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By Julie Makinen, Los Angeles Times

BEIJING — In his first public address on the U.S.-China relationship since taking up the post of U.S. ambassador, Max Baucus said Wednesday that “the U.S. welcomes China’s rise” and that his priorities include pushing for a bilateral investment treaty and increasing cooperation on environmental issues.

But the former Montana senator briefly rapped Beijing on the knuckles over concerns including human rights, cyber-theft of U.S. companies’ trade secrets, and the blocking of American tech firms from the Chinese market.

“Trade and investment have come to be the foundation, the ballast, of the U.S.-China relationship, providing great stability,” said Baucus, speaking to a luncheon hosted by the American Chamber of Commerce and other business groups in Beijing. Developing trust on issues like business and the environment, he said, would serve as a basis for addressing other matters where the two nations disagree.

Baucus, 72, took over the ambassador’s post from Gary Locke this spring and has spent the last several months settling into the job and traveling to a number of Chinese cities. Already, though, he’s found the U.S.-China relationship encountering rocky shoals.

Baucus has kept a low profile as a number of issues between Beijing and U.S. allies in the region have flared up, including World War II-era grievances and territorial disputes in the South China Sea. Beijing has also reacted strongly to the U.S. indictment of five Chinese army officers in May on charges of hacking into American companies and stealing commercial secrets.

Baucus is stepping off the sidelines as Treasury Secretary Jacob J. Lew and Secretary of State John Kerry prepare to travel to Beijing in July for the sixth round of the U.S.-China Strategic and Economic Dialogue with their Chinese counterparts.

The new ambassador encouraged China to push forward with economic reforms and asserted that a bilateral investment treaty could have as many benefits for China today as the nation’s accession to the World Trade Organization did in 2001.

Though WTO membership opened China to a significant degree, Beijing continues to restrict foreign investment in numerous sectors of the economy, barring foreign entities from owning more than 50 percent of ventures in areas including automobiles and agriculture. A bilateral investment treaty that reduces such barriers is a high priority for many U.S. companies — particularly service providers — doing business in China, though American labor groups and others have concerns.

Advocates say such a treaty would also improve U.S. firms’ ability to protect their technology in China because they would not be forced to share as much with Chinese partners.

The United States already has such investment treaties with about 40 other smaller countries, but any such deal between the world’s top two economies would have a significantly larger impact.

Baucus devoted a notable portion of his remarks Wednesday to environmental concerns, including pollution and climate change. He recounted that when first lady Michelle Obama visited China this spring, she encountered a young boy — named Max, coincidentally — who told her he liked living in Beijing except for one thing: the dirty air.

“You obviously don’t have to look very far … to see that Max has a point,” Baucus said. He urged Chinese leaders to follow President Obama’s recent pledge to cut emissions from U.S. power plants and said Americans could help China learn from the U.S. experience cleaning up its pollution problems several decades ago.

Baucus briefly brought up some recent points of tension in the bilateral relationship, noting that China has recently arrested a number of “moderate voices” who have been advocating for issues such as ethnic minorities’ rights and good governance.

“We strongly believe that individual advocates play an important role in developing a civil society,” Baucus said. Playing to a top concern of Chinese leaders — the fear of unrest — he added that “protecting basic rights such as freedom of expression enhances social stability.”

He reiterated U.S. concerns over cyber-theft of trade secrets by “state actors” in China. “We wouldn’t sit idly by while a crime is committed in the real world, so why should we do it when it happens in cyberspace?” he said. “We will continue to use diplomatic and legal means to make clear that this type of behavior must stop.”

And he briefly alluded to China’s continued blockages of companies such as Facebook and Twitter, and its recent enhanced restrictions on Google access within the mainland. Locking such companies out of China’s market will hurt both of us, he said.

“Despite our differences, we have no choice but to keep talking, to work our way through these tough challenges,” Baucus said. “It’s at moments like these that more, not less, dialogue is needed.”

© / Saul Loeb

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