Wednesday, May 26, 2010

Chinese, U.S. Economies Complementary, Treasury's Geithner Says

By Stephen Kaufman [staff Writer]

Washington - At the close of the two-day Strategic and Economic Dialogue in Beijing, U.S. officials welcomed Chinese commitments to continue increasing domestic demand and consumption, to place currency exchange on their economic reform agenda and to move toward facilitating foreign business competition in China.

In a prepared
statement, Treasury Secretary Timothy Geithner said May 25 that both countries are acting on commitments they made in 2009 to broadly rebalance economic growth in the wake of the global financial crisis. As a result, "Americans are saving and investing more and borrowing less from the rest of the world, and China is consuming and importing more."

The economic strengths of China and the United States are complementary and both benefit from economic growth by the other, he said.

Along with welcoming China's commitment to continue economic reforms that enhance its role as a consumer nation, Geithner said China is also taking steps to promote innovation and technological advancement, including allowing "a more level playing field for U.S. firms in China."

"China has revised certain aspects of its product accreditation system, such as the requirement that products be patented or trademarked in China. It has affirmed its commitment to abide by the principles of nondiscrimination, market competition, open trade, intellectual property protection, and leaving the terms of technology transfer and production processes to agreement between enterprises," he said.

Geithner said China will submit by July a revised offer on joining the World Trade Organization's Agreement on Government Procurement, which would help mitigate U.S. concerns that foreign companies could be excluded from the Chinese government's lucrative procurement market.

"This is progress," Geithner said. "It does not fully resolve our concerns, but it gives us a set of basic principles on which to move forward."

Geithner also praised the recognition by Chinese officials that reform of the currency exchange rate is "an important part of their broader reform agenda." The United States has been critical of China's low exchange rates, which have made Chinese exports cheaper in global markets.

"Allowing the exchange rate to reflect market forces is important not just to give China the flexibility necessary to sustain more balanced economic growth with low inflation, but also to reinforce incentives for China's private sector to shift resources to more productive, higher-value-added activities that will be important to future growth," Geithner said.

At a press conference with Geithner May 25, Secretary of State
Hillary Rodham Clinton said China and the United States have weathered recent "rocky periods" in their relationship thanks to the good personal relationship between President Hu Jintao and President Obama, and from the relationship that has developed through the Strategic and Economic Dialogue.

The discussions on both tracks "build an enormous amount of understanding and create an environment in which both the United States and China are able to better appreciate the other's point of view" and work through problems "in an open, candid manner," she said.

Both sides now can point to a "very long list" of agreements in areas including the economy, energy, educational exchange and science and technology, she said. The secretary particularly cited agreements that will allow 100,000 more Americans to study in China over the next four years, and the joint development of China's natural gas resources, which she said will help enhance the country's energy independence.

"Imagine what it would mean for China if China unleashed its own natural gas resources so you are not dependent on foreign oil, particularly from such a difficult area as Iran," Clinton said.

Along with Clinton and Geithner, the nearly 200-member U.S. delegation to the dialogue included U.S. Trade Representative Ron Kirk, Federal Reserve Chairman Benjamin Bernanke and representatives from other U.S. government agencies and the military.

In remarks with Chinese officials and Geithner at the closing of the dialogue, Clinton said that despite their separate histories and different stages of development, China and the United States recognize their joint responsibility for meeting the world's current challenges, such as climate change, reducing the spread of nuclear weapons and rebalancing the world's economy.

"This dialogue is a mechanism to exercise that collective leadership and meet our collective responsibilities," Clinton

In separate remarks at the Central Party School in Beijing, Geithner, who has twice lived and studied in China, said U.S. leaders have admired Chinese leaders for recognizing the "risks in caution" as they have undertaken reforms over the past few decades. "There are risks in any choice. There are risks in acting boldly, but there are risks in caution too," he said.

The dialogue between the two countries is important because it brings them together "on trying to build, strengthen, reinforce a rules-based global economic framework for cooperation that best serves our mutual interests in the decades ahead," he said.

(Published by the Bureau of International Information Programs, U.S. Department of State)