Results of U.S.-China Strategic & Economic Dialogue
by Ken Jarrett, vice chairman, Greater China
Last month, U.S. Secretary of State Hillary Clinton and U.S. Treasury Secretary Tim Geithner led a large delegation of more than 200 U.S. officials to Beijing for two days of talks - the second meeting of the annual Strategic & Economic Dialogue (S&ED).
The S&ED is the successor to the Strategic Economic Dialogue (SED) that began during the Bush administration. The SED was held on a semi-annual basis and limited to economic and trade issues; in creating the S&ED, the Obama administration merged an existing separate high-level dialogue on political/security issues with the SED and switched to an annual meeting schedule. Vice Premier Wang Qishan represents China in discussions of economic issues, and State Councilor Dai Bingguo leads for China on political/security issues.
Both governments expressed satisfaction with the outcome of the dialogue, which reinforced the more positive trend in bilateral relations that began in April after a period of acrimony following the December climate change summit in Copenhagen and subsequent tensions over Tibet and Taiwan. The recent sinking of a South Korean warship and concerns about Eurozone stability also shaped the atmosphere for this meeting.
The S&ED is designed as a forum for dialogue of economic and strategic issues at the macro level, but outside observers typically measure the success of each meeting by tangible outcomes. Against that metric, here are some highlights from the discussions on trade and investment issues:
- The United States conveyed concern that China's growing emphasis on indigenous innovation could discriminate against foreign companies.
- China agreed to submit a revised submission for the World Trade Organization's Government Procurement Agreement, although this will be just another step in the long process of making China a signatory to this agreement.
- Some Chinese press headlined an alleged U.S. agreement to recognize China's "market economy status," which would benefit China if subjected to U.S. trade remedy investigations, but in fact the United States simply agreed to continue discussions of this issue.
- China reiterated its criticisms of U.S. export controls, and the United States responded that a review is already underway.
- China and the United States signed a Memorandum of Understanding on Supply Chain Security to facilitate the flow of goods between the two countries.
On currency reform, there were no announcements. This discussion stayed behind closed doors as the United States stuck to its low-key approach of encouraging RMB revaluation. The effect of those discussions will only become more apparent in the coming months, as China does not want to be seen as yielding to U.S. pressure. President Hu Jintao, in his opening address, reiterated China's position that it would pursue RMB exchange rate reform under the principles of "independent decision-making, controllability and gradual progress."
In other areas, there were a number of outcomes related to energy and environmental issues, an area of growing cooperation between the United States and China. These included initiatives on nuclear reactor safety and shale gas. China also offered to provide scholarships to 10,000 of the 100,000 students the United States plans to send to China over the next four years.
In sum, this meeting of the S&ED may not have produced exciting headlines, but it did provide a forum for senior officials to discuss a wide a range of issues. There were some modest tangible outcomes, but the biggest plus was the S&ED's role in reinforcing the cooperative tone that has characterized U.S.-China relations since April.