China and the United States seek to iron out differences at the recent Strategic and Economic Dialogue

By YU YAN

Despite disputes over trade, exchange rates and the investment climate,China and the United States are striving to promote cooperation through dialogue, as the two countries become increasingly dependent on each other and benefit substantially from each other’s development, said Chinese officials and scholars.

The most recent effort was the two-day Sino-U.S. Strategic and Economic Dialogue(S&ED), which ended in Washington, D.C.on May 10. Chinese Vice Premier Wang Qishan and State Councilor Dai Bingguo cochaired the dialogue with U.S. Secretary of State Hillary Clinton and Treasury Secretary Timothy Geithner, as special representatives of their presidents.

This was the third round of this two-track dialogue. It was upgraded from the former Strategic Dialogue and Strategic Economic Dialogue initiated by the two countries in 2005 and 2006 respectively.

“We had a good conversation, but we didn’t agree on each and every issue,” said Dai at the end of the talks. “But after each round of dialogue, we successfully expanded mutual understandings, increased trust and enhanced cooperation. This has added to our confidence of further developing our bilateral relations in the future.”

Progress

The biggest achievement was the Sino-U.S. Comprehensive Framework for Promoting Strong, Sustainable and Balanced Growth and Economic Cooperation signed by Wang and Geithner, he said.

“The United States and China af fi rm both countries will, based on common interests,promote more extensive economic cooperation,from a strategic, long-term, and overarching perspective, to work together to build a comprehensive and mutually beneficial economic partnership, adding to the prosperity and welfare of the two countries, and to achieve strong,sustainable, and balanced growth of the world economy,” the document said.

A major task of the third round of the S&ED was fulfilling the consensus reached by Chinese President Hu Jintao and U.S.President Barack Obama during Hu’s visit to the United States this year, to move Sino-U.S. relations toward a “cooperative partnership,” said Tao Wenzhao, a senior research fellow with the Institute of American Studies at the Chinese Academy of Social Sciences.

In January, Hu paid a state visit to the United States, during which he and Obama reached a consensus on building a cooperative partnership based on mutual respect and benefit. The visit charted a clear course for the future of Sino-U.S. relations.

The framework signed during the S&ED would build on the momentum to step up bilateral cooperation, Tao said.

During the dialogue, the two sides discussed a wide range of topics, including longterm issues in bilateral economic cooperation,Europe’s sovereign debt crisis, the nuclear disaster triggered by Japan’s earthquake, as well as the turbulence in the Middle East, and its signi fi cance for the global economy.

A highlight of the strategic track of the third round of the S&ED was the establishment of the Sino-U.S. Strategic Security Dialogue(SSD).

“To build a solid partnership between the two countries, it is important to strengthen the weak areas of their bilateral relations, including the military relationship,” Tao said.

Chinese Vice Foreign Minister Zhang Zhijun and Deputy Chief of the General Staff of the Chinese People’s Liberation Army Ma Xiaotian attended the SSD, along with U.S. Deputy Secretary of State James Steinberg and Under Secretary of Defense Michèle Flournoy.

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The SSD was established to help boost Sino-U.S. military exchanges, which have always lagged behind economic and strategic discussions. The move was significant, because it was conducive to enhancing mutual trust, eliminating suspicions, strengthening understanding and expanding areas of cooperation, Tao said.

Business issues

At a time when business ties between China and the United States are thriving, it is essential the United States put the agreements in the framework signed during the third round of the S&ED into practice and remove obstacles for Chinese investors,said Zhou Shijian, a senior research fellow with the Center for U.S.-China Relations at Tsinghua University in Beijing.

Chinese statistics show Sino-U.S. trade reached $385.34 billion in 2010, up 29.2 percent over the previous year. The two countries are currently each other’s second largest trade partners.

But Chinese companies’ efforts to invest in the United States had long been hindered by the U.S. Government in the name of protecting national security, Zhou said.

The Committee on Foreign Investment in the United States (CFIUS) has rejected a series of Chinese investment bids in recent years. For instance, earlier this year,China’s leading telecom solutions provider Huawei Technologies was forced to drop a deal to purchase a share of U.S. server technology company 3Leaf Systems, due to CFIUS interference, which deemed the$2-million deal a possible risk to U.S. national security.

Chinese investment in the United States was helpful for the U.S. economic recovery and could create more job opportunities for Americans, Zhou said. “The United States should eliminate political factors interfering with economic activities,” he said.

Chinese Commerce Minister Chen Deming said Chinese investment in the United States accounted for a small portion of China’s total outward investment. In 2010, China’s total outward investment, not including fi nancial sector investment, amounted to $59 billion, while its investment in the United States represented only 2.4 percent of the total fi gure.

“We hope the United States will treat Chinese investment and investment of Chinese state-owned enterprises in the United States in a fair manner,” Chen said.

It is unfair the United States still regards China as a non-market economy, Zhou said.China has carried out economic reforms since 1978 and joined the WTO in 2001.

On entering the WTO, China agreed with other members it would be regarded as a “transition economy” for 15 years before automatically gaining market economy status in 2016.

There are only five years to go, and by then, the United States will not be able to use the market economy status as a bargaining chip against China, Zhou said.

While the United States claims accelerated appreciation of the yuan can help ease China’s ongoing inflation, Zhou said Washington’s real purpose is to weaken China’s competitiveness in exports.

“As long as it has a trade de fi cit against China, the United States will keep pressuring the yuan to appreciate,” he said.

Chinese exports to and imports from the United States totaled $283.3 billion and$102.04 billion respectively in 2010, posting a surplus of more than $180 billion for China.

The trade surplus with the United States accounted for 99 percent of China’s total trade surplus, said Chen.

He said the way to resolve these imbalances was for the United States to ease its export restrictions toward China and to encourage U.S.exports to China rather than restricting Chinese exports to the United States.

The United States exercises export license administration on more than 2,000 hitech items to China. Under this system, the authorities give export licenses only after the end use of the products is veri fi ed.

Obama announced a decision to reform the U.S. export control regime in December last year, granting 164 countries license exemptions, but China was not on the list. ■