Why China talks tough but then cooperates: Hormats
China's tough talk with the United States and its recent cooperation on trade issues are not mutually exclusive, said Robert Hormats, former State Department undersecretary for economic growth.
In fact, they go hand in hand.
"Ironically they combine in China," Hormats told CNBC's "Squawk Box" on Wednesday. "Nationalistic statements at home give you a bit of latitude to do what you need to do to help strengthen the Chinese economy through trade and investment."
At the same time China has taken a tough position with the United States and some if its neighbors, it also has reached out to develop a new Silk Road comprised of infrastructure projects throughout Southeast and East Asia, said Hormats, who is now associate chairman at Kissinger Associates.
Hormats made the comments in response to a question about Chinese President Xi Jinping's promotion of a Chinese blogger known for anti-American sentiment shortly before Xi met with President Barack Obama.
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This week, the two countries announced agreements on carbon emission reductions and the removal of tariffs on information technology goods.
Roughly 400 areas of the high-tech energy sector—including semiconductors, medical devices and satellite guidance—will benefit substantially from the agreement, not only in China but other emerging markets, Hormats said.
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He noted that cybersecurity remains a major issue, and one that business leaders pressed Obama to bring up in meetings with his Chinese counterpart. The two countries have long traded accusations over cyberspying and theft of intellectual property.
Hormats said that while much work remains to be done, he sees some progress in this area.
"Some of the provinces in China that want to attract high-end investment from the United States and elsewhere are taking tougher action to protect intellectual property of foreigners and their own people, who are developing new intellectual property at a rapid rate," Hormats said.
The U.S. promised to reduce carbon emissions 26 to 28 percent below 2005 levels by 2025, while China would aim to stop expanding its emissions by 2030.
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Hormats said China has an incentive to stick to the agreement because the government is facing major internal pressure over pollution in its cities.