The inaugural session of the China-U.S. Comprehensive Economic Dialogue (CED) in Washington, D.C. on July 19 has charted the course for economic cooperation between the world's two largest economies with a one-year plan to deepen pragmatic cooperation and resolve outstanding problems.

"The two sides shared the view that the most important outcome of this round of dialogue is that it has charted the course for China-U.S. economic cooperation," the Chinese delegation attending the dialogue said in a statement after the conclusion of the talks.

The two sides agreed to take "win-win cooperation" as the basic principle for developing bilateral economic relations, "dialogue and consultation" as the basic means to tackle differences, and "regular communication on major economic policies" as the basic way of dialogue and cooperation, the statement said.

Although the high-level talks, co-chaired by Chinese Vice Premier Wang Yang and U.S. Treasury Secretary Steven Mnuchin and Secretary of Commerce Wilbur Ross, ended with no joint statements, Chinese Vice Finance Minister Zhu Guangyao described the dialogue as "very candid, very friendly and very constructive" with positive outcomes.

Both sides spoke highly of the significant and balanced outcomes achieved under the 100-day economic cooperation plan, an important consensus reached by Chinese President Xi Jinping and his U.S. counterpart Donald Trump during their Mar-a-Lago meetings in April, Zhu said at a press briefing.

Major outcomes of the 100-day plan include U.S. beef returning to the Chinese market after 14 years and policy restrictions on U.S. liquefied natural gas exports to China loosening. In exchange, the U.S. lifted an embargo on China's cooked chicken imports.

After the U.S. presidential election last year, many fretted that China-U.S. trade relations would enter a stormy season and even run the risk of a trade war, Wang said at a luncheon for the Chinese and U.S. business communities on the eve of the dialogue. But the recent fruitful cooperation between the two has proved that China-U.S. economic cooperation is sailing on the right course.

The CED is one of the four major dialogues the two sides established in April. The first round of the dialogue allowed the two sides to focus not only on economic and trade issues but also on long-term and strategic policies important to bilateral economic relations.

One-year cooperation plan

China and the United States discussed a one-year economic cooperation plan in areas such as the macroeconomy, trade, investment and global economic governance. Both would take follow-up actions to identify issues and

determine the substance of an early harvest as soon as possible.

"I don't think there's been enough negotiation to have a lot of concrete results," David Dollar, a senior fellow at the Brookings Institution and former official with the U.S. Treasury Department, told Xinhua News Agency. Dollar expects the two sides to develop specific plans within the year.

He said a high-quality U.S.-China bilateral investment treaty would help the U.S. export its services to China and build a foundation for a better bilateral trading relationship. "The U.S. primarily exports services. It's hard to export services if you cannot invest," he observed.

China has agreed to further open up its service sector and expand bilateral trade in services with the United States as it shifts its economy toward a growth model powered by consumption, services and innovation.

"Despite a huge deficit in services trade with the United States, China nevertheless believes that trade in services between China and the United States is mutually beneficial," the statement from the Chinese delegation said.

Given the differences between the two countries' service industry in terms of size and structure, it remains possible for both to exploit their comparative advantages and complement each other, the statement said, adding, "Expanding bilateral trade in services can also promote balanced trading relations between the two sides."

Addressing trade imbalance is a top priority of the Trump administration. To do so, China is urging Washington to remove its outdated regulations on export control and increase

hi-tech product exports to China, Zhu said. China will push for this demand in the one-year plan.

If the United States were to liberalize its export barriers against China like it has with Brazil or France, the trade deficit with China would narrow by up to 24 percent or 34 percent, respectively, according to a research by the Carnegie Endowment for International Peace.

Steel resolve

Talks on excess steel capacity between China and the United States are watched closely by the international community, especially with the Trump administration about to release a report on the national security implications of steel imports soon.

China shares the U.S. view that steel overcapacity is a global issue, which requires a global collective response, Zhu said, adding that China also emphasizes that the excess capacity is the result of sluggish global economic recovery.

The Chinese delegation reportedly told the U.S. side that China has taken measures to cut steel overcapacity. The plan is to reduce steel production capacity by 100 million to 150 million tons by 2020.

In defense of the U.S. steel industry, the Trump administration in April invoked a decades-old, rarely used trade tool, known as a Section 232 investigation under the Trade Expansion Act of 1962, to look into all steel imports.

If the investigation concludes that the imports would undermine U.S. national security, the trade law would allow the government to impose tariffs, quotas or other measures to restrict them.

"I think an honest assessment of the national security issue would conclude that there is no national security issue because we mostly produce steel ourselves or we get it from Canada and Mexico, which are close allies of the United States," Dollar said.

In his view, it won't have much effect on China if the Trump administration imposes new tariffs on imported steel, as the United States imports only a tiny percentage from China.

As co-chairs of the Global Forum on Steel Excess Capacity, China and the United States have maintained policy dialogue and communication regarding the steel glut.

At the G20 Summit in Hamburg, Germany, G20 leaders called on the forum to fulfill the commitment to enhance information sharing and cooperation by August, and to rapidly develop concrete policy solutions to reduce excess steel capacity.

The article was first published on xinhuanet.com

Copyedited by Sudeshna Sarkar

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