying to promote yourself to a political position in China. That doesn’t fly,” said Greenberg.

“His behavior, singing Mao songs and wanting to go back to that era, was just the wrong way to do it,” said.

Bo, who had led a campaign to revive radical songs and slogans of the 1966-76 Cultural Revolution, was removed as Chongqing party boss in mid-March, six weeks after his vice mayor, Wang Lijun, fled to a nearby U.S. consulate.

Greenberg said he had a “very pleasant” 90-minute meeting with Bo and Chongqing mayor in that city in February.

“About two days later, things blew up,” he said.