Clinton Urges Asian Nations to Compete Fairly in World Markets

HONG KONG — In remarks clearly aimed at Beijing’s leaders without explicitly criticizing China, Secretary of State Hillary Rodham Clinton called in a speech in Hong Kong on Monday for Asian nations to compete fairly in international markets and to include the United States in regional economic agreements.

Mrs. Clinton urged governments not to draft market-shaping regulations in secret and not to favor state-owned enterprises. She called for strong protections for intellectual property and for government contracts to be open to foreign and domestic companies alike.

“All who benefit from open, free, transparent and fair competition have a vital interest and a responsibility to follow the rules,” she said. “Enough of the world’s commerce takes place with developing nations that leaving them out of the rules-based system would render the system unworkable. And that, ultimately, would impoverish everyone.”

Mrs. Clinton called for regional economic integration to be pursued through groups that include the United States like the Asia-Pacific Economic Cooperation forum, whose annual gathering will be led by President Obama in Hawaii in November.

In economic policy, as on security issues, China has preferred to address issues in Asia either bilaterally or through agreements with small numbers of Asian countries, without the United States. That approach to negotiations has allowed greater influence for China, the region’s largest economy and leading military power.

But the hazard of bilateral trade agreements within Asia is that they may create further layers of bureaucracy, Mrs. Clinton said.

“There is now a danger of creating a hodgepodge of inconsistent and partial bilateral agreements which may lower tariffs but which also create new inefficiencies and dizzying complexities,” Mrs. Clinton said. “A small electronics shop, for example, in the Philippines might import alarm clocks from China under one free trade agreement, calculators from Malaysia under another, and so on — each with its own obscure rules and mountains of paperwork — until it no longer even makes sense to take advantage of the trade agreements at all. Instead, we should aim for true regional integration.”

Mrs. Clinton also made an implicit criticism of China’s two-month embargo last autumn on shipments of rare earth metals to Japan, which extended to a brief halt on shipments to the United States and Europe as well. She warned on Monday that international faith in the fairness of the current global trade system is threatened, “when vital supply chains are blocked.”

Departing briefly from the Asian economy themes of her speech, Mrs. Clinton also offered an assurance that Congress and the Obama administration would find a way to raise the ceiling on the national debt.

“The political wrangling in Washington is intense right now, but these kinds of debates have been a constant in our political life throughout the history of our republic,” she said, later adding that she was “confident that Congress will do the right thing and secure a deal on the deal ceiling, and work with President Obama to take the steps necessary to improve our long-term fiscal outlook.”

Chinese officials have been watching warily the debt debate in the United States. With more than $1 trillion in United States Treasuries, China holds roughly a tenth of the American national debt.

China’s precise holdings are unclear, as monthly data for foreign holdings of Treasuries are highly unreliable because the notes are frequently held in the name of various banks in other countries, while the most recent annual data is from last summer and is not fully comprehensive.

Mrs. Clinton spoke in Hong Kong to a gathering of the local branches of the American Chamber of Commerce and the Asia Society.

The secretary of state praised Hong Kong’s commitment to free markets and light regulation. She conspicuously avoided any mention of the democratic aspirations of Hong Kong residents or their concerns about one of the world’s highest levels of economic inequality, which some local critics have attributed to limited regulation of oligopolies and to real estate deals between large companies and the government.

A march on July 1 by protesters calling for more democracy and more populist economic policies drew 54,000 people according to the final police estimate and 218,000 people according to the organizers.

Mrs. Clinton offered unalloyed praise for Hong Kong’s success, and put it in the context of the system of one country with two economic and legal systems that China and Britain created when Britain returned the territory to Chinese rule in 1997. China has objected strongly over the years to any American advice on how to run the territory, contending that this amounts to foreign interference in China’s domestic affairs.

“Under the ‘one country, two systems’ policy, this remains a city that bridges East and West and looks outward in all directions, a place where ideas become businesses, where companies compete on the merits, and where economic opportunity is palpable and real for millions of people, a place that defines the fierce and productive economic competition of our time,” she said.

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