By Zhou Jing

China and the United States began their fifth strategic economic dialogue (SED) Thursday morning in Beijing, with Chinese Vice Premier Wang Qishan and the US Treasury Secretary Henry Paulson co-chairing the talks.

The latest session of the two-year-old consultation mechanism kicked off amid deepening economic gloom and the transition to a new US government. But a review of previous rounds of the SED shows that the meetings have made substantial progress in deepening mutual understanding and cooperation.

1st SED is a turning point

The first round of dialogue was held in Beijing in December 2006. The face to face talks were a turning point in the development of bilateral ties.

The talks focused on China's economic development strategy. A number of agreements were reached on trade and investment, protecting the environment, and maintaining sustainable development.

It was agreed to establish representative offices for the New York Stock Exchange and Nasdaq in China; the US supported China's bid to join the Inter-American Development Bank (IADB) and the Paris-based Financial Action Task Force (FATF), and the two sides agreed to re-start negotiations on commercial aviation in January 2007.

2nd SED sees substantial achievements on trade and the economy

In the second SED held in Washington in May 2007, two countries discussed key issues influencing bilateral economic relations, including service industries, energy and the environment, balanced economic growth and innovation.

It was agreed that daily passenger flights from the US to China would double by 2012, while air cargo companies would enjoy almost unfettered access to the Chinese market by 2011.

Both sides promoted policy incentives to ensure the rapid and full commercialization of advanced coal technologies and of carbon capture and storage technologies.

The two countries also renewed their commitment to the WTO Doha negotiations and agreed to further discussions on reducing or eliminating both tariff and non-tariff barriers to environmental goods and services.

On the tourism industry, a joint communique said negotiations would be launched to ease restrictions on Chinese group tourism to the US.

3rd SED discusses strategic economic ties

The third high-level talks in December 2007 focused on trade integrity, product safety, balanced economic development, and energy and environmental cooperation.

Two countries also addressed new issues emerging from the growth of bilateral business ties and discussed how to turn difficulties and challenges into opportunities for cooperation.

The third round of talks was significant because it did not simply deal with short-term economic and trade issues, but considered the relations from a strategic and long-term viewpoint.

The meeting concluded 31 agreements on financial services, food safety and product quality, energy and the environment, and transparency and investment.

Among the agreements was the decision to allow qualified foreign-invested companies (including banks) to issue RMB denominated stocks, qualified listed companies to issue RMB denominated corporate bonds, and qualified incorporated foreign banks to issue RMB denominated financial bonds.

The US government pledged to remain committed to applying equal treatment to Chinese banks, broker-dealers and investment advisers.

The two countries also agreed to extensive cooperation over a 10-year-period focusing on technological innovation, adoption of clean technologies, and sustainable natural resources.

4th SED strengthens mutual trust

The fourth round of the SED kicked off in June 2008 in Maryland. With the theme of "sustainable economic growth" and held in an honest and frank atmosphere, both countries said mutual trust was strengthened during the talks.

The talks concluded with landmark achievements. A 10-year energy and environment cooperation framework was signed. The countries also agreed to open negotiations on a bilateral investment treaty, to identify important transport infrastructure needs and enable the free flow of trade in these areas.

In addition, they signed memorandums and agreements on the communication of macro-economic policies, financial services, investment to improve living standards, product quality, trade, competition and investment. They also held in-depth discussions on the US subprime mortgage crisis and global food safety.

Expectations for the 5th SED

This week's two-day dialogue will focus on the building blocks of an enduring US-China economic partnership.

Treasury Secretary Paulson said that for the first time the US and China will be focusing on how they can work together through international forums to strengthen the global economic system.

Despite the grave global financial turmoil, China-US trade kept up its strong momentum as bilateral trade volume rose by 13.6 percent in the first ten months to US$281.3 billion. The US is China's second largest trade partner after the European Union.

Initiated by President Hu and President Bush in 2006, the SED mechanism is the highest-level of dialogue between the two nations to discuss long-term strategic issues in bilateral trade relations. The dialogue is held twice a year, alternating between China and the United States.

(China.org.cn December 5, 2008)