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Economy not a zero-sum game

By Huang Jing (China Daily)
Updated: 2007-05-28 09:01

The author Huang Jing is a senior fellow at the John Thornton China Center of the Brookings Institution

Despite the much publicized tensions and tit-for-tat, the second round of the China-US Strategic Economic Dialogue (SED) ended in a positive atmosphere, with both Washington and Beijing hailing the Washington meeting as a success.

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China, US seek to ease trade woes

The two countries have agreed to deepen cooperation on a wide variety of issues, including financial services, energy efficiency, environmental protection and civil aviation. They have also agreed to make further efforts to address China's currency value, enforcement of intellectual property rights, and implementation of World Trade Organization commitments.

Strategically, the most significant outcome of this round of SED is the clearly expressed commitment from both sides to continuing the SED process. This came amidst criticism from various interest groups that the SED has failed to achieve satisfactory results. This commitment is significant not only because the continuing process helps enhance the mutual understanding necessary for resolving existing problems, but also because leaders in both countries realize that confrontations do not serve the long-term interests of either nation.

Indeed, thanks to the overwhelming globalization and China's ever-growing integration into the world economy, the US and China have become each other's second largest trading partners. The deepening and irreversible economic interdependence speaks volumes about this unprecedented round of SED. Never has a China-US dialogue drawn in so many high-level government officials from both countries, and never have their discussions assumed such breadth and depth.

Given their increasingly interconnected interests, both Washington and Beijing have become reluctant to resort to unilateral action to solve the problems in their economic relations. Such a confrontational approach would inevitably boomerang.

Instead, as proven by the just-ended talks, only through cooperation can the two great powers realistically hope to reach the meaningful compromises necessary for achieving win-win solutions.

It is in the spirit of seeking compromise rather than provoking confrontation that both the Chinese and US teams, led by Vice-Premier Wu Yi and Secretary of Treasury Henry Paulson, took painstaking efforts to prevent their disagreements on key issues from upsetting the more important strategic interests.

While standing unflinchingly on principles, Beijing demonstrated notable flexibility and willingness to accommodate US concerns. Likewise, political leaders in Washington displayed commendable patience in their efforts to move the dialogue forward, despite forces aimed at derailing the process.

Even Speaker of the House Nancy Pelosi, who was perceived as relentless in demanding Beijing take serious action to address the issue of "unfair trade", showed her hospitality and rationality to the visiting Chinese team.

This spirit of mutual accommodation indicates a consensus that the China-US economic relationship does not have to be a zero-sum game, and that there are enormous stakes in improving this relationship through compromise and cooperation, instead of damaging duels.

It demands great political skill for both sides to translate their commitment to further cooperation into meaningful solutions to the persistent China-US problems. However, most of these problems, especially the trade imbalance, are not necessarily policy oriented. They are rooted in the two nations' domestic economic structures that have not readily come into line with globalization.

Thus, the solution to these problems requires both Washington and Beijing to readjust and even restructure their economies. Although this readjustment is by no means easy, Washington and Beijing have little choice. The present prosperity needs to be grounded firmly in the mainstream of globalization.

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