Issues to follow after China-US strategic, economic talks
Saturday, 5 June 2010
The recently concluded second round of China-US Strategic and Economic Dialogue (S&ED) was widely considered a success.
Meanwhile, the event's achievements and issues are being followed closely by academics, media and policy-makers in both countries.
Analysts said the key areas being watched were China's market economy status, US high-tech exports to China, the renminbi exchange rate, cooperation on new energy sources and trade and investment environment.
China's market economy status
At the dialogue, the US pledged to seriously consider the issue of China's market economy status and speed up the process of acknowledging that status.
However, Chen Fengying, chief of economic studies at China Institute of Contemporary International Relations, said, although the US attitude on that issue had improved, it didn't mean Washington would soon acknowledge Beijing's market economy status.
"The US legislation process to acknowledge China's market economy status requires some external conditions, such as the marketisation of the exchange rate and price formation mechanism and the opening of capital items," Chen said.
"So it is a difficult process and will encounter huge obstacles in the US Congress," he said.
She was echoed by Sun Zhe, director of the China-US Relations Studies Centre at Tsinghua University.
"It is virtually impossible in two or three years," Sun said, adding that many in Washington prefer to see an automatic acknowledgement of that status in 2016 as stipulated in agreements reached prior to China's entry into the WTO.
US hi-tech exports
China maintains over-conservative US restrictions on hi-tech exports to China have played a major role in creating the bilateral trade imbalance.
During the dialogue, the US side promised to consider Beijing's concerns on the issue.
"On which items and to what extent the United States will ease the restrictions deserve attention," said Tu Xinquan, deputy director of China Institute for WTO Studies at the University of International Business and Economics.
"My estimate is that Washington may ease restrictions on the products which were originally permitted for export to China before 1989," Tu said.
But other analysts said it was too early to expect concrete concessions from the United States, since neither a list of controlled items nor a timetable had been released.
Renminbi exchange rate
On public occasions throughout the dialogue, US delegates kept a low-profile on the sensitive issue of the renminbi exchange rate.
Chinese President Hu Jintao has reiterated that China will continue to steadily advance the reform of the exchange rate mechanism under the principle of independent decision-making in a controllable and gradual way.
US-China Business Council President John Frisbie said the US side welcomes "President Hu's affirmation to reform his country's exchange rate administration and China's desire for increased coordination in re-balancing economic growth models."
Analysts say the consensus reached on the issue by both sides during the dialogue probably indicates a postponement in the anticipation of the renminbi's appreciation.
Energy cooperation
Energy cooperation was considered to be the most concrete and pragmatic part of the dialogue, accounting for 10 of the 26 tangible outcomes.
In fact, clean energy has been a bright spot in the China-US economy and trade relations in recent years, and both sides have sent out positive signals for close cooperation. They agreed to strengthen cooperation on stabilising the international energy market, ensuring energy supplies and optimising energy use.
Kenneth Lieberthal, director of the John L Thornton China Centre at Washington think-tank Brookings Institution, said the dialogue further advanced bilateral cooperation on green technology.
If a comparatively barrier-free bilateral economic relationship could be established in this area, trade and investment barriers will be reduced to the benefit of the two governments, Lieberthal said.
Trade and investment environment
During this round of the dialogue, progress also has been made on improving the trade and investment environment.
The two sides agreed to begin this summer a series of talks between Chinese and US experts and senior-level officials to address US concerns about China's independent innovation policy in government procurement.
China also pledged to submit an amended version of its government procurement agreement to the WTO by July, which was well received by the US side.
Zhao Xiuzhong, dean of the International Business and Trade School at the University of International Business and Economics in Beijing, said China was not obligated to change its independent innovation policy, so the positive response from the US was diplomatic courtesy.
However, Zhao said the WTO submission marked a crucial step in improving transparency of the legislation process, which would benefit both China and the United States.
The issue of the investment environment is a two-part story. On the security of assets, US Secretary of Treasury Timothy Geithner stressed "the US economy is recovering quickly" and repeated it was safe to hold US bonds. On improving the corporate investment environment, the US promised to provide fair treatment for Chinese enterprises and said the Committee on Foreign Investment in the United States would treat all foreign investments equally, regardless of their source.
Don't judge the dialogue with concrete results only
This round of China-US dialogue achieved remarkable outcome in terms of the number of concrete results. But a number of people still don't believe the S&ED mechanism has played a leading role in addressing practical and core issues of concerns of both sides.
It should be noted, however, that if we judge the value of the dialogue only by concrete results or disregard its importance on grounds that it didn't resolve certain crucial issues, we probably miss the substance of this mechanism.
"Currently, there are some 60 ministerial or higher level dialogue mechanisms between the two countries and basically all are functional dialogues that cover certain specific areas of cooperation," said Wang Yong, an expert on international politics and economics.
"But what lacks most in China-US relations is strategic understanding and mutual trust, so the two countries should hold more candid dialogues to enhance communication and mutual trust on core concerns and interests of each other. The S&ED provides a platform for such talks," he said.
Aside from the specific agreements reached during this round of S&ED, there are at least three macro-level achievements.
First, it enhanced strategic mutual trust and smoothed communications between the two countries, providing a basis for talks on more substantial issues.
Second, it eased previous tensions between the two sides and created a favorable environment for China-US economic and trade cooperation.
Third, it served as a role model for global coordination on economic policies, laying a good foundation for the next G20 summit this month.
— Xinhua
Meanwhile, the event's achievements and issues are being followed closely by academics, media and policy-makers in both countries.
Analysts said the key areas being watched were China's market economy status, US high-tech exports to China, the renminbi exchange rate, cooperation on new energy sources and trade and investment environment.
China's market economy status
At the dialogue, the US pledged to seriously consider the issue of China's market economy status and speed up the process of acknowledging that status.
However, Chen Fengying, chief of economic studies at China Institute of Contemporary International Relations, said, although the US attitude on that issue had improved, it didn't mean Washington would soon acknowledge Beijing's market economy status.
"The US legislation process to acknowledge China's market economy status requires some external conditions, such as the marketisation of the exchange rate and price formation mechanism and the opening of capital items," Chen said.
"So it is a difficult process and will encounter huge obstacles in the US Congress," he said.
She was echoed by Sun Zhe, director of the China-US Relations Studies Centre at Tsinghua University.
"It is virtually impossible in two or three years," Sun said, adding that many in Washington prefer to see an automatic acknowledgement of that status in 2016 as stipulated in agreements reached prior to China's entry into the WTO.
US hi-tech exports
China maintains over-conservative US restrictions on hi-tech exports to China have played a major role in creating the bilateral trade imbalance.
During the dialogue, the US side promised to consider Beijing's concerns on the issue.
"On which items and to what extent the United States will ease the restrictions deserve attention," said Tu Xinquan, deputy director of China Institute for WTO Studies at the University of International Business and Economics.
"My estimate is that Washington may ease restrictions on the products which were originally permitted for export to China before 1989," Tu said.
But other analysts said it was too early to expect concrete concessions from the United States, since neither a list of controlled items nor a timetable had been released.
Renminbi exchange rate
On public occasions throughout the dialogue, US delegates kept a low-profile on the sensitive issue of the renminbi exchange rate.
Chinese President Hu Jintao has reiterated that China will continue to steadily advance the reform of the exchange rate mechanism under the principle of independent decision-making in a controllable and gradual way.
US-China Business Council President John Frisbie said the US side welcomes "President Hu's affirmation to reform his country's exchange rate administration and China's desire for increased coordination in re-balancing economic growth models."
Analysts say the consensus reached on the issue by both sides during the dialogue probably indicates a postponement in the anticipation of the renminbi's appreciation.
Energy cooperation
Energy cooperation was considered to be the most concrete and pragmatic part of the dialogue, accounting for 10 of the 26 tangible outcomes.
In fact, clean energy has been a bright spot in the China-US economy and trade relations in recent years, and both sides have sent out positive signals for close cooperation. They agreed to strengthen cooperation on stabilising the international energy market, ensuring energy supplies and optimising energy use.
Kenneth Lieberthal, director of the John L Thornton China Centre at Washington think-tank Brookings Institution, said the dialogue further advanced bilateral cooperation on green technology.
If a comparatively barrier-free bilateral economic relationship could be established in this area, trade and investment barriers will be reduced to the benefit of the two governments, Lieberthal said.
Trade and investment environment
During this round of the dialogue, progress also has been made on improving the trade and investment environment.
The two sides agreed to begin this summer a series of talks between Chinese and US experts and senior-level officials to address US concerns about China's independent innovation policy in government procurement.
China also pledged to submit an amended version of its government procurement agreement to the WTO by July, which was well received by the US side.
Zhao Xiuzhong, dean of the International Business and Trade School at the University of International Business and Economics in Beijing, said China was not obligated to change its independent innovation policy, so the positive response from the US was diplomatic courtesy.
However, Zhao said the WTO submission marked a crucial step in improving transparency of the legislation process, which would benefit both China and the United States.
The issue of the investment environment is a two-part story. On the security of assets, US Secretary of Treasury Timothy Geithner stressed "the US economy is recovering quickly" and repeated it was safe to hold US bonds. On improving the corporate investment environment, the US promised to provide fair treatment for Chinese enterprises and said the Committee on Foreign Investment in the United States would treat all foreign investments equally, regardless of their source.
Don't judge the dialogue with concrete results only
This round of China-US dialogue achieved remarkable outcome in terms of the number of concrete results. But a number of people still don't believe the S&ED mechanism has played a leading role in addressing practical and core issues of concerns of both sides.
It should be noted, however, that if we judge the value of the dialogue only by concrete results or disregard its importance on grounds that it didn't resolve certain crucial issues, we probably miss the substance of this mechanism.
"Currently, there are some 60 ministerial or higher level dialogue mechanisms between the two countries and basically all are functional dialogues that cover certain specific areas of cooperation," said Wang Yong, an expert on international politics and economics.
"But what lacks most in China-US relations is strategic understanding and mutual trust, so the two countries should hold more candid dialogues to enhance communication and mutual trust on core concerns and interests of each other. The S&ED provides a platform for such talks," he said.
Aside from the specific agreements reached during this round of S&ED, there are at least three macro-level achievements.
First, it enhanced strategic mutual trust and smoothed communications between the two countries, providing a basis for talks on more substantial issues.
Second, it eased previous tensions between the two sides and created a favorable environment for China-US economic and trade cooperation.
Third, it served as a role model for global coordination on economic policies, laying a good foundation for the next G20 summit this month.
— Xinhua