China, U.S. to strengthen economic ties, enhance bilateral relations(3)

2015-06-23 08:39Xinhua Editor: Gu Liping

As China has a massive production capacity, while the U.S. has sophisticated green technologies, the two countries can collaborate to provide clean energy products at much lower costs so that everybody can afford to buy, Huang said, adding that both U.S. and Chinese producers could also make a lot of profits.

Huang said this collaboration between China and the U.S. is " essential" because "it cannot be solved by pure markets and business practices" and it needs government support.

But right now the two sides are "constantly assuming each other for unfair competition" on subsidizing green technology differently, Huang argued, noting that China puts "a lot of financing and subsidies" to directly support clean energy producers, while the U.S. supports clean energy indirectly by subsidizing consumers "purchasing of these goods for tax benefits. "

"They need to solve these problems by saying: Look, we both have the same objectives. We're both pouring a lot of money into this. We do it in different ways. Let's try to work with each other not to assume each other," Huang said.

"We have to look for these areas where in fact both sides have similar interests, but they approach differently rather than have conflicts, making it a source of collaboration," Huang added.

Daniel Russel, U.S. assistant secretary of state for East Asian and Pacific affairs, said last week the two sides will chair a joint session at this year's S&ED "focusing on how the U.S. and China can work to reduce emissions, how we can make energy cleaner. "

"We don't always see eye to eye. But the fact is that global challenges require that we cooperate. They require collaborative solutions," Russel said at a press briefing to preview the S&ED meetings.


China's Vice Finance minister Zhu Guangyao told reporters last week at a news briefing that the two sides will have "a strategic discussion" of important issues concerning China and the U.S. economies at this year's S&ED as an innovation of the dialogue mechanism.

China-proposed Asian Infrastructure Investment Bank (AIIB), the Belt and Road initiatives, the Silk Road Fund, as well as Chinese currency renminbi (RMB)'s admission to the special drawing rights (SDR) basket of the International Monetary Fund (IMF), are likely to be such kind of issues during the S&ED meetings, according to U. S. experts.

Citing the example of AIIB, a new international financial institution to fund infrastructure projects in Asia, Sheet said in April that a central goal of the S&ED "has always been to support China's emerging role in the global economic and financial architecture, and to strengthen its sense of ownership of and responsibility for the international system."

While the U.S. is not likely to join the AIIB at present, U.S. President Barack Obama said in April that the U.S. looks forward to collaborating with the new development bank, "just like we do with the Asia Development Bank and with the World Bank."

China has said the AIIB will uphold high standards and be complementary to existing development banks, and China always welcomes the United States to join the bank.

Posen believed it's in China's "enlightened self-interest" to have a high-standard, transparent, and well-functioning institution with good lending practices to support infrastructure investment in the region.

China has also showed great interest to add the RMB into the SDR basket, as the IMF was scheduled this fall to review the composition of the basket, currently including U.S. dollar, Japanese yen, British pound and the euro.

The IMF said in May that it welcomed and shared China's objective to include the RMB in the SDR basket and would work on this regard with Chinese authorities.

"I think the U.S. should support it but doesn't mean they need to say right now yes," Posen said, adding that the U.S. should " come up with a sensible list of what changes China might need to make" to get the IMF's largest shareholder's backing.

Zhou Xiaochuan, governor of the People's Bank of China (PBOC), said in April that China will take a series of reforms to further increase the capital account convertibility of RMB, and make the currency more "freely usable", an important criterion for admission into the SDR.

At the last SDR review in 2010, the RMB met the export criterion, but was assessed as not meeting the "freely usable" criterion. Since then there have been a number of developments in the RMB's international use, the upcoming review will take stock of these developments, the IMF said.

Huang said all these China's international initiatives are " good things", but also "raise concerns" in the U.S. about the power structure changes between the world's two largest economies, which need to be carefully managed.

As the world's two largest economies and two largest trading partners, China and the U.S. have tremendous amount of interests in improving investment climate, which indicates a "very strong win-win" between China-U.S. relations, Huang said, hoping that the win-win atmosphere on the economic side could be translated into the political and foreign policy side.

Despite tensions over issues such as the South China Sea dispute and cyber security, economic cooperation between China and the U.S. goes well so far. "There are security issues between the U.S. and China", but "I don't believe they need spill over into these (economic) areas," Posen said. "In fact I'd rather see these areas succeed."

Huang believed the upcoming S&ED meetings will provide an important opportunity for both sides to expand economic cooperation, manage their differences, and create "a more productive and collaborative environment" for Chinese President Xi Jinping's planned first state visit to the U.S. in September.

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