S&ED: An opportunity to repair Sino-US ties
- By Yan Pei
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E-mail China.org.cn, July 24, 2014
The recently-concluded China-U.S. Strategic and Economic Dialogue (S&ED) managed to make some progress, although it was not very significant, following a downward spiral in bilateral ties during the past year.
The two major world economies have over 90 different dialogue and negotiation schemes every year, but the annual S&ED is probably the most important and effective one. At a time when frictions between the two major powers seem to be on the rise, both sides have pinned high hopes on the dialogue, to break through the current period of lackluster relations.
This year, the two-day event yielded over 300 agreements, covering areas including economy, energy, climate, technology and people-to-people exchanges.
One of the biggest highlights was setting a timetable for negotiations on the Bilateral Investment Treaty (BIT). BIT negotiations started back in 2008. Both sides expected to reach an agreement setting rules on bilateral investment in all sectors of the economy. The 14th round of BIT talks will be held in Washington DC in late July.
China and the United States vowed to reach a consensus on core issues and major provisions of the BIT texts by the end of this year. The two sides will also start working on the negative list, which details bans and restrictions on foreign investment, in early 2015.
"The BIT talks consist of two phases, the first is the text and the other is the negative list. We are going to start the second phase," Assistant Commerce Minister Zhang Xiangchen said at a press briefing during the S&ED.
Last year's S&ED saw a consensus for BIT talks on the basis of pre-establishment national treatment (PENT) with a negative list. Under PENT, foreign investors will be accorded national treatment in the pre-establishment phase of their operations.
Zhu Guangyao, Vice Finance Minister of China, said the conclusion of BIT talks would be historic, significantly benefiting the bilateral relationship and the world economy.
The China-U.S. bilateral investment treaty (BIT), if concluded successfully, would re-anchor the bilateral economic relationship in the 21st century, said Daniel M. Price, former international economic affairs advisor.
"The BIT will set rules governing investment in all sectors of the economy and it will be the first time that China and the United States will comprehensively address market access issues for foreign investors," said Price.
Zhang Lijuan, a professor at the School of Economics at Shandong University, also sees the BIT regime as a key for a major economy to survive in a globalized world. "When the BIT gets under way, we can expect that both the United States and China will benefit greatly from increasing FDI from the other side," said Zhao.
Besides progress on BIT talks, the two sides also touched on the yuan exchange rate formation, the pricing mechanism in key strategic sectors and foreign investment reviews.
China agreed to adopt greater transparency in foreign exchanges, promising to reduce intervention in its currency market when conditions permit. The second largest economy is also committed to letting the market play a bigger role in the pricing mechanism in key sectors including oil, electricity and natural gas.
The United States promised to provide an open environment for Chinese investment. The Committee on Foreign Investment in the United States will adopt universal standards in reviewing foreign investment projects and maintain discussions with China over the concepts in the review.
As Chinese President Xi Jinping said during his opening remarks at the S&ED, "China and the United States' interests are deeply interconnected. Cooperation will lead to win-win results while confrontation will hurt both sides."
The two countries should promote mutual trust, mutual respect, keep the big picture in sight and work together to build a new type of great power relationship, said Xi.
"The world needs China and the United States to work with each other -- despite their differences -- not to confront each other," said Shada Islam, director of policy at Friends of Europe, a Brussels-based think tank for the European Union (EU).
The S&ED was established in April 2009. Since then, five rounds of the dialogue have been held, with the first in Washington in July of the same year. The past rounds of the dialogue have made achievements in economy, energy, climate and technology.
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