Sowing the CED of Closer Cooperation

The inaugural session of the China-U.S.Comprehensive Economic Dialogue(CED) in Washington, D.C. on July 19 hascharted the course for economic cooperationbetween the world’s two largest economieswith a one-year plan to deepen pragmatic co-operation and resolve outstanding problems.“The two sides shared the view that themost important outcome of this round ofdialogue is that it has charted the course forChina-U.S. economic cooperation,” the Chinesedelegation attending the dialogue said in astatement after the conclusion of the talks.The two sides agreed to take “win-wincooperation” as the basic principle for devel-oping bilateral economic relations, “dialogueand consultation” as the basic means to tackledifferences, and “regular communication onmajor economic policies” as the basic way ofdialogue and cooperation, the statement said.Although the high-level talks, co-chairedby Chinese Vice Premier Wang Yang andU.S. Treasury Secretary Steven Mnuchin andSecretary of Commerce Wilbur Ross, ended with no joint statements, Chinese Vice FinanceMinister Zhu Guangyao described the dialogueas “very candid, very friendly and very construc-tive” with positive outcomes.

Both sides spoke highly of the significantand balanced outcomes achieved under the100-day economic cooperation plan, an impor-tant consensus reached by Chinese President XiJinping and his U.S. counterpart Donald Trumpduring their Mar-a-Lago meetings in April, Zhusaid at a press briefing.

Major outcomes of the 100-day plan in-clude U.S. beef returning to the Chinese marketafter 14 years and policy restrictions on U.S. liq-uefi ed natural gas exports to China loosening. Inexchange, the U.S. lifted an embargo on China’scooked chicken imports.

After the U.S. presidential election last year,many fretted that China-U.S. trade relationswould enter a stormy season and even run therisk of a trade war, Wang said at a luncheon forthe Chinese and U.S. business communities onthe eve of the dialogue. But the recent fruitfulcooperation between the two has proved thatChina-U.S. economic cooperation is sailing onthe right course.

The CED is one of the four major dialogues the two sides established in April. The fi rst roundof the dialogue allowed the two sides to focusnot only on economic and trade issues but alsoon long-term and strategic policies important tobilateral economic relations.

One­year cooperation plan

China and the United States discussed a one-year economic cooperation plan in areas suchas the macroeconomy, trade, investment andglobal economic governance. Both wouldtake follow-up actions to identify issues and determine the substance of an early harvest assoon as possible.

“I don’t think there’s been enough ne-

gotiation to have a lot of concrete results,”David Dollar, a senior fellow at the BrookingsInstitution and former official with the U.S.Treasury Department, told Xinhua NewsAgency. Dollar expects the two sides to developspecifi c plans within the year.

He said a high-quality U.S.-China bilateral investment treaty would help the U.S. exportits services to China and build a foundationfor a better bilateral trading relationship.“The U.S. primarily exports services. It’s hardto export services if you cannot invest,” heobserved.

China has agreed to further open up its ser-vice sector and expand bilateral trade in serviceswith the United States as it shifts its economytoward a growth model powered by consump-tion, services and innovation.

“Despite a huge defi cit in services tradewith the United States, China neverthelessbelieves that trade in services between Chinaand the United States is mutually benefi cial,”the statement from the Chinese delegationsaid.

Given the differences between the twocountries’ service industry in terms of size andstructure, it remains possible for both to exploittheir comparative advantages and comple-ment each other, the statement said, adding,“Expanding bilateral trade in services can alsopromote balanced trading relations betweenthe two sides.”

Addressing trade imbalance is a top priorityof the Trump administration. To do so, Chinais urging Washington to remove its outdatedregulations on export control and increasehi-tech product exports to China, Zhu said.China will push for this demand in the one-yearplan.

If the United States were to liberalize its ex-port barriers against China like it has with Brazilor France, the trade deficit with China wouldnarrow by up to 24 percent or 34 percent,respectively, according to a research by theCarnegie Endowment for International Peace.

Steel resolve

Talks on excess steel capacity between Chinaand the United States are watched closely bythe international community, especially withthe Trump administration about to release areport on the national security implications ofsteel imports soon.

China shares the U.S. view that steel over-capacity is a global issue, which requires a globalcollective response, Zhu said, adding that Chinaalso emphasizes that the excess capacity is theresult of sluggish global economic recovery.The Chinese delegation reportedly told theU.S. side that China has taken measures to cutsteel overcapacity. The plan is to reduce steelproduction capacity by 100 million to 150 mil-lion tons by 2020.

In defense of the U.S. steel industry,the Trump administration in April invoked adecades-old, rarely used trade tool, known asa Section 232 investigation under the TradeExpansion Act of 1962, to look into all steel im-ports.

If the investigation concludes that the im-ports would undermine U.S. national security,the trade law would allow the government toimpose tariffs, quotas or other measures to re-strict them.

“I think an honest assessment of the na-tional security issue would conclude that thereis no national security issue because we mostlyproduce steel ourselves or we get it fromCanada and Mexico, which are close allies of theUnited States,” Dollar said.

In his view, it won’t have much effect onChina if the Trump administration imposes newtariffs on imported steel, as the United Statesimports only a tiny percentage from China.As co-chairs of the Global Forum on SteelExcess Capacity, China and the United Stateshave maintained policy dialogue and communi-cation regarding the steel glut.

At the G20 Summit in Hamburg, Germany,G20 leaders called on the forum to fulfill thecommitment to enhance information shar-ing and cooperation by August, and to rapidlydevelop concrete policy solutions to reduceexcess steel capacity.

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