U.S., China Open Talks Amid Criticism of Rights, Economic Policies

Day one of the third annual U.S.-China Strategic and Economic Dialogue finished today in Washington DC. Judging from reports, human rights and economic concerns were the main talking points. From Washington Post:

The session opened with criticism by top U.S. officials of recent arrests of Chinese activists and artists that came in the wake of the spreading pro-democracy movement in the Middle East.

“We have vigorous disagreement in the area of human rights,” Vice President Biden said at the opening of the meeting. Secretary of State Hillary Rodham Clinton said: ”We have made very clear, publicly and privately, our concern about human rights.”

A senior administration official later said the discussions on human rights were “very candid and honest.”

On economic issues, U.S. Treasury Secretary Timothy F. Geithner said there had been “very promising changes” in Chinese economic policy over the past year. These include a modest appreciation of China’s currency, with a sense that more is on the way, and a promise to better protect the rights of U.S. and other foreign companies.

Still, the U.S. is using the meetings to push into sensitive terrain — urging the Community Party-controlled government to loosen control of its financial system, a major source of state power and conduit of investment to state-controlled enterprises.

Opening up the financial sector is considered important to boosting the spending power of Chinese households and making the country less dependent on exports for its economic success.

The Chinese delegation asked the U.S. government to loosen export and investment controls. From Sydney Morning Herald:

China urged Washington to lift export and investment controls directed against Beijing, saying such a move could go a long way towards conquering the steep trade imbalance between the two powers.

But in their annual bilateral dialogue, US officials continued to press Beijing over its allegedly undervalued yuan as a way to redress China’s $273 billion trade surplus with the United States.

“The way to resolve this imbalance is to ease the export control regime of the United States towards China and to encourage US exports to China rather than restricting Chinese exports to the United States,” Chen Deming, the Chinese trade minister, told reporters.

Chen said Washington’s forex argument over the trade issue between the world’s two largest economies “is not founded.”

Chinese officials said later the yuan was not discussed on Monday. A senior US official said Geithner would raise the issues of currency and economic rebalancing in greater depth on Tuesday.

In his opening remarks, Geithner also listed China’s need for banking reforms to boost its private sector, and the need for “a more level playing field” in trade and investment between the two economic superpowers.

Chinese Vice Premier Wang Qishan called addressing economic imbalances “a long process.”

American Congressmen have also indicated what results they hope to see come out of the two day Strategic and Economic Dialogue. From Reuters:

Congressional Republicans on Monday urged the Obama administration to hold China’s feet to the fire over currency and industrial policies they said are hurting American companies.

“The U.S.-China relationship is critically important. But much work needs to be done to strengthen that relationship and improve U.S. market access into China,” Republican members of the House of Representatives Ways and Means Committee said.

They put their message in a letter to U.S. Treasury Secretary Timothy Geithner and Secretary of State Hillary Clinton, who hosted Chinese officials beginning on Monday two days of high-level talks on economic and geopolitical concerns.

“China must let the RMB (renminbi) appreciate and move toward allowing market supply and demand to determine the value of its currency,” they said.

The Republicans, who won control of the House in last November’s election, steered clear of threatening legislation to force China to revalue its yuan, or renminbi, currency.

But in the Democrat-controlled Senate, Senator Sherrod Brown said he believed legislation was needed to stop “China’s unfair currency manipulation.”

Lawmakers criticized China’s use of “WTO-inconsistent subsidies” and regulatory practices that they said give Chinese companies an unfair advantage over foreign firms.

They also accused Beijing of of misusing its anti-dumping laws “to retaliate against U.S. companies,” and of throwing up food safety barriers to keep out U.S. farm exports.

The Republicans took aim at Chinese restrictions on rare earth exports and called on Beijing to do more to help bring world trade talks to a successful conclusion.

Here is Vice President Joe Biden delivering the opening remarks at today’s Strategic and Economic Dialogue.