Secretary of State Hillary Rodham Clinton and Treasury Secretary Timothy F. Geithner hosted the third joint meeting of the U.S.-China Strategic and Economic Dialogue (S&ED) in Washington, D.C., May 9-10 and were joined for the Dialogue by the Chinese Co-Chairs, Vice Premier Wang Qishan and State Councilor Dai Bingguo. Secretary of State Clinton, Treasury Secretary Geithner and the Chinese ministers made a joint statement following the U.S.-China S&ED on May 10. Secretary Clinton said:
"I want to begin by thanking our Chinese colleagues, led by Vice Premier Wang and State Councilor Dai and the entire Chinese delegation for a productive and comprehensive dialogue between us. And I also, along with Secretary Geithner, want to thank everyone on the American side, not just those from the State Department or Treasury but indeed from across our government. The unprecedented level of involvement and the extraordinary work that has taken place since our last S&ED in Beijing was truly impressive.
"The Strategic and Economic Dialogue continues to grow broader and deeper. It reflects the complexity and the importance of our bilateral relationship. And we have covered a lot of ground together, and I'm happy to report we have made a lot of progress. The list of agreements and understandings reached is quite long. We have seen concrete progress on a wide range of shared challenges, from the energy and environment to international trade and security. For example, there is now a new partnership that will bring U.S. and Chinese companies and universities together. Those which are developing innovative environmental technologies will now be working bi-nationally and with local governments and NGOs to promote sustainable development projects such as next generation batteries for electric cars, and new clean air and water initiatives. Already, Tulane University in New Orleans and East China Normal University are collaborating to improve the conservation of wetlands, and we have seen many other examples.
"We are also laying the groundwork for potentially significant future collaboration on development, from working together to innovate and distribute clean cookstoves and fuels to strengthening public health systems in developing countries. And our people-to-people programs continue to expand, most notably our '100,000 Strong' Student Exchange Initiative, which has already raised the stated goal of dollars to go along with the very generous Chinese Government support for 20,000 American students because all of us are committed to increase more people-to-people interactions and opportunities. Now, I am well aware that these specific and very substantive partnerships may not produce major headlines, but I think they do reflect our shared commitment to translate the high-level sentiments and rhetoric of these diplomatic encounters to real world benefits for our citizens, our countries, and the wider world.
"Just as important, although perhaps even harder to quantify, are the habits of cooperation and mutual respect that we've formed through these discussions. We believe that to keep our relationship on a positive path, as foreseen by Presidents Obama and Hu, the United States and China have to be honest about our differences and address them firmly and forthrightly. At the same time, we are working together to expand the areas where we cooperate and narrow the areas where we diverge. And we are building up a lot more understanding and trust. So we discussed everything, and whether it was something that was sensitive to us or sensitive to them, all the difficult issues, including human rights. And we both have made our concerns very clear to the other. We had candid discussions on some of our most persistent challenges, from addressing North Korea and Iran to rebalancing the global economy.
'We agreed on the importance of cooperating in Afghanistan to advance common goals of political stability and economic renewal. We established a new U.S.-China consultation on the Asia-Pacific region, where we share a wide range of common interests and challenges. And for the first time in these dialogues, senior military and defense leaders from both sides sat down face to face in an effort to further our understanding, to develop trust, and avoid misunderstandings that can lead to dangerous miscalculations. This new strategic security dialogue is a very important step forward, and we think it will add immeasurably to our bilateral relationship.
"As we have discussed these issues and as we have committed to keeping the relationship moving forward, we have some milestones ahead of us. For the first time, President Obama plans to participate in this year's East Asia Summit. And Vice President Biden will travel to China this summer, continuing our discussions on the full range of shared regional and global challenges. And he hopes to return the hospitality by welcoming Vice President Xi Jinping to Washington at a later date. I look forward to seeing our Chinese partners at the ASEAN Regional Forum in Indonesia, and both the President and I and the Secretary are greatly anticipating the United States hosting APEC in Hawaii.
"Now, those are just a few of the highlights. But day to day, at every level of our governments, we are working hard to build that positive, cooperative, comprehensive relationship that our two presidents have asked for. This is the long, hard, unglamorous work of diplomacy. At our plenary sessions that State Councilor Dai and I chaired yesterday, there was a dizzying array of issues that we are working on together, and I felt very satisfied because that was not the case two years ago. And I anticipate that we are going to see further progress, because we want to realize the full promise of our partnership, and we very fervently hope to leave a more peaceful and prosperous world for our children and our children's children.
"So let me again thank our Chinese friends for making this long journey and for working as we move forward on our journey together into the future."
Following Secretary Clinton's remarks, Secretary Geithner outlined the discussions on economic issues. Secretary Geithner said:
"We had a very comprehensive discussion about a full range of economic issues between us and facing the global economy. As always, we reviewed the major risk and challenges to our -- to growth domestically in China and the United States, and we talked about the major risks and challenges on the global economic front. We talked about the investment climate in both countries. We talked about energy policy, financial reform -- very comprehensive discussions. And we benefited on the U.S. and on the Chinese side from an exceptionally talented and very senior delegation of financial exports -- experts, members of the cabinet, regulators, et cetera. And that's very important.
"Now, our three key objectives on the U.S. side were: first, to encourage the ongoing transformation of the Chinese economy away from its export-dependent growth model of the past to a more balanced growth strategy led by domestic demand; to encourage China to level the competitive playing field between U.S. and Chinese companies, both in China and around the world; and to strengthen our engagement with China on financial reform issues in both countries.
"And we have made very, very significant progress in our economic relationship over the past two years. Our exports to China reached $110 billion last year and are growing about 50 percent faster than our exports to the rest of the world. And those exports are all the things Americans create and build -- from agriculture, all sectors of manufacturing, services, and advanced technology -- and they support hundreds of thousands of jobs across the United States.
"Now, overall, we are seeing very promising shifts in the direction of Chinese economic policy. First on the exchange rate, since last June, as you know, the Chinese currency, the renminbi, has appreciated against the dollar by more than 5 percent, and at an annual rate of about 10 percent when you take into account the fact that Chinese inflation is significantly faster than that in the United States.
"We hope that China moves to allow the exchange rate to appreciate more rapidly and more broadly against the currencies of all its trading partners. And this adjustment, of course, is critical not just to China's ongoing efforts to contain inflationary pressures and to manage the risks that capital inflows bring to credit and asset markets, but also to encourage this broad shift to a growth strategy led by domestic demand.
"China has outlined in its Five-Year Plan a comprehensive set of reforms, again, to shift its growth strategy away from one relying on exports to domestic demand. China has joined a broad commitment with other countries in the G-20 to put in place mechanisms to reduce the risk that we see once again the emergence of large, external imbalances that could threaten future financial stability and future economic growth.
"This process is going to take time, and of course, it's going to require a sustained effort of reform. But of course, it's essential to the future health of the global economy and the trajectory of future growth in China. Again, we're seeing progress here, too. If you just step back from and look, China's current account surplus as a percent of GDP peaked at about 10 percent before the crisis. It's now around 5 percent, and of course, we'd like to see that progress sustained.
"This brings me to the third area, the third area of focus in our discussions, which is how to create a more level playing field. In our meetings over the last few days, we've seen some very important steps towards that goal, and let me just review a few of them. First, China committed to making long-term improvements in its high-level protection of intellectual property rights and enforcement regime to strengthen the inspection of government software and use at all levels of government. And this will help protect U.S. innovators as well as Chinese innovators in all industries, not just in software. And I think that's very important.
"China also confirmed that it will no longer employ government procurement preferences for indigenous innovation products at any level of government. And this is important to make sure, of course, that U.S. technology, U.S. firms, can compete fairly for business opportunities in China.
"China has committed to increased transparency, requiring government authorities to publish regulations at least 30 days in advance, so again, that U.S. firms, all foreign firms, have the chance to see those informations -- see those regulations in draft and they have the opportunity for input just as their Chinese counterparts do.
"China and the United States, recognizing the importance of transparency and fairness in export credit policies, have agreed to undertake discussions on export -- on the terms of our respective export credit policies. And this is important, of course, because China, by some measures, is the largest provider of export credit on -- in the world.
"And finally, we've been discussing with the Chinese authorities the important objective of how to make sure that companies in China that compete with state-owned enterprises are not put at a broader disadvantage.
"The final focus of our discussions on the economic side was China's ongoing financial reforms to create a more open, more flexible, more dynamic, more developed financial system. And these reforms, which are designed to increase the returns to savers, to further develop China's equity and bond markets, and to expand opportunities for foreign financial institutions in China are very important and very promising, not just, of course, in expanding opportunities for U.S. institutions but also reinforcing this broad shift in strategy by the Chinese Government towards a growth strategy led by domestic demand.
"Now, when President Hu visited Washington in January, President Obama described the evolution of our relationship as -- quote -- 'a healthy competition that spurs both countries to innovate and become even more competitive.' And of course, just as China faces significant economic challenges at home, we have our challenges in the United States, too. And we are working very hard not just to repair the damage caused by this financial crisis, but to make sure that as we restore fiscal sustainability, as we return to living within our means as a country, we're making sure we preserve the capacity to invest in things that are going to be critical to the future strength of the American economy. And I can say, based on the strength of our conversations and the strength of this emerging relationship, that this economic relationship with China is -- will continue to grow, continue to deepen, and continue to provide tremendous opportunities for both nations. And you see today concrete, tangible signs of progress on both sides that underscore that commitment of both our presidents.
"In conclusion, I just want to end where Secretary Clinton began, which is to thank the delegations on both sides, both the American and Chinese participants in these discussions. They brought a directness and candor and, frankly, greater openness than we've seen in the last two years, and I think that is very welcome. And I want to express my personal gratitude to Vice Premier Wang for his leadership in these discussions, and to compliment him for the very substantial changes he's already been able to bring about. Thank you very much."
You can read the full transcript of the joint closing remarks here.