International ties

The second S&ED: More equal, balanced and inclusive

By Huang Ying (Chinadaily.com.cn)
Updated: 2010-05-31 10:51

For China, what it wants most from the dialogue are two things. The first is a fairer economic competition environment. China has long been demanded by the US government to open its market to foreign investors, but America has not reciprocated China in the same way or on the same level. Chinese company’s bid for US oil companies was refused in the name of national security, and Chinese financial companies always find it very hard to operate in US market because of the countless restrictive policies and requirements. Besides this long-term protectionism in investment, China also worries about the new surge of protectionism that emerges in US trade policy. Since the outbreak of the international financial crisis, trade conflicts between the two countries have sprung up in many areas. This is a most worrying trend. In the second S&ED, however, the two countries agreed to avoid protectionism in both investment and trade areas.

Related readings:  Deep talks for future ties  S&ED carries high hopes  Debate: Sino-US S&ED  US to recognize China's market economy status

The second thing of great importance to China is to ensure the safety of its investment in US government bonds which have long been deemed as the safest investment by the world. However, after the crisis, observers around the world begin to question the solvency of US government. As America’s biggest creditor, China urged America to further push the reform of its financial supervision system. America agreed to continue to strengthen the supervision of the government-sponsored enterprises, and foster a financial sector servicing the investment needs of residents, business and producers.

However, US wouldn’t give in on two fronts, just like China wouldn’t back off on the RMB issue, at least for now. The first is about US controls of high-tech exports which, China believes, is, among other things, is one main sources of trade imbalance between the two countries, thus need to be reviewed and altered.

According to the Chinese Ministry of Commerce, the share of high-tech products in US exports to China fell from 18.3 percent in 2001 to only 7.5 percent in 2009, suggesting how the bilateral trade is distorted by the US control policy.

In response to Chinese demand on an end to this discriminatory practice, US Secretary of Commerce Gary Locke admitted that this cold-war policy was out of date and needed reform, but gave no clear route map or timetable about how or when to change the policy.

The second is recognition of China’s status of market economy. China has been recognized by many developed countries as “market economy”, but America refuses to follow this trend. This issue stands as a big obstacle in the smooth development of Sino-US economic ties. However, new signs indicate that America is now pondering on changing this policy. This change of attitude is welcomed by Chinese government.

Besides the above key issues, there are other important areas that merit mention here. For example, the two countries agreed to cooperate in energy, anti-pandemic, climate change and environment feilds. They also agreed to further promote the international financial reform and endorse G20’s role as the main forum for international economic cooperation.

Although the second S&ED leaves much to be resolved to the next meeting, it shows the world that this cooperation mechanism has become more equal, balanced and inclusive. The differences are obvious, but the potential space for the two countries to cooperate is expanding. This time, China becomes more confident in advancing its own views and propositions. The themes of the meeting are more balanced, reflecting the desires and concerns of both sides. The meeting also reflects the increasing interdependence of the two countries and their willingness to further deepen this interdependence and their mutual understanding. This is a positive sign.

“Dialogue is better than confrontation, ” for America and China, said Chinese Premier Wen Jiabao. ,US Secretary of State Hillary Clintons described the Sino-US relations by citing one Chinese old saying. She said, the two countries “travel different paths, but share common destination”. It is true that Sino-US relations have experienced too many ups and downs, but since they are both aware that they share common destination, they should learn to listen to each other’s concerns, respect each other choices, and coordinate their acts.

Huang Ying is an economic researcher in China Institutes of Contemporary International Relations (CICIR), and she contributes this article to China Daily. The opinions expressed are her own.