U.S.-China Dialogue Opportunity To Address Global Issues
USINFO Staff Writer
Washington - The United States and China are expected to make progress on a range of bilateral and global issues during their biannual high-level Strategic Economic Dialogue (SED), says a senior U.S. Treasury Department official.
Driving this movement is the recognition in both countries that open markets, innovation and effective social and energy policies are critical to sustainable economic growth, Alan Holmer, the Treasury Department’s special envoy for China, told USINFO May 18.
Holmer said the importance of such progress goes beyond bilateral relations.
“As global economic leaders, we have shared global responsibilities, including advancing global trade, strengthening the world economy and addressing global imbalances,” he said.
Providing advice and assistance to China on shifting from export-driven growth toward consumption-driven economic expansion will be one of the topics discussed at the May 22-23 meeting of the SED in Washington, Holmer said. Export-led growth has created huge trade surpluses in China and burdened its trading partners, particularly the United States, with huge trade deficits.
But changing the pattern of growth is primarily in China’s interest, Holmer said.
“Rebalancing the Chinese economy toward consumption will raise the welfare of the Chinese people and allow China to grow in the future without generating huge trade surpluses,” he said at a May 18 press briefing in Washington.
Other topics expected to be discussed at the SED meeting include reforms of the Chinese financial sector, liberalization of services, an efficient and effective social safety net and protection of intellectual property rights.
Since the first SED meeting in Beijing in December 2006, the pace of reforms in China has picked up in many areas, including government transparency, export subsidies and market access for foreign banks, Holmer said.
He said the administration also hopes to make progress in other areas such as air services and energy efficiency.
The two countries have been negotiating an open skies agreement, which would remove most of the bilateral restrictions on their airlines. (See related article.)
The Bush administration also has promoted advanced technologies as a way to improve energy efficiency. At a more fundamental level, China’s energy needs can be addressed through financial market reforms, according to a recent study. (See related article.)
Holmer said the high-level meeting will be an opportunity “to build personal relationships and trust” with Chinese officials and provide feedback on the impact their economic policies have on the United States and the rest of the world.
Earlier in May, Treasury Secretary Henry Paulson said he encouraged Chinese officials to meet with U.S. lawmakers in Washington.
Holmer, however, declined to confirm whether such a meeting will take place at the time of the SED.
Several key lawmakers have expressed frustration with the pace of the Chinese reforms and what they see as an insufficient commitment to address U.S. concerns. They have threatened to place trade restrictions on Chinese imports unless Beijing allows a more meaningful appreciation of the Chinese currency, the yuan.
The two sides agree in principle on currency appreciation but still remain apart on the timing, Holmer said.
“Our goal is to quicken the pace of reform in China, by helping them understand that the greater risk lies in moving too slowly, not in moving too quickly,” he said.
The day Holmer spoke, China announced it would allow its currency to rise or fall by 0.5 percent against a basket of currencies that includes the U.S. dollar, up from the current 0.3 percent margin.
At the briefing, Holmer called it a “useful step toward greater flexibility and an eventual float of the currency.”
Paulson, who will host the meeting, will be joined by the U.S. secretaries of agriculture, commerce, labor, health and human services, transportation and energy. Also attending will be the U.S. trade representative, Environmental Protection Agency administrator, deputy secretary of state and the Federal Reserve chairman.
For more information on U.S. policies, see The United States and China.