The fourth round of the US-China Strategic Economic Dialogue (SED) produced new agreements on investment, energy and the environment. Over the two-day meeting, led by US Treasury Secretary Henry Paulson and Chinese Vice Premier Wang Qishan, the countries inked a 10-year agreement on environmental and energy cooperation, and agreed to negotiate an investment treaty.
Businesses didn’t wait for the talks to start their own negotiations. The day before the SED began, US and Chinese companies announced nearly US$14 billion in new deals in the high-tech, manufacturing and telecom industries, and for soybean, chemical and electromechanical products.
Prior to the talks, it was also revealed that the US was delaying approval of banking licenses to Industrial and Commercial Bank of China and China Construction Bank. US regulators expressed concerns over the banks’ largest shareholder, Central Huijin Investment, which is controlled by China Investment Corp, the country’s sovereign wealth fund. Chinese officials saw the move as a politically motivated negotiating strategy.
There were more conflicts over currencies. Paulson praised China for the faster rise of the renminbi, but his calls for allowing the currency to float more freely were ignored. Chinese officials, meanwhile, criticized US policy for allowing the dollar to fall, driving up commodity prices.
Despite the tensions, the environmental agreement, which covers air, water, clean power, transportation and conservation, does represent a step forward.The SED could win further credibility if discussions regarding an investment treaty to ease US-China asset purchases bear fruit. However, senior Democrats in Washington said final decisions should be left to the next president.