x Abu Dhabi, UAEThursday 27 July 2017

China-US talks high on unity, low on actual detail

International China emerged in pole position at the end of strategic talks with the US in Washington.

Chinese Vice Premiere Wang Quishan, left, holds a basketball given to them by President Barack Obama, as State Councilor Dai Bingguo delivers closing statements.
Chinese Vice Premiere Wang Quishan, left, holds a basketball given to them by President Barack Obama, as State Councilor Dai Bingguo delivers closing statements.

China emerged in pole position at the end of strategic talks with the US in Washington Wednesday, having ensured the debate stuck to broad economic issues and steered clear of thorny subjects such as the strength of its currency and its human rights record. China had gone into the strategic and economic dialogue eager to add higher international diplomatic profile to its economic strength. It did just that, with Washington and Beijing agreeing to take steps to rebalance the global economy and maintain stimulus spending until economic recovery is secured. The Chinese vice premier in charge of economic and financial affairs, Wang Qishan, was in an upbeat mood after the talks, which he described in Chinese media as a "full success". "The dialogue has injected fresh dynamism into the Sino-US relations," Mr Wang told the state-run China Daily. Timothy Geithner, the US Treasury secretary, focused on the broader economic aspects. "It is vitally important for China and the United States to see through their commitments to repair the financial system and lay the foundation for recovery," Mr Geithner said. Details of how this would come about were relatively thin on the ground. Both nations agreed to adjust the focus of their economies, with China aiming to become less reliant on exports for growth, and the US pledging to start saving and investing again to stop the boom-and-bust cycle. They also signed a sweeping memorandum on climate change and on energy and both pledged their support for free trade. The tone of the talks was less scratchy than under the Bush administration, when dialogue often became bogged down on market access and currency issues. Photographs of Barack Obama, the US president, presenting the visiting Chinese delegation with a basketball illustrated how the talks were big on keeping a public display of unity between the world's biggest economy and China, the rising superpower, but low on specifics. The two economies are increasingly interconnected: the US is China's best customer for exports, and China is the US's biggest creditor, holding US$802 billion (Dh2.94 trillion) of US treasury securities. Both are also spending heavily to kickstart their respective economies, and China also agreed to keep its 4tn yuan (Dh2.15tn) stimulus plan in place long enough for the US economy to start to recover. Government spending has kept China's economy growing at about 8 per cent, a remarkable rate given the global slowdown, and economies around the world hope China can lead the return to health. But few believe China can do it alone, and for the world to recover, the US also needs to start expanding again. Mr Obama is implementing a $787bn fiscal stimulus, and the Federal Reserve chairman, Ben Bernanke, doubled the central bank's balance sheet to about $2tn. There was also little reference, in public at least, to another bugbear in US-China relations: Washington's demand that China allows its currency to rise faster to help correct trade imbalances. China needs exports and Beijing warned against letting the dollar slide too far, which would cut the value of its substantial dollar holdings. "As a major reserve currency-issuing country in the world, the United States should properly balance and properly handle the impact of the dollar supply on the domestic economy and the world economy as a whole," Mr Wang said. On issues from North Korea to human rights, Hillary Clinton, the US secretary of state, said little more than that the two sides had talked. Instead, US officials focused on the positives in China's rise, highlighting commitments to liberalise the business and investment environment in China, including allowing international banks to underwrite Chinese bonds, raising the threshold for foreign direct investments that need government approval and loosening limits on interest rates. Meanwhile, China will wait for the US to begin to pull back on its stimulus measures before deciding whether it will do the same. The chief of the People's Bank of China, Zhou Xiaochuan, said: "If we are confirmed that the recovery of the US economy is established and stable, if we see that the United States starts to exit its expansionary fiscal and monetary policy, then China will see what it will do at that time." Appropriately enough, Mr Obama quoted the Houston Rockets basketball star Yao Ming, who was born in Shanghai, to underline the growing closeness between the two countries. "As a new president and also as a basketball fan, I have learned from the words of Yao Ming, who said, 'No matter whether you are a new or an old team member, you need time to adjust to one another'. Well, through the constructive meetings that we've already had, and through this dialogue, I'm confident that we will meet Yao's standard," Mr Obama said. business@thenational.ae