Fears over China-US economic talks baseless

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By Yuan Peng (China Daily)
Updated: 2008-06-17 07:44

The fourth China-US Strategic Economic Dialogue will take place in Annapolis, capital of the state of Maryland, on Tuesday and Wednesday local time. The choice of the beautiful seaside town to convene the meeting in a way reflects the special importance of the talks.

Several aspects of this round of the talks are "new". The first is a new situation. On the US side the presidential election campaigns have entered the white-hot stage; the country's economic prospect remains uncertain with the impacts of the subprime crisis still felt strongly; President George W. Bush's term in office is approaching its end, while the nation is somewhat unsure where its development is headed.

On the Chinese side, post-quake relief and reconstruction, stabilizing the stock markets and preparations for the Olympic Games are all testing the nation's social and economic resilience and development potential.

And from a global point of view, a food crisis is looming large as the price of oil and almost everything else is going up, leaving the world economy to face challenges of historic proportions.

The second new thing is the personnel. As "Iron Lady" Wu Yi's successor, Vice-Premier Wang Qishan will for the first time head the Chinese delegation in these talks.

The third is new starting point. Coming up is the fourth round of the bilateral strategic economic dialogue since the first round took place in December 2006. The key achievements and experience gained from the first three rounds serve as a good foundation for the success of the fourth.

With all these new aspects the latest round has naturally attracted more than usual attention from both countries and the rest of the world and aroused all kinds of expectations. How will China and the US, as two main engines of the global economy, contribute to the macro-economic development through rational dialogue? As a key pillar supporting the overall stability of bilateral ties, can the strategic economic dialogue play the role for long, and how will they propel Sino-US relations toward lasting strategic stability with increased clout? Will this round turn out to be the finishing touches to a phase or the prelude to a new chapter in the China-US economic and trade ties?

The first reason why the strategic economic talks have attracted so much attention and expectations lies in the particularly important positions China and the US occupy in the global system and the current unusual world economic situation. The next is that the first three rounds actually achieved important results instead of becoming a platform for platitudes.

In the previous three rounds, the two sides have adopted "mutual benefit and win-win results" as the spirit of dialogue and principle so that the pursuit of their own interests will not deny the other party's interests or feelings and they will find the point or points where the two nations' interests join those of the world as well as seeking to maximize their common interests.

This is exactly why the two countries have made significant achievements in cooperation on a wide range of issues, including opening up financial markets to each other, allowing each other to invest, intellectual property right (IPR) protection, energy resources and the environment, climate change, product quality and food safety.

The US government made efforts to contain trade protectionism despite congressional pressure in order to prevent the politicization of trade issues, while the Chinese side has done more, including allowing the yuan to appreciate against the US dollar by 16 percent so far, steadily advancing the opening up of the financial sector, noticeably improving product quality, enhancing IPR protection with marked results and contributing to dealing with climate change and saving energy while reducing consumption of natural resources.

This time both sides have presented their lists of what they want to achieve in the talks. The US is expecting China to step up financial services industry reform, sign an agreement on protection of investment and IPR, improving product quality, ensuring food safety and so on; while the Chinese side hopes to strengthen strategic mutual confidence, increase macro-economic policy coordination and repel trade protectionism.

According to the spirit of mutual benefit and win-win results, people have reasons to believe the two sides will exercise certain flexibility while adhering to the principles and join hands in expanding the area of cooperation.

Some pessimists have concluded that the fourth round of the bilateral strategic economic dialogue will not be able to achieve substantial results. Because of the joint effect of its financial mess, flagging economy and election campaigns that are approaching the red-hot state, the US side will definitely increase pressure on China for strategic reasons; while the latter will find it hard to be more flexible in the extraordinary situation, as it is going all out in post-disaster (the Wenchuan earthquake) relief and preparations for the Olympic Games. And for this reason not only the upcoming dialogue will be the last before President Bush moves out of the White House but the strategic talks as a form of communication will automatically expire upon the end of his presidency.

Such worries are entirely unfounded, but politicians and strategists of reason will not subscribe to this kind of sentiment because, first of all, the original purpose of establishing the strategic economic dialogue was to examine bilateral economic and trade ties from a strategic vantage point and to develop their strategic relationship by means of economy and trade, with the emphasis on strategic and long-term development within the big picture instead of single-minded pursuits for "concrete gains". Second, it has been proven in practice that the strategic economic talks have played an irreplaceable role in keeping bilateral ties generally stable and in increasing strategic mutual confidence between the two sides. Third, reducing trade disputes and promoting common interests through dialogue is the trend in the era of globalization.

Finally, it does not matter who wins the US presidential election, as neither Barack Obama nor John McCain can afford not to focus their administration on "back to business" or "the economic battle". Neither of them can refuse to accept the benefits brought by the talks even if they dislike "strategic economic dialogue" label, because they would hate to bear the strategic impact of terminating the talks even more.

It is very interesting that the theme of the fourth round of the China-US Strategic Economic Dialogue is "sustainable economic growth". This is currently the most urgent economic topic not just for China and the US but the world as whole as well. In a way the sustainability of the China-US Strategic Economic Dialogue itself will indicate where "sustainable economic growth" is headed.

The author is a researcher with China Institute of Contemporary International Relations

(China Daily 06/17/2008 page8)