The fourth round of the China-U.S. Strategic and Economic Dialogue (S&ED) started Thursday morning in Beijing. Among the many important topics of discussion at the talks, creating ways to enhance complementary cooperation between the industries of both countries must surely be the most important.

Complementary industries create a basis for cooperation

At present, Chinese industry is still in the era of the industrial economy, while the U.S. has entered the age of the knowledge economy. The two countries' industry structures appear to complement each other perfectly and there are a number of reasons why it is important that they do so and continue to do so.

First, the Sino-American factor endowments difference determines the mutual benefits of the trade in goods and services.

One instance of the complementary trade benefit in action is the fact that China has five times more workers than the U.S., and their average wage is only 1/10 of that made by U.S. workers. As a result, it naturally follows that China exports labor- intensive products to the U.S. and imports technological and capital intensive products from the U.S. Both countries receive their own unique trade benefits from this situation.

Second, the U.S. has a significant international competitive advantage over China in terms of agriculture.

For example, the population of the U.S. is less than a quarter of China's, while the U.S. has around 40 percent more arable land than China. To balance this, China and the U.S. have established complementary mechanisms regarding cooperation in areas such as bio safety, water and soil conservation, plant and animal disease prevention and control, major disaster warning, among others.

Third, the division of labor characteristics of the two countries' industry and related industries are significantly different.

Presently, China has become an important export market for the U.S. especially in terms of aircraft and automobiles, and Chinese industry has a competitive advantage over the U.S. in terms of light industries such as textiles and garments. This has also led to a mutually beneficial cooperative relationship between China and U.S. in their respective areas of manufacturing strength.

Fourth, there is great potential for development and cooperation in the modern service and knowledge economy, yet there is currently a large gap in this area between China and the U.S.

Therefore, further cooperation between China and the U.S. can be explored in the fields of science and technology, atmosphere, power sources and the environment.

Addressing global welfare through globalization

It is important that China and the U.S. act with regard to the overall situation of global welfare to actively promote the process of economic globalization.

The U.S. stance has shifted from pursuing the advancement of globalization to pursuing regionalization and localization and, as a result, trade protectionism is on the rise. Under such circumstances, China should reduce tariffs and act to facilitate trade and investment.

It appears almost certain that China and the U.S. are destined to become the world's largest mutual trade and investment partners. Therefore, it makes sense that strengthening industry cooperation between the two countries is conducive to promoting the long-term prosperity and stability of the global economy.

Following on from this, industrial cooperation between China and the U.S. should effectively solve such sensitive issues as more effective measures to protect intellectual property rights and dealing with high-tech export restrictions.

The final strand is to actively promote the reform of global governance and explore a new model of global governance cooperation. To this end, China should present and promote an internationally cooperative governance structure as well as contribute to the development of economic globalization. By doing so, all of the advantages of mutual cooperation and benefits can be magnified and cemented.

The author is Secretary-General of the Academic Committee of China's National Development and Reform Commission.

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