2016 U.S.-China strategic and economic dialogue: An update

On June 6-7, U.S. Treasury Secretary Jacob J. Lew and Chinese Vice Premier Wang Yang led the eighth meeting of the Economic Track of the U.S.-China Strategic and Economic Dialogue (S&ED VIII) in Beijing, China. As the Special Representatives of President Barack Obama and President Xi Jinping, Secretary Lew and Vice Premier Wang led discussions with a high-level delegation of Cabinet members, ministers, agency heads, and senior officials from both countries.

As the world’s two largest economies, the United States and China share a mutual interest in each other’s economic prosperity, and recognize that enhanced cooperation on the diverse set of issues encompassed in the S&ED is crucial for the health of the broader global economy. During the eighth meeting of the S&ED, the two sides pledged to implement fully S&ED commitments, including those from the previous seven dialogues.

The United States and China announced further concrete measures to support strong domestic and global growth, promote open trade and investment, and enhance and foster financial market stability and reform. The two sides also discussed international economic issues including the G20 financial-track agenda, persistent risks facing their respective domestic economies and the global economy, the necessary policy tools for addressing those risks, and global economic governance.

The issues discussed in the meeting are as follows:

I. Strengthening Economic Policy Cooperation

The United States and China jointly reaffirm commitments on exchange rate made during the Shanghai and Washington G20 Finance Ministers and Central Bank Governors Meeting in 2016, including to refrain from competitive devaluation and not to target exchange rates for competitive purposes.

Given the United States’ and China’s impact on and integration with the global economy, both sides commit to clearly communicating respective economic policies.

II. Promoting Open Trade and Investment

The United States and China recognize that the structural problems including excess capacity in some industries, exacerbated by a weak global economic recovery and depressed market demand, have caused a negative impact on trade and workers. Both sides recognize that subsidies and other types of support from governments or government-sponsored institutions can cause market distortions and contribute to global excess capacity and therefore require attention. The two sides commit to enhance communication and cooperation, and are committed to take effective steps to address the challenges so as to enhance market function and encourage adjustment.

The U.S. Department of Commerce and China’s Ministry of Industry and Information Technology discussed advanced manufacturing in the United States and China. The two sides exchanged views on the role of public-private partnerships, the U.S. National Network for Manufacturing Innovation, and the China Manufacturing 2025 Plan.

III. Fostering Financial Stability and Reform

The United States and China welcome efforts to further develop Renminbi (RMB) currency trading and clearing capacity in the United States, consistent with applicable laws, and to improve access by U.S. institutional investors to Chinese capital markets while deepening China’s financial markets. Both sides stress the importance of maintaining a level playing field between Chinese and foreign financial institutions in RMB trading and clearing services.

IV. Enhancing Global Cooperation and Economic Governance

The United States supports China’s presidency to host a successful G20 Hangzhou Summit in 2016 and looks forward to working closely with China to promote strong, sustainable and balanced growth of the global economy.

While talks on steel trades turned out to be fairly decisive, no consensus was reached on issues related to overproduction of aluminium by Chinese smelters and its offloading in global markets. However, a fairplay is expected from both the nations to facilitate non-competitive international trade, conducive to the global economy.