Economic and strategic commitments

Jin Canrong, Deputy Dean of the School of International Studies at Renmin University of China, believes that the first round of the S&ED made a good start because Chinese and U.S. officials "held a frank and comprehensive dialogue in a relaxed atmosphere."

Jin said the economic track of the first S&ED achieved remarkable results, producing a lot of consensus on developing the low carbon economy and how to cope with the global financial crisis. In his view, however, the strategic track was less fruitful, although there were agreements on reducing the North Korean nuclear threat, disease control and prevention, poverty alleviation and expanding China-U.S. military exchanges.

To ensure recovery from the international financial crisis, the joint release added, China and the United States will take respective measures to promote balanced and sustainable growth of their domestic economies, including increasing savings in the United States and the contribution of consumption to China's economic growth.

Both countries would make joint efforts to build a sound financial system and improve financial regulation and supervision. Beijing and Washington are committed to more open trade and investment and to fighting protectionism. They also pledged to work together on reforming and strengthening the international financial institutions, while increasing the voice and representation of emerging and developing economies— including China—and to guarantee adequate financing for development.

Both sides negotiated a Memorandum of Understanding to Enhance Cooperation on Climate Change, Energy and the Environment to establish a mechanism for climate change policy dialogue and cooperation. Led by the U.S. Department of State and U.S. Department of Energy and China's National Development and Reform Commission (NDRC), the initiative aims to improve cooperation between the two countries on clean and efficient energy and environmental protection.

The two countries, meanwhile, reaffirmed their commitment to achieving success at the UN climate change summit in Copenhagen at the end of this year.

Specific issues

On the other hand, the S&ED made little progress in resolving problems in bilateral economic and trade relations, as China and the United States have different concerns in this regard, Jin said.

During the economic track of the S&ED, Chinese Vice Premier Wang Qishan urged the United States to guarantee the security of China's dollar assets and acknowledge China's market economy status as soon as possible.

At a time of economic difficulty, China pledged to expand imports from the United States, with the hope that the United States will ease restrictions on hi-tech exports to China, he said, according to a news release from China's Foreign Ministry. China also hopes Washington treats Chinese-invested enterprises in the United States equally and ensures the security of Chinese assets in the United States.

Two-way trade between China and the United States totaled $333.74 billion in 2008, up 10.5 percent year on year, according to China's Ministry of Commerce. The growth rate is the lowest since China entered the World Trade Organization in 2001.

Regarding the world's major reserve currency, the United States should properly balance the relationship between the effects of issuing dollars upon its domestic economy and the international economy, Wang said.

As the biggest creditor nation of the United States and a country with the largest foreign exchange reserves in the world, China is worried about a depreciation of the dollar, which would cause losses in its assets. By the end of May, China held $801.5 billion in U.S. treasury bonds. And at the end of June, its foreign exchange reserves hit a new high of $2.13 trillion.

China's concerns at this particular point failed to make it into the joint press release. Xie Zhenhua, Vice Chairman of the NDRC, said at a press conference that the S&ED was designed to address long-term issues of strategic importance. Specific problems that require bilateral consultation would be resolved through other mechanisms between the two countries, he said.

The United States, however, tried to prompt China to change its economic growth model.

There was "notable agreement" from the Chinese that China will not be able to grow by exporting to the United States, David Loevinger, and official at the U.S. Treasury Department, said.

The financial crisis has provided a new opportunity for the United States and China to communicate effectively, said Drew Thompson of The Nixon Center. "Both China and the United States have put together very significant stimulus packages and they have really stepped up to take leading position to deal with it," he said. "That consists a very important platform from which to discuss the 'exit strategy' from the crisis."

Since the United States is expected to consume less, he added, China would have to rely less on exports to promote its economic growth, a change that would lead to a different economic relationship between the two countries in the future.

Jin pointed out that China-U.S. relations are characterized by their steady growth amid friction. "Both China and the United States showed great sincerity in the S&ED," he said. "They wanted to maintain and develop this mechanism and make it a better platform for ensuring the stability of their relations."