ECONOMIC ACHIEVEMENTS OF THE 2016 U.S.-CHINA S&ED
June 17, 2016
The recently concluded eighth U.S.-China Strategic & Economic Dialogue (S&ED) and seventh Consultation on China-U.S. People-to-People Exchange (CPE) accomplished more than 300 concrete achievements within its three tracks, including over 60 outcomes in the economic track, 120 outcomes in the strategic track, and 158 outcomes in the people-to-people track, all of which shed light for further cooperation between the two countries. According to John Kerry, the U.S. Secretary of the State, this year’s S&ED was the most productive he’d ever attended.
The economic dialogue within the framework of the U.S.-China S&ED was hosted by Yang Wang, China’s Vice-premier of the State Council, and Jacob Lew, the U.S. Secretary of the Treasury. The two sides exchanged ideas in terms of strengthening economic policy, promoting open trade and investment, deepening financial stability and reform, and improving global cooperation and economic governance.
Among the over 60 outcomes, the most significant accomplishment involved the proposed U.S.-China Bilateral Investment Treaty (BIT). The U.S.-China Bilateral Investment Treaty has been under consultation since 2008 and has undergone over 20 rounds of negotiations. With the G20 Summit in September approaching, both sides agreed it is time to further promote the BIT. A large area of debate regarding the BIT has been the use of negative lists, which set investment restrictions for the other country rather than providing a positive list of approved sectors. The U.S. has been insistent about the need for a narrow and limited negative list, while China has been reluctant to open investment in more service sectors, citing security concerns. During the S&ED, the U.S. and China have agreed to exchange updated Negative Lists this month with a new round of negotiations in Washington. This is a significant step moving toward a closer economic tie between China and the U.S.
Other economic accomplishments include China providing the U.S., for the first time, with an investment quota to deepen the two countries’ financial connections. The U.S. acquired 250 billion yuan ($38 billion) from China under the RQFII (Renminbi Qualified Foreign Institutional Investor) program to purchase Chinese stocks, bonds and other assets. China also promised to boost its economy and avoid competitive devaluation of the Chinese currency (RMB). In this context, it can be inferred that China plans to continuously engage in currency and other economic reforms as well as maintain a more market-oriented exchange rate. Finally, in response to U.S. concerns regarding China’s overcapacity issue, China promised to cut 110-150 million tons of iron and steel production capacity and will not add new capacity.
In addition to these key accomplishments within the economic track, China and the U.S. also paid extraordinary attention to cooperation in other areas. For example, the two sides reaffirmed their ongoing discussion on export control issues during the U.S.-China High Technology and Strategic Trade Working Group (HTWG). Both sides will keep promoting bilateral trade and investment cooperation among states, provinces, and cities. Infrastructure construction; protection of intellectual property rights; agriculture; small and medium enterprises policy dialogues; research, development, and innovation on clean energy; counter-terrorism; cybersecurity; judicial law enforcement; anti-corruption; customs enforcement; global health cooperation; bilateral aviation cooperation; marine protection; international climate change negotiations; and a wide range of other issues were discussed and evaluated for further strengthening, communication, and cooperation. The two countries also agreed to make future efforts in promoting new development in military-to-military relations, strengthening policy dialogues, increasing communication and interaction, and improving mutual trust.
Improving the future relationship between China and the United States largely depends on negotiating a comprehensive U.S.-China Bilateral Investment Treaty. It will not only serve to overcome the international financial crisis, but also help ensure a stable development of Sino-U.S. relations. China would achieve greater domestic consumption and services, and the U.S. would gain access to increased investment and exports. Most importantly, the BIT would help reduce the tensions between the two countries. However, it might not be realistic for China and the U.S. to approach free trade through a single agreement on all key topics. Rather, the ongoing bilateral investment treaty talks might need to focus on step-by-step compacts on individual topics, since many specific economic barriers and many other controversial issues still exist, including the very unbalanced economic relationship, different income levels, economic systems and political systems, and the pervasive lack of trust.
The U.S.-China S&ED is the two countries’ most consistent and all-encompassing high-level bilateral dialogue and cooperation mechanism. As it is vital for the two sides to effectively manage Sino-U.S. relations in the Asia-Pacific and strengthen their ability to deal with any issues that arise bilaterally, regionally, or globally, the U.S.-China S&ED plays a very important role. Thanks to the foundation laid by the U.S.-China S&ED, the two countries will surely maintain continued communication on key global issues and reach increasing levels of consensus and cooperation in the future.
For more information on this topic, please visit the following links:
US Department of State – “S&ED Opening Session Remarks”
US Department of State – “U.S.-China Strategic & Economic Dialogue Outcomes of the Strategic Track”
US Department of the Treasury – “2016 U.S.-China Strategic and Economic Dialogue U.S. Fact Sheet – Economic Track”
CCTV America– “5 Things You Need to Know about S&ED”
For Chinese language news on this topic, see the sources below:
Xinhua News Agency (新华社) – “第八轮中美战略与经济对话框架下经济对话联合成果情况说明”
Compiled and edited by Xieyao Chen