China, US meet over trade, economy

Reuters.

US Treasury Secretary Jacob Lew (L) shakes hands with China's President Xi Jinping as he arrives for their meeting at the Great Hall of the People in Beijing March 19, 2013.

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Beijing - China and the United States put trade and economic issues at the top of their diplomatic agenda as President Xi Jinping met US Treasury Secretary Jack Lew on Tuesday and called for the two sides to focus on shared interests rather than differences.

The two men stuck resolutely to diplomatic niceties in front of the watching media ahead of what was, for both, their first major international meeting since taking their respective offices.

A US official said in an e-mailed statement that the meeting itself was a 45-minute strategic level discussion of the major issues on the bilateral agenda including currencies, Europe and the global economy, intellectual property, cyber-security and North Korea, in which Lew was “candid and direct.”

China's official Xinhua news agency in a commentary - which are not policy statements but typically reflect government thinking - said Lew should use his visit to convince Beijing that Washington would solve its debt problems, stabilise the value of the dollar and honour trade treaty commitments.

“The stakes are high,” the commentary said, striking a more hawkish tone than Xi.

“I can say we have a seamless connection,” China's new president said, speaking in front of a tapestry depicting a pine tree and flying cranes, both symbols of hospitality.

“In the China-US relationship we have enormous shared interests, but of course unavoidably we have some differences.”

Lew said both countries had a responsibility to promote global growth, and called on China to boost domestic demand to help in global rebalancing.

“The (US) president is firmly committed to building a relationship of growing strength where we cooperate on issues of economic and strategic importance, understanding that we will each have to meet our own responsibilities, but we'll also have to manage our differences,” he said.

Both Xi and Lew agreed on the important role of the Strategic and Economic Dialogue - due to take place in the United States this year after being held in China in 2012 - in cooperation and making progress on differences, according to the US official's e-mailed note.

TRADE RIVALRY

Trade is clearly an area of both cooperation and rivalry for the world's two biggest economies, as China's Commerce Ministry reinforced at a separate event, saying it would accelerate trade talks with key trading partners as US efforts to seal its own trans-Pacific free trade deal gather pace.

China will hold three rounds of trade negotiations with Japan and South Korea this year and step up talks with other trading partners, the Ministry of Commerce said.

The talks are seen by analysts as a two-pronged initiative by Beijing to engage with Japan after recent diplomatic tension over disputed islands in the East China Sea, while also countering the “pivot” by the US to reaffirm its role in Asia in the face of China's economic rise.

Japanese Prime Minister Shinzo Abe said last week that Tokyo would seek to join the US-led Trans-Pacific Partnership (TPP) talks that currently bring together the United States, Canada, Mexico, Australia, New Zealand, Chile, Peru, Vietnam, Malaysia, Brunei and Singapore.

Bringing the world's third-largest economy into the negotiations would set the stage for a final agreement covering nearly 40 percent of world's economic output, but could also isolate China in the process.

“We will improve communications and talks with the related parties and push forward the progress of our own free trade areas,” Chinese Commerce Ministry spokesman, Shen Danyang, told reporters when asked about Japan's plan to join TPP talks.

“We always think that every economy in the world has the right to participate in the process of world economic integration and we always take an open and inclusive attitude for all efforts to push for regional and world cooperation,” Shen said.

“We also think that any regional or bilateral free trade agreement should be only a complement to the multilateral trade system, not a replacement for it,” he added.

For its part, Washington is eager for China to move toward a more consumer-oriented economy and away from investment and export-driven growth, which has contributed to a record-high $315 billion US trade deficit with China last year.

Washington wants China to reduce barriers to trade and investment and to let the yuan currency float freely in markets.

US companies face barriers to invest in around 100 Chinese sectors, while China has complained the United States blocks Chinese investments on unjust national security grounds.

Chinese Premier Li Keqiang, the head of government, pledged on Sunday to forge “a new type of relationship” with the United States and called for the end of a cyber-hacking row between the two countries.

A private US computer security company said last month a secretive Chinese military unit was likely behind a series of hacking attacks targeting the United States. President Barack Obama raised the issue during a phone call with Xi last week.

Also on Tuesday, Lew met Xu Shaoshi, chairman of China's National and Development Reform Commission, the economic planning agency that wields approval authority over major investment projects.

Lew will also meet newly-appointed finance minister Lou Jiwei, formerly head of China's sovereign wealth fund, and US business leaders. - Reuters