From Beijing Review:
When the second round of SED opened in Washington, DC, a two-day meeting co-chaired by Chinese Vice Premier Wu Yi and U.S. Treasury Secretary Henry Paulson, the mass media did not expect any breakthroughs. They understood that this dialogue was part of a bureaucratic process and was under no illusions. What is seldom noticed is that the Mutually Assured Destruction (MAD) doctrine, which was used to balance power between the Soviet Union and the U.S. during the Cold War, now has been shifted to China and the United States in terms of bilateral economic relations.
From a trade point of view MAD reflects high economic interdependency between China and the United States. When losses occur to one, the other will be affected. China is a big creditor of the United States, since it buys U.S. treasury bonds in large numbers. This February, U.S. shares trembled when the Chinese stock market dived. [Full Text]
Zhou Qing’an is a researcher at the Center for International Communication Studies of Tsinghua University. Pang Zhongying is a professor at the International Studies School of Renmin University of China. Read also remarks by Treasury Secretary Paulson on China and the Strategic Economic Dialogue at the Heritage Foundation Lee Lecture:
… You are certainly familiar with the genesis of the SED. In August, 2006, President Bush and President Hu agreed to create an on-going forum to manage our economic relationship, for our mutual benefit, on a long-term strategic basis. We held our inaugural meeting in Beijing, continued our efforts through a series of meetings among Chinese and U.S. officials, and held the second meeting two weeks ago here in Washington. This dialogue is important because we must get this relationship right. An open, honest economic relationship between our two countries is important to the future of the global economy.
For over 30 years, the Heritage Foundation has been formulating and promoting free market public policies. There is much common ground in your commitment to the principles of free enterprise and the over-riding objectives of broad-based economic engagement with China. Across the spectrum of economic issues, I believe it is in the best interest of the United States, China and the rest of the world that China move more quickly to adopt market-based reforms. And that is one of the primary objectives of the SED – to speed the pace of reform in China.
We who believe in open economies are swimming against a strong protectionist tide these days. As I explained to the Chinese, a large section of the American public doesn’t believe that the benefits of trade are being shared equally between or within our two countries, and Congress reflects that view. The Chinese delegation had the opportunity to meet with Congressional leaders during their visit. I think the meetings were mutually respectful, and it was beneficial for the Chinese to personally meet those who have such serious concerns.
Protectionism isn’t a growing force only in the United States. It is playing a role in domestic politics in China as well. This fall, the Communist Party of China will hold its 17th Party Congress, to determine changes in leadership. This may impact many aspects of national policy, including the pace of economic reform in China.
The task of the SED is long-term, and that is difficult in a town where short-termism is the order of the day. A newspaper headline at the conclusion of the recent SED meeting said that it did not “resolve major issues.” This, in my opinion, misses the point. The dialogue is an on-going process. To get results, we must build relationships, and take smaller, deliberate steps forward together to create momentum for greater change. Through candid discussions, we will ease, rather than increase, tensions and get to solutions and action. [Full Text]
