Strengthened Mutual Trust — Third round of China-U.S. strategic and economic dialogue

Chinese President Hu Jintao paid a historic state visit to the United States in January 2011. The two heads of state stand high and see far. They conform to the times, committed to joint efforts to develop a cooperative partnership based on mutual respect and mutual benefits. The world's largest developing country and developed country are trying to find a new mode of relating. At a critical historical junction in the China-U.S. relationship, the third round of China-U.S. strategic and economic dialogue was carried out in Washington D.C. on May 9 and 10, to implement important agreements reached between the two heads of state during Chinese President Hu Jintao's state visit to the U.S. earlier this year. The two sides conducted in-depth talks on bilateral, regional and global issues. Frank dialogue and tangible cooperation enhanced strategic mutual trust and bore rich rewards.

On the strategic track, the discussions produced 48 specific outcomes in five major areas, including promoting high-level exchanges, bilateral dialogues and consultations, addressing regional and global challenges, enhancing China-U.S. Bilateral Cooperation, as well as cooperation on climate change, energy and environment.

There were two highlights: The military from both sides for the first time held a China-U.S. strategic security dialogue, with a view to increasing mutual understanding and trust, exploring cooperation and controlling differences. The two sides agreed to establish a consultation mechanism on Asia-Pacific affairs and plan to start the first round of consultations as early as possible, so as to push forward the two sides' interaction in the Asia-Pacific region.

The two countries decided to strengthen regional and global communications and coordination to jointly cope with challenges, and safeguard peace and stability. Regarding the Korean Peninsula, both sides reiterated the 2011 Joint Statement on their understanding. Both sides recognize there are common interests in political stability and economic reconstruction of Afghanistan and decided to strengthen the coordination of related efforts to promote these interests. On the Iranian nuclear issue, the two sides reaffirmed the 2011 Joint Statement on their understanding. The two sides decided to take measures to encourage parties to continue to promote the North-South Sudan peace process to resolve disputes through negotiations.

The two also reached many consensuses on energy cooperation in a framework of strategic dialogue to push forward tangible cooperation on smart grid, large-scale wind power development, natural gas, distributed energy, shale gas and aviation biofuels.

In economic dialogues, the two sides focused on the theme of constructing an all-round mutually beneficial economic partnership and conducted discussions on promoting trade and investment, improving financial systems and strengthening financial regulation, promoting structural readjustment and development mode transformation as well as robust and sustainable economic growth, with many results being reached. The core result is: In line with the consensus reached by President Hu Jintao and President Obama in January 2011, Chinese Vice-Premier Wang Qishan and US Treasury Secretary Timothy Geithner signed the U.S.-China Comprehensive Framework for Promoting Strong, Sustainable, and Balanced Growth & Economic Cooperation.

This milestone document makes clear the two countries will conduct larger-scale, closer and more extensive economic cooperation. So far the two sides have never signed such an extensive and comprehensive cooperative framework with any third parties. Under this framework, the two sides will try to standardize the direction of their bilateral economic relationship in accordance with the consensus reached by the two heads of state, including dealing properly with unavoidable conflicts and frictions in the process of rapid economic development, that is, to develop the all-round China-U.S. economic partnership on the basis of mutual respect and mutual benefit. The significance of this framework will be gradually felt with each passing day.

As for economic issues concerning both sides, this round of dialogue was also very productive. The two sides reached a balanced consensus on the exchange rate issue. The U.S. side acknowledges progress made in RMB exchange rate reforms; while the Chinese side insists it will keep pushing forward the RMB exchange rate formation mechanism reform in accordance with China's national interests and actual conditions of economic development. At the same time, as the issuer of U.S. dollars, one of the world's major reserve currencies, the United States will keep alert to excessive volatility in the exchange rate.

The United States relaxing controls over high-tech product export limitations, fully acknowledging China's market economy status and granting Chinese businesses fair investment opportunities are among the issues that most concern China. The United States made a commitment to treat China equally in export control reform, relaxing controls over hi-tech exports to China and will swiftly and fully acknowledging China's market economy status in a cooperative way through the China-U.S. Joint Commission on Commerce and Trade. The United States welcomes Chinese businesses' direct investment and promised to treat all foreign capital with the same rules and standards without discrimination. Chinese officials expressed that this conforms to bilateral interests and hoped to see the U.S. side make these commitments reality as soon as possible.

The two sides also conducted significant discussions on global financial regulation and the realization of all-round and sustainable economic growth decided on by the G20.

They also held consultations on the impact of hot issues on the global economy such as the European sovereign debt crisis, Japan's massive natural disaster and nuclear leakage, as well as the impact of turmoil in West Asia and North Africa on world oil market. These consultations will help the two countries communicate with each other in case of emergencies concerning both sides' economic development.

Undoubtedly, there still exist friction and barriers in the China-U.S. relationship, but the development of China-U.S. cooperative partnership is irresistible, because it conforms to the fundamental interests of the two countries and also the two peoples and to the huge trend of peace, development and cooperation in the 21st century and will benefit the whole of human society.

Mutual respect is the basis for a mutually beneficial and win-win result. It's necessary to push forward the China-U.S. relationship with an outlook drawn from history and on the basis of mutual respect and frank communication. Only by viewing China from an historical perspective will the United States be able to come to see what huge progress China has made on various issues, including human rights causes, in 30 years. Despite disagreements on issues due to historical and real factors on both sides, the benefits brought by cooperation to the two countries and their two peoples far outweigh disadvantages. The existence of disagreements is another strong proof of the strategic, long-term and overall significance of China-U.S. strategic and economic dialogue.

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