The United States and China have agreed to take multiple steps to support trade, encourage investment, and stabilize financial markets in both nations at bilateral economic talks last week. Despite differences over China’s exchange rate policy and the value of its currency, the yuan, the 2 governments have pledged to increase cooperation on economic affairs, a move that is important not just in North America and Asia, but around the globe because of the 2 countries’ significant role in world trade and the ongoing financial crisis.
Top American and Chinese policymakers met during the Fifth U.S.-China Strategic Economic Dialogue in Beijing last week to discuss important issues in our bilateral economic relationship, including the effects of the global financial crisis. The crisis started as a collapse of the credit markets that provide the financing for most day-to-day business and consumer spending, then became a wide-spread economic downturn because of the resulting shrinkage in business and trade. Given global turmoil, advancing open investment and trade remained a key area of discussion for the SED as open markets speed economic recovery.
In the SED talks, the U.S. and China agreed to provide and additional $20 billion to fund international trade, easing the buying and selling of goods and services across borders. Both nations also discussed pushing forward toward a successful completion of international trade talks, also known as the Doha Round, that stalled in July. If agreement can be reached on the WTO’s Doha Development Agenda, protective subsidies and tariffs could be cut on thousands of goods, opening markets for farm goods and other products, particularly those from developing nations. That would further spur world trade and help to combat the downturn.
Agreement was also reached on environmental concerns shared by the 2 nations. “Eco-Partnerships” will be created to test ways to improve energy efficiency, air and water quality, and to develop vehicles that do not rely exclusively on gasoline and other fossil fuels.
“The Chinese economy, like the U.S. economy, depends on global trade,” said U.S. Treasury Secretary Henry Paulson. By speaking directly to each other, China and the U.S. can help each other manage periods of tension and transition and “build a stronger relationship that benefits our citizens and the global economy.”