By Tao Wenzhao
The Third China-US Strategic Economic Dialogue, aimed at seizing
the opportunities brought by economic globalization and meeting the
challenges posed by the same, concluded last week. The strategic
dialogue has studied the economic and trade ties between the two
countries from a strategic vantage point and achieved rich
results.
The most recent strategic dialogue yielded achievements in two
areas. One is at the policy level, where the two sides reaffirmed
the importance of bilateral economic and trade ties and the
necessity of better planning their long-term cooperation. They also
expressed their opposition to trade protectionism. As US Commerce
Secretary Carlos M Gutierrez put it, trade protectionism actually
protects nothing. The other area finds expression in the 31 points
of consensus the two countries reached in eight fields and the
signing of multiple specific cooperation agreements.
Compared to the first two dialogues, the most recent round
stands out for the bigger range and depth of issues covered - with
richer results to boot - and for extending the scope and depth of
economic and trade cooperation between the two countries. Some of
the issues covered this time were not discussed on the previous two
occasions, such as food and product safety.
US media have exaggerated the quality problems of food and other
products exported from China and seriously damaged China's image.
Safety issues are close to the hearts of many consumers. They may
not know a lot about exchange rates and unfavorable balances of
trade, but questions of product safety always hit close to home.
Some US politicians have taken advantage of this reporting by
pouring fuel on the fire and spreading confusion. That is why the
strategic dialogue had to address the issue.
This round of dialogue was more in depth than the last two
rounds on a series of topics, such as the opening of China's
capital market and the issues of energy resources and the
environment. China's level of economic development is such that the
country's energy efficiency is still quite low. The country
consumes more energy per unit of GDP than developed countries,
meaning there is enormous potential to use green energy, while the
United States has a great deal to offer in terms of equipment and
technology to increase energy efficiency. Given these complementary
conditions, the two sides are looking at endless space for
cooperation in this area.
As the National Development and Reform Commission Minister Ma
Kai said, Sino-US cooperation in energy will create many business
opportunities and no doubt become a new engine of growth in
bilateral economic and trade relations. For this reason the latest
round of strategic dialogue decided to set up a working group to
come up with a 10-year plan for cooperation between the two nations
in energy resources and the environment. The arrangement is of
profound and far-reaching significance.
Since the first strategic economic dialogue, the trade imbalance
between China and the US has been a key topic. Vice-Premier Wu Yi
noted in her speech at the opening ceremony of the third strategic
dialogue that she was extremely concerned about the more than 50
China-related bills with strong protectionist flavor that have been
proposed by the US Congress in recent years. If these bills become
law, they will seriously hurt bilateral economic and trade
ties.
One of the central issues of this legislation is the Chinese
currency. The laws' sponsors are demanding that Washington increase
pressure on China to revalue the RMB. Some members of Congress
claim America's huge trade deficit with China is the result of the
RMB exchange rate, which China has deliberately kept low. They say
the low exchange rate gives Chinese products an unfair advantage in
the US market, and that the best way to correct the mistake is to
force China to revalue its currency upward. For example, senators
Charles Schumer and Lindsey Graham jointly sponsored a bill in the
last legislative year demanding that China raise the RMB exchange
rate by 27.5 percent. A lot of similar legislation has been tabled
this year as well.
The truth is that the trade imbalance between China and the US
has not been caused by exchange rates. The US' manufacturing
industry accounts for only 12 percent of its GDP, as many of the
enterprises now outsource their production to other countries.
China enjoys considerable advantages in manufacturing and is now
known as the "world factory". It is only logical that American
consumers would welcome the inexpensive quality products China
exports. The Chinese side has pointed out on many occasions that
the US should relax controls on civilian high-tech exports to
expand its share in the Chinese market.
During the most recent round of strategic economic dialogue,
Vice-Premier Wu Yi reiterated that China's door is wide open for US
products and the only obstacle is the US export policy. Gutierrez
also mentioned that tipping the Sino-US trade balance depends on
more US exports to China, not fewer Chinese exports to the US. In a
word, fixing the trade balance will take joint efforts by both
nations.
Wu said China has always strongly opposed the politicization of
economic and trade issues. This means irrelevant factors must be
kept away from economic and trade issues and no one should be
distracted by "political implications" and "strategic impacts".
Since the latter half of the 1990s, some people in the US have
tirelessly spread "China threat" theories. They are able to fit
everything into their "China threat" theories, including the
bilateral economic and trade relations between the two
countries.
The US-China Economic Security Assessment Committee was
established in 2000 as a compromise during the Congressional
debates over China's permanent normal trade relations status. The
members of this committee were appointed by the leaders of the US'
two main political parties. Their job is to watch out for any
project in bilateral economic and trade ties, any investment
project by the US in China or any investment project by China in
the US that might harm the national security of the US. It presents
a report to Congress every year and frequently holds hearings to
air confusing and deceptive statements. It is the leading voice in
the chorus of voices that would politicize economic and trade
issues in the US.
The US will vote in a presidential election next year. As
always, it is a time when non-issues are blown up into issues, and
it is increasingly likely that the Sino-US trade imbalance and
intellectual property rights will be played up. It is also time for
enlightened people in both countries to join efforts to minimize
the damage. Vice-Premier Wu Yi in her speech referred to a letter
signed by 160 US transnational corporations and industry
associations and delivered to Congress as an example of efforts by
enlightened US citizens working against the politicization of
economic and trade relations.
Though there have always been elements in the US seeking to
politicize bilateral trade issues, we are quite confident about the
development of Sino-US economic and trade ties, because it is a
mutually beneficial and win-win bilateral relationship that brings
substantial benefits to both peoples. The two countries are
increasingly interdependent in economic affairs and the majority of
the two leading political parties in the US support further
development of our bilateral economic and trade ties.
The most recent round of strategic economic dialogue has
prioritized a to-do list for the next six months, indicating the
dialogue is now an effective mechanism for enhancing bilateral
economic and trade ties. As long as the two sides follow this path,
each round of the strategic economic dialogue will bring our
bilateral trade relations to another level.
The author is a researcher with the Chinese Academy of Social
Sciences
(China Daily December 17, 2007)
