The last US-China bilateral meeting of the year delivered no major breakthroughs although the American negotiators were cheered by a couple of major announcements on market access. The Strategic Economic Dialogue, a cabinet-level, twice-yearly discussion led by US Treasury Secretary Henry Paulson and Chinese Vice Premier Wu Yi, convened in Xianghe, near Beijing, for two days in December.
Once again faster appreciation of the renminbi featured high on the agenda and, once again, Beijing refused to budge. In fact, the Chinese negotiators took their opportunity to highlight the risks posed by a weakening US currency.
But Paulson drew attention to the significance of China agreeing to let foreign companies raise funds on China’s equity markets. This came a few days after Beijing increased the investment quota for foreign firms trading on China’s stock exchanges and said it would allow Sino-foreign joint venture brokerages. In return, Washington gave ground over a bilateral investment treaty, which could clear the way for more M&A activity from Chinese firms in the US.
The other major development was the signing of two product safety pacts. China now requires firms exporting goods to America to register for inspections with the Chinese government. The inspections would yield a certificate that meets US Food and Drug Administration standards.
It is hoped that these agreements will draw a line under the product safety scandals that saw angry clashes between US and Chinese officials over the summer. However, this may be wishful thinking.
Wu, who was representing China at her last dialogue before retirement in March, delayed her opening remarks by an hour due to a “heated discussion” between the two sides. When she did speak, Wu noted that “disharmonious notes” had entered trade relations.
Whoever replaces her at the next meeting in June will have plenty to do.