US, China Conclude First "Comprehensive Economic Dialogue," Eye Future Areas for Progress
The US and China completed their first “Comprehensive Economic Dialogue” last week, reviewing progress made on certain trade items within the “100-day” window set by leaders, while pledging to continue efforts towards resolving various other economic issues.
The event was co-chaired by US Commerce Secretary Wilbur Ross, Treasury Secretary Steven Mnuchin, and Chinese Vice Premier Wang Yang, and also included other high-ranking officials from both sides.
After last week’s talks, a joint statement released by Ross and Mnuchin says China “acknowledged our shared objective to reduce the trade deficit which both sides will work cooperatively to achieve.”
The principles of “balance, fairness, and reciprocity will continue to guide the American position,” the document adds.
A separate report by Chinese state-run news agency Xinhua and circulated by the country’s Ministry of Commerce said that both sides agreed to “strengthen cooperation, accounting for the differences, and continue the constructive cooperation to narrow the trade deficit.” The statement highlights that both parties recognise the principles of “win-win cooperation” and “dialogue and consultation” as key for moving forward.
Washington officials noted that over the past 100 days, the major areas where they have seen advances include issues such as credit ratings, bond clearing, electronic payments, commercial banking, liquefied natural gas, as well as China’s completion of its changes to its import restrictions on American beef.
In his opening remarks, Mnuchin also mentioned those earlier achievements under the 100-day plan, particularly on beef, given China’s previous 13-year ban following a case of bovine spongiform encephalopathy – known more commonly as mad cow disease.
The beef outcomes had been pushed for heavily by American meat producers in the run-up to an April meeting between US President Donald Trump and Chinese President Xi Jinping. (See Bridges Weekly, 13 April 2017)
“Despite our success at expanding exports, the foreign market with the greatest growth potential – China – remains closed to US beef and beef products, even as China imports large and growing volumes from our competitors,” the joint letter said at the time
China announced that it was lifting the import ban last autumn, while the previous US Administration was still in place. Technical details were, however, finalised this year, without which US producers were purportedly “still blocked from selling any US beef to Chinese consumers,” according to the letter.
Beijing’s statement refers mainly to the earlier advances, such as on poultry exports to the US, or the approval of some American biotechnology applications. It also indicated that steel and aluminium trade were of continued interest to both sides, among others, in a reference to the high-profile issue of global industrial overcapacity.
Issues such as boosting bilateral trade in services were also flagged as needing future work. No announcements were made last week on the bilateral investment treaty (BIT) negotiations, an area where China is reportedly wishing to resume work given the rapid growth of US-bound investments. Those talks started in 2008 but have yet to be finalised.
History of talks
While this was the inaugural meeting of this new “dialogue,” the two sides have previously held high-level dialogues in similar configurations under earlier US administrations. This includes a “Strategic and Economic Dialogue” established in 2009 under then-US President Barack Obama and then-Chinese President Hu Jintao, which convened annually to address “the challenges and opportunities that the US and China face on a wide range of bilateral, regional, and global areas of immediate and long-term strategic and economic interest.”
This mechanism, in turn, replaced US-China “Strategic Economic Dialogue,” set up by the previous administration in 2006, “to provide an overarching framework for ongoing productive bilateral economic dialogues.”
During his opening remarks last week, Mnuchin referred to the history of high-level talks between the two sides, and explained that the current format “was broadened to include a wide array of issues,” and can “increase the focus on concrete and targeted commitments.”
The two sides have long had a complex history, both on trade and on other major policy issues. The Asian giant is credited as the US’ top source of imports, and the third largest destination for American exports.
While US deficit in goods trade had decreased by 5.5 percent between 2015 and 2016, according to data published by the Office of the US Trade Representative, it still totalled US$347 billion last year, making up nearly half of the country’s total trade deficit.
The current US administration has repeatedly raised concerns over the causes of the deficit, arguing that in some cases, unfair practices are at play, for instance in areas such as currency and intellectual property rights.
Addressing “imbalances caused by Chinese government intervention in its economy, as well as addressing the impact of China’s industrial, agricultural, technological, and cyber policies on US jobs and exports” was therefore a key topic for the Comprehensive Economic Dialogue, according to Mnuchin.
In a speech last week to business leaders in Washington, Chinese Vice Premier Wang Yang mentioned that one of the reasons for US’ trade deficit with China may result from “outdated US regulations on export control,” which Beijing says are inhibiting trade in those goods from reaching their full potential.
Citing an op-ed published by the Carnegie Endowment for International Peace, the vice premier noted that “if the US were to liberalise its export barriers against China to the same level as those applicable to Brazil or France, the US trade deficit with China would narrow by up to 24 and 34 percent respectively.”
ICTSD reporting; “China offers concessions to avert trade war with US,” FINANCIAL TIMES, 9 April 2017; “What's at stake at China-US Comprehensive Economic Dialogue?” CHINA DAILY, 18 July 2017.