China-US Strategic, Economic Dialogue: Energy Cooperation, Hopes for Cutting US Budget Deficit

China hopes U.S. will cut budget deficit

2009-07-28 16:06:42

BEIJING, July 28 --

China expressed its hope that the U.S. government will be able to cut its budget deficit in order to prevent inflation that could jeopardize the value of China's dollar-denominated assets, as the two countries wrapped up the first of two days of high-level talks here.

"We sincerely hope the U.S. fiscal deficit would be reduced, year after year," Zhu Guangyao, assistant minister of finance, told reporters after the conclusion of the first day of talks, which have been dubbed the U.S.-China Strategic and Economic Dialogue.

"The Chinese government is responsible and first and foremost our responsibility is [for] the Chinese people, so of course we are concerned about the security of the Chinese [dollar] assets," Zhu said.

China holds a total of more than 800 billion U.S. dollars in U.S. treasury debt, making it America's largest foreign creditor.

As a result of recent American efforts to counter the financial crisis and stimulate the economy, U.S. government spending has soared, and is projected to reach 1.84 trillion U.S. dollars this year. That is more than four times the previous high.

Many investors and economists fear this deficit spending will lead to inflation, as the increase in the supply of dollars drives down their value, thereby also reducing the value all dollar-denominated assets, including U.S. Treasury bonds. As a result, some investors have started to buy shorter-term bonds, which they hope will not be impacted by any longer-term inflation driven by increased government spending.

U.S. Secretary of Treasury Timothy Geithner assured the Chinese delegation in his opening remark on Monday that U.S. has taken steps to overhaul its financial system, enhance regulation, and control the deficit.

"We are committed to taking measures to maintain greater savings and to reducing the federal deficit to a sustainable level by 2013," he said. However, Geithner did not reveal how, specifically, the United States planned to achieve its deficit-cutting goals during the dialogue.

Both American and Chinese officials, however, agreed that the economy has begun to slowly stabilize.

"We have agreed that green shoots have emerged in the international economy and financial markets," said Zhu. However, the economic foundation is far from being sound, and the current situation remains severe, Zhu warned.

China's economy has shown solid signs of recovery, with its GDP growth picking up to 7.1 percent in the first half of this year after dipping to as low as 6.1 percent in the first quarter. The country's retail sales growth was 15 percent in the first half of this year, the highest since 1985, according to Ministry of Finance figures.

The two-day talks, which are co-chaired on the Chinese side by Vice Premier Wang Qishan and State Councilor Dai Bingguo, and the U.S. Secretary of State Hillary Rodham Clinton and Secretary of Treasury Timothy Geithner on the U.S. side, covered a wide array of issues, including the global economy, climate change and clean energy as well as regional security issues.

At the opening ceremony on Monday, U.S. President Barack Obama emphasized his hope for closer cooperation between the two countries.

"I believe that we are poised to make steady progress on some of the most important issues of our times," he said. "The relationship between the United States and China will shape the 21st century."

(Source: China Daily)

Editor: Wang Hongjiang

Chinese official: China, U.S. share more interests than divergences on energy co-op

2009-07-28 13:40:01

by Xinhua Writers Bai Jie, Liu Lina, Wang Xiangjiang

WASHINGTON, July 27 (Xinhua) --

China and the United States share more common interests than divergences on cooperation in such fields as clean energy, environment and climate change, a top Chinese official said here Monday.

"As major energy producers and consumers, China and the United States are facing such challenges as environmental pollution and climate change," Zhang Guobao, director of China's National Energy Administration (NEA), said on the sidelines of the China-U.S. Economic and Strategic Dialogue, which started on Monday.

"The two countries share a lot more common interests than divergences and enjoy a broad prospect of cooperation," he said.

Zhang added that he and U.S. Energy Secretary Steven Chu, as well as other officials, had a good discussion on Monday.

"We exchanged views on a wide range of issues, including energy efficiency, wetland protection, natural reserves and clean transportation. But we all felt that time is too limited for us to have in-depth discussion," Zhang said.

The energy issue, climate change and environmental protection are high on the agenda of the dialogue as part of the strategic stream of discussions.

As to the future of China-U.S. energy cooperation, Zhang said this was being pursued through such platforms as China-U.S. oil and gas forum, China-U.S. dialogue on energy policy and others.

He added that new sessions of the dialogue and forum would be held sometime this year "focusing on new problems that had emerged in the new scenario."

China and the United States announced the establishment of a joint clean energy research center two weeks ago, when Chu and Commerce chief Gary Locke made their first visit to China since becoming cabinet members of the administration of President Barack Obama.

Each side will commit an initial financing of 15 million U.S. dollars and set up headquarters in both countries.

On the key issue of cutting energy consumption and reducing major pollutant emissions, Zhang said that China and the United States shared "common but differentiated responsibilities."

"The two countries have different national conditions and are in different stage of economic development, so the responsibilities should be differentiated," Zhang said.

The energy chief added that it was vital for China and the United States to discuss the UN climate change summit in Copenhagen scheduled for this December, and consultation between China and other economies was also of great importance.

"Most of the countries are actively conducting negotiations in order to reach consensus at the Copenhagen summit," Zhang said.

The China-U.S. Economic and Strategic Dialogue, the first of its kind between the world's biggest developing and developed economy, was jointly launched by Chinese President Hu Jintao and his U.S. counterpart Obama at their meeting during the G20 summit in London on April 1.

The new mechanism is a reincarnation of a biannual strategic economic dialogue set up by the two countries in 2006 and a vice-ministerial strategic dialogue launched in 2005.

Chinese Vice Premier Wang Qishan co-chaired the "Economic Track" of the dialogue with U.S. Treasury Secretary Timothy Geithner, while Chinese State Councilor Dai Bingguo co-chaired the "Strategic Track" with U.S. Secretary of State Hillary Clinton.

China, U.S. attach importance to first Strategic and Economic Dialogue

2009-07-28 08:25:32

by Xinhua writers Wang Jiangang, Zhao Yi

WASHINGTON, July 27 (Xinhua) --

Both China and the United States have attached great importance to the first ever China-U.S. Strategic and Economic Dialogue (S&ED), which kicked off on a high note in the U.S. capital on Monday.

Chinese President Hu Jintao and U.S. President Barack Obama have pinned high hopes on the July 27-28 dialogue, a mechanism upgraded from the previous Strategic Dialogue and biannual Strategic Economic Dialogue initiated in 2005 and 2006 respectively.

President Hu sent a congratulatory letter to the S&ED, which was read at the opening ceremony by his special representative, Chinese Vice Premier Wang Qishan. Wang and Chinese State Councilor Dai Bingguo, both co-chairing the dialogue on behalf of the Chinese president, are leading a large delegation of some 150 senior officials, 24 of them at or above the ministerial level.

Hu said in his message that both countries shoulder important responsibilities on a host of major issues concerning peace and development of mankind, adding that in the face of the complex and changing international economic and political situation, China and the United States should endeavor to expand common ground, reduce differences, enhance mutual trust and strengthen cooperation through the strategic and economic dialogue.

"This serves the common interest of the two sides and will help advance the positive, cooperative and comprehensive relationship between our two countries," said the Chinese leader.

"It is also of great importance for peace, stability, development and prosperity of the whole world," he added.

"I am confident that with the concerted efforts of both teams, the S&ED mechanism will keep improving and growing and inject new dynamism and make new contribution to our mutually beneficiary cooperation in various areas and to the growth of our positive, cooperative and comprehensive relationship," said Hu.

President Obama addressed the dialogue's opening in person, elaborating on an array of issues, ranging from the financial crisis, security and climate change. He also stressed the importance of cooperation between the two countries.

He hailed the dialogue as an "essential step forward in advancing a positive, constructive, and comprehensive relationship" between the two countries.

"Our countries have now shared relations for longer than we were estranged. Our people interact in so many ways. And I believe that we are poised to make steady progress on some of the most important issues of our times," he said.

Obama said no nation can meet the challenges of the 21st century on its own, which "only makes U.S.-China dialogue more important."

The U.S. side also gave unprecedented priority the dialogue, the first of its kind under the Obama administration. Twelve officials at or above the ministerial level, including Secretary of State Hillary Clinton and Secretary of Treasury Timothy Geithner who are co-chairing the dialogue for the American side, were involved in the dialogue.

"SAME BOAT" THEORY

It is widely noticed that Clinton has time and again preached the "same boat" theory while making important remarks on U.S.-China relations on various occasions.

In a joint letter to The Wall Street Journal published on Monday, Clinton and Geithner stressed the importance of the dialogue, saying "few global problems can be solved by the U.S. or China alone. And few can be solved without the U.S. and China together."

"The strength of the global economy, the health of the global environment, the stability of fragile states and the solution to nonproliferation challenges turn in large measure on cooperation between the U.S. and China," said the two key cabinet members in the letter.

"But having these strategic-level discussions with our Chinese counterparts will help build the trust and relationships to tackle the most vexing global challenges of today -- and of the coming generation," says the letter.

The top U.S. diplomat and top financial official cited the Chinese aphorism "When you are in a common boat, you need to cross the river peacefully together" to express their hope of strengthening cooperation between the two countries. China has now become Washington's single biggest creditor, with 801.5 billion dollars in Treasury securities, according to the U.S. Treasury Department.

Addressing the opening ceremony, Geithner echoed Clinton's "same boat" theory by speaking in Mandarin Chinese "Tong Zhou Gong Ji," the Chinese phrase for "the same boat" theory, and expressed hope that both sides could work together to tackle tough global issues.

Editor: Deng Shasha

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