Opinion

Progress on Sino-US ties, but a great deal still to do

(China Daily)
Updated: 2010-06-01 10:39

Forum

Editor's note: Chinese researchers give their views on the results of the China-US Strategic & Economic Dialogue (S&ED) which concluded in Beijing on May 25. The S&ED held discussions on several issues of concern for both countries.

Lu Zhengwei, senior economist with the Industrial Bank Co Ltd

From the final list of agreements and achievements out of this year's China-US Strategic & Economic Dialogue (S&ED), it is clear that concerns from both sides were addressed.

For example, the United States focused on the restructuring of the Chinese economy from export-oriented to domestic demand-driven, while China expressed concern over the security of its American assets as the US has announced plans to cut its deficit and commitment to support the solvency of enterprises closely related to the government, such as Fannie Mae and Freddie Mac.

Ostensibly, many of China's concerns were addressed in the dialogue, shown in the consensus reached on issues such as anti-trade protectionism, exchanges and cooperation in the financial sector, reform of the international financial regime and exchanges in science and technology. But it also demonstrated that the US is familiar with strategies to get its way through low-key discussions. In other words, the US is no loser in the game.

Related readings:  Sino-US ties' strategic importance growing  US, China focus on hybrid, electric vehicles  US to recognize China's market economy status  China, US ink green energy deals

China may face greater pressure on the control of greenhouse emissions at the meeting the National Development and Reform Commission is set to hold with the US Environmental Protection Agency within one month following the dialogue in order to implement a bilateral memorandum on climate change.

Although both parties seem to be happy with the outcome of the dialogue, as an economist, I can't see many substantial benefits for China. The US won't stop pressuring China on emissions reduction and the yuan policy. They didn't put the currency issue to the top of the agenda partly because it was not the proper time when the euro was falling as a result of the European sovereign debt crisis.

One thing that is noteworthy is that this time both sides agreed to exchanges and cooperation on minimum wage and social security issues, which means the Chinese government would consider demands from the US side on these issues. After the yuan appreciates in the future, we need to watch closely for rising labor and social security costs and their irreversible and profound impact on the economy.