By Liu Lina

The coming high-level Strategic and Economic Dialogue (S&ED) between the United States and China will bring "closer and closer" the two nations' economic relations which are "important to the recovery of the world economy," Albert Keidel, an American specialist in Chinese economy, said in an interview with Xinhua on Wednesday.

"The dialogue is historic. In that, we have two top cabinet members in the U.S. side, State Department and Treasury Department, meeting with two members of China's State Council. This has never happened before," the former high rank official of the U.S. Treasury Department and now a well-known independent economist said. "It is a real breakthrough."

The first round of S&ED, which will be held on July 27-78 in Washington, is a reincarnation in a broader format of the Strategic Economic Dialogue set up by former U.S. Treasury Secretary Henry Paulson, who used the forum to engage Beijing on an array of issues critical to longer-term bilateral relations. The new mechanism was jointly launched by Chinese President Hu Jintao and U.S. President Barack Obama during their meeting in London in April.

It is widely expected that economic relations will play a prominent role during the broad discussions. There are many shared interests and topics that can be discussed between the two countries, Keidel said.

"The recovery of the global economy will be the number one topic to talk in the economic dialogue part," he said. "How can these two countries cooperate and help understand each other as they looked for ways to help the world out of recession is essential."

Keidel praised China's economic policies in tackling the financial crisis and said that China will play a more and more important role in the global economy recovery.

"The recovery in China has a symbolic boost for the world. It will help many countries which export primary products, machinery and other products." However, the U.S. has larger responsibility for helping resolve the global crisis, he noted.

Besides, Keidel said there are many other shared interests for the two countries. "For example, climate change, global warming, these are topics that China and the U.S. already have arrangements to work on, but needs more detailed engagement. They also can collaborate on other issues, such as food safety and product safety."

When answering a question regarding the recent worries about more trade protectionism will come from the U.S. since Lawrence Summers, U.S. President Barack Obama's top economic adviser, said that the rebuilt American economy will be more export-oriented, Professor Keidel said that it does not mean that there will be trade war between China and the U.S.

On the contrary, he believed that U.S. and China will return to a mutually beneficial trade pattern, in which the U.S. sells technology, foods and other needed goods to China, and China sells lower-ended manufacture goods and other increasingly sophisticated products.

"There will be a very good match, which means for China a more balanced and healthy trade picture," Keidel said.

He added that the American economy needs to change. He admitted that the American economy will not be consuming so much that creates large deficit, which caused concerns from overseas creditors, like China.

China has been unhappy with the skyrocketing U.S. budget deficit, driven in part because of Obama's massive spending to jump-start the economy. Washington's deficit is expected to reach 1.8 trillion dollars this year.

Although there are still differences and misunderstandings between the two countries, Keidel expressed his optimistic outlook toward the bilateral economic relationship.

He said that the S&ED will be a good platform for the two parts to exchange views and the dialogue will build a working relationship between the two cabinets, which they can use throughout the Obama administration.

"In this positive and constructive way of engagement, there will be more political trust and they can collaborate successfully, " Keidel said.

(Xinhua News Agency July 25, 2009)