Treasury Secretary Paulson's Advice To China: Reform and Open Up

Investors in the China exchange-traded fund or ETF (FXI), which is a basket of 25 large state-owned companies, should be interested in U.S. Treasury Secretary Henry Paulson's 40-minute speech at the Shanghai Futures Exchange before local business leaders and government officials. He laid out his case for how financial-market reforms and opening up to foreign competition could help the Chinese government meet its goals for more balanced economic growth and widespread prosperity stated in its latest five-year economic plan.

Elizabeth Price of the WSJ explains that some government officials and participants in China's financial-services sector oppose further foreign competition, accusing offshore investors of pursuing only the most profitable segments of the market at the expense of local rivals and customers. Others, however, want to inject more offshore capital and expertise in their businesses, with the Beijing municipal government, for example, recently partnering with Swiss Bank UBS AG to help create China's first full-service brokerage house run by a foreign firm.

Here is the full text of his speech as posted by the U.S. Consulate in Shanghai.