– U.S. Treasury Secretary Jacob
J. Lew and Chinese Vice Premier Wang Yang concluded the economic discussions of
the seventh U.S.-China Strategic and Economic Dialogue (S&ED). They were
joined by leaders from 19 U.S. government agencies, and senior officials
representing key Chinese ministries and agencies.
The two sides discussed issues spanning the full breadth of
the U.S.-China economic relationship. The United States secured
commitments from China to implement economic reforms and pro-market policies
that will create new opportunities and a more level playing field for U.S.
workers and firms. The two sides also made progress in working together
to address climate change and other issues of global importance.
The Administration will continue to ensure that our economic
relationship with China delivers concrete benefits for the American people,
including by advancing our priorities when President Obama hosts Chinese President
Xi Jinping for a state visit in September.
2015 U.S. China Strategic and Economic Dialogue U.S.
Fact Sheet – Economic Track
Exchange Rate Liberalization: The
United States secured new and ambitious commitments from China to move towards a
more flexible, market-determined exchange rate, limit foreign exchange
intervention, and increase the transparency of its exchange rate policies.
These reforms are vital to leveling the playing field for American exports,
workers, and firms, and promoting China’s transition to consumption-led growth
and away from exports. The Administration will continue to push for exchange
rate reform and transparency as priorities in its engagement with China,
building on the significant progress to date.
- China committed to increase
exchange rate flexibility and move more rapidly toward a market-oriented
exchange rate system. China pledged for the first time to intervene in
foreign exchange markets only when necessitated by disorderly market
conditions. Since June 2010, the RMB has appreciated by about 30
percent on an inflation-adjusted, trade-weighted basis, and China has
greatly reduced foreign exchange intervention since last year’s S&ED
meeting. It is critical that China continue to move to a more market-determined
exchange rate and a more transparent exchange rate policy.
- China pledged to release
economic data following the IMF’s Special Data Dissemination Standard
(SDDS) by the end of the year, an important step in meeting international
standards of transparency in foreign exchange reserve and other economic
data. More broadly, China recognized that meeting the transparency
standards of major reserve currencies will be important to its goal of
increasing international use of the RMB.
Expanding Opportunities for U.S. Firms Through
Consumption-Led Growth: China’s Third Plenum economic
agenda, launched in November 2013, seeks to move China to a new,
market-oriented growth model, based on household consumption rather than
exports and investment. This transition will expand the market for U.S. goods
and services in China and promote strong global growth. China committed to a
number of reforms at the S&ED that will support its rebalancing objectives
by further enhancing the role of the market, improving the business climate for
private firms, and strengthening the earning power and economic security of
households.
- Increasing the Transparency of SOE Expenditures: China pledged to provide more detailed information on the operation
of its state capital budget, funded by state-owned enterprises (SOEs).
China committed to disclose expenditures by budget item and detail how
they are spent. Starting in 2015, China is to guide local governments to
improve their state capital budgets at the local level. Greater
transparency of state capital budgets will help ensure that China meets
its commitment to increase the share of SOE income used to improve
peoples’ livelihoods, with a goal of this share reaching 30 percent by
2020.
- Market-Determined Interest Rates: China committed to further advance market-based interest
rates in the banking system, building on progress over the last year in
increasing the flexibility of deposit interest rates and introducing
certificates of deposit to individual investors and enterprises. Allowing
interest rates to be set by the market will channel more financial
resources to private firms rather than SOEs, while helping boost
consumption by increasing the return that Chinese households earn on their
savings.
- Boosting Household Consumption and Macroeconomic Rebalancing: China pledged to accelerate the establishment of its social
security system to achieve universal coverage by 2020, which will promote
greater consumption by increasing households’ income and confidence in
their long-term economic security. China also committed to establish a
unified real estate registration system by 2017 and take other measures to
improve the transferability of rural and urban construction land at
market-determined prices. These steps will provide Chinese rural residents
with greater economic rights over their land, raising their wealth and
their ability to consume and invest.
Promoting An Open, Predictable, and Transparent
Climate for U.S. Firms and Innovation: Opening up
China’s market and removing discriminatory trade and investment barriers is
vital to ensuring that U.S. workers and firms benefit from China’s economic
growth. We also secured China’s commitments to treat U.S. innovation in a
transparent, fair, and nondiscriminatory manner, protecting a vital source of
U.S. economic competitiveness.
- Open Trade in Information and Communications Technology (ICT): With regard to our strong concerns over China’s recently
developed information and communications technology (ICT) regulations,
including those governing the commercial banking sector, China committed
to ensure that such bank ICT regulations will be nondiscriminatory, are
not to impose nationality-based requirements, and are to be developed in a
transparent manner. China committed to enhance policy transparency in its
governance of the ICT sector, including providing opportunities for
comment on draft regulations. The United States and China also committed
to maintain ongoing consultations on these issues.
- Bilateral Investment Treaty (BIT) Negotiations: The United States and China reaffirmed their commitment to
negotiate a high-standard BIT and agreed to intensify negotiations.
China committed to provide an improved “negative list” that reflects a
commitment to open investment environments by early September. We
have made it clear to China that, to successfully conclude the
negotiations, it will be critical for China’s negative list to be very
limited and narrow, and to represent substantial liberalization.
Successful negotiation of an ambitious BIT would create new markets for
U.S. firms by opening up new sectors of China’s economy and increasing
protections for U.S. investors.
- Disciplining Export Financing: Subjecting Chinese and other emerging market government
export financing to international guidelines is critical to reining in
such financing globally and helping to level the playing field for U.S.
exporters. To this end, the Administration recently secured
commitments from China and other members of the International Working
Group on Export Credits to begin a significant new phase of work to
negotiate horizontal guidelines that would discipline government export
credit financing across generally all sectors. China further
reaffirmed its support for guidelines that would apply to export financing
provided by or on behalf of a government and that are consistent with
international best practices. As we enter this new phase of work to
discipline Chinese and other emerging market export financing,
re-authorization of the U.S. Export-Import Bank will be extremely
important to maintaining U.S. leverage and making further progress in the
negotiations.
- National Security Review: The United States and
China engaged in extended discussions regarding national security review
approaches, during which we stressed our strong concerns that China’s
national security review is too broad in its scope, considers numerous
issues that go well beyond genuine national security concerns and
expressly affords third parties an inappropriate role in the review
process. We noted all of these factors significantly undercut
China’s stated goal of investment liberalization. We also stressed
the need for China to give investors regulatory certainty in the national
security review process, including by providing a safe harbor and making
explicit that their security review will not apply retroactively. We
will continue to press China on these issues in the coming months.
- Competition Law: Ensuring that China
implements its Antimonopoly Law (AML) in a transparent and
non-discriminatory manner has been a top priority for the U.S.
government. In this S&ED, China provided important clarity by
specifying which courts are responsible for handling appeals of
Antimonopoly Law (AML) decisions, including those involving intellectual
property issues. China also provided additional clarity regarding
administrative reconsideration of AML decisions by confirming that foreign
and domestic parties to AML proceedings may seek administrative
reconsideration in accordance with the same rules. China further committed
that the law departments in the Ministry of Commerce (MOFCOM), State
Administration for Industry and Commerce (SAIC), and the National Development
and Reform Commission (NDRC) are to hold a meeting with the United States
to discuss their agencies' administrative reconsideration procedures.
- Translations of Trade Related Measures: As sought by the United States in order to foster a more
transparent and understandable business environment in China, China has
issued a measure requiring Chinese agencies to publish English
translations of all trade-related departmental rules, normally before
their implementation. China also has committed to study concerns raised by
the United States regarding the timeliness of China's English translations
of trade-related administrative regulations.
- Promoting Regulatory Transparency: Both China and the United States affirmed the importance of
transparency in the development of all legal measures, in order to enhance
predictability for companies. China has taken strides in the last few
months to address problems posed by some legally binding measures that are
developed non-transparently. Specifically on the transparency of measures
called normative documents, China confirmed all such measures must be
published in final form and that these measures can be invalidated by a
court in the course of litigation against the government. In addition, the
United States and China are to work together in the short term to explore
solutions to problems posed by China's normative documents, including by
considering the topic of notice-and-comment rulemaking.
- Industry Development Plans: China affirmed that
its policies to promote Strategic Emerging Industries, including industry
development promotion guidelines and national and sub-national industry
development funds, apply to and will be made available to foreign-invested
enterprises on an equal basis. China also committed to enhance
policy transparency by soliciting public comments on legally binding
measures in this policy area.
- Technology Licensing on a Commercial Basis: In light of China's rapidly evolving technological needs and
its plans to reform its economy, China committed to conduct research on
regulations governing technology licensing, with a major focus on the need
of private parties to determine technology import and export licensing
terms freely. The United States and China also committed to continue
exchanges and dialogue on technology licensing issues, including a through
a joint seminar convened by China’s Ministry of Commerce in the first
quarter of 2016.
- Theatrical Film Distribution: China confirmed that any licensed film distributors in China
can contract directly with U.S. film producers for the distribution of
imported films (other than those distributed on a revenue-sharing basis)
and further confirmed that these distributors can distribute these films
entirely on their own, and without any involvement by China's state-owned
enterprises, including any China Film Group company. This freedom to
contract should generate higher revenues for U.S. film producers and
should lead to more ready access to China's market for their films.
- Enhancing Drug Quality and Supply Chain Security: To enhance drug supply chain integrity and to ensure patient
access to safe and high-quality medicines, China pledged to share with the
United States its proposal to enact regulatory and enforcement oversight
of the manufacturers of bulk chemicals that can be used as active
pharmaceutical ingredients, and to consider necessary legislative changes
requiring such oversight. China further committed to provide transparency
by publishing its new Drug Administration Law in draft form for public
comments and to take into account opinions from Untied States and other
relevant stakeholders.
Cooperating on Global Challenges:
As the world’s two largest economies, cooperation between the United States
and China is vital for tackling many of today’s most pressing global
challenges. The United States and China pledged to work together to prioritize
efforts to provide public financing for low-carbon technologies, eliminate
inefficient fossil fuel subsidies, and promote high standards for development
finance in third countries.
- Supporting the Green Climate Fund: The United States and China pledged to work constructively
together to support the effective operation of the Green Climate Fund
(GCF), recognizing it as the main dedicated multilateral fund for climate
finance. Securing financial resources to promote low-emission,
climate-resilient economic development is critical to the overall success
of global efforts to address climate change.
- Promoting a Cleaner Global Economy: The United States and China committed that their bilateral
investments in other countries should support low-carbon technologies and
climate resilience, and committed to a dialogue around the role of public
finance in reducing greenhouse gas emissions. The United States and
China reaffirmed their commitment in the G-20 to phase out inefficient
fossil fuel subsidies, and pledged to complete the ongoing peer reviews of
their subsidies under the G-20 process by the end of the year and publish the
results.
- Development Finance: The United States and
China committed to strengthen cooperation on development financing through
the World Bank and other multilateral development institutions. Such
cooperation will promote transparent, effective, and accountable
development assistance to achieve sustainable growth and poverty reduction
in third countries.
Creating a More Open, Resilient Chinese Financial
System: An efficient, market-oriented financial system
is critical to China’s economic rebalancing and its transition to
consumption-led growth. At this year’s S&ED, China pledged measures to open
up and strengthen the role of its capital markets and reduce its reliance on
the state-dominated banking system. These steps, as well as ongoing interest rate
liberalization, will channel more financial resources to China’s private firms,
create more stable funding for local governments, increase the return on
savings for Chinese households, and expand opportunities for U.S. financial
firms and investors.
- Opening Up China’s Capital Markets: China committed to expand and streamline existing vehicles
for foreign investment in its securities markets. In addition, China
announced plans for two new programs to expand the access of foreign
investors to China’s domestic bond market. Greater participation by
foreign investors will help promote deeper, more efficient financial
markets to support China’s private sector development and household
consumption:
- Foreign investors will have access to China’s interbank
bond market (the largest segment of the Chinese bond market)
with overall limits set at an aggregate level, rather than the current
system of quotas allocated to individual firms or jurisdictions;
- Foreign investors will be able to access the listed bond
market through Free Trade Accounts established in the Shanghai
Free Trade Zone;
- China also committed to
steps that will allow foreign financial services firms to play a greater
role in fostering development of the bond market, already the fourth largest
in the world. China pledged to allow locally-incorporated foreign banks to
obtain bond underwriting and settlement licenses on the same basis as
domestic banks. China also affirmed that foreign credit rating agencies
are permitted to issue credit ratings for bonds issued by local
governments.
- Expanding Opportunities for U.S. Financial Services Providers: China committed to expand the scope of business permitted
for foreign-invested securities firms. China also announced incremental
measures that will allow foreign financial firms greater flexibility in
operating in China through wholly-owned entities rather than joint
ventures, including: allowing 100 percent foreign-owned investment
management firms to engage in private fund management, including secondary
trading in China’s stock and bond markets, servicing a fast-growing market
of Chinese firms and high net worth individuals; and allowing foreign
brokers to establish futures companies within the Shanghai Free Trade
Zone, and to trade specific products in the domestic futures market.
- Strengthening Bilateral Cooperation to Safeguard Financial
Stability: Reflecting the increasing integration
of our financial systems, U.S. and Chinese regulators committed to
strengthen regulatory cooperation and information sharing in securities
and derivative markets, including regarding Chinese companies listed in
the United States. The U.S. Public Company Accounting Standard Board and
China’s Securities Regulatory Commission committed to work toward joint
inspections of audit firms in each country, which is important for
protecting investors and promoting financial integrity in both markets.
China is also to strengthen its domestic regulatory regime in key aspects,
including the resolution of financial firms and supervision of financial
conglomerates. The U.S. Office of Financial Research and the People’s Bank
of China are to enhance cooperation in the area of financial statistics to
monitor systemic risk. China is also preparing to report international
banking statistics to the Bank of International Settlements, which will
support financial stability by providing greater transparency on
cross-border linkages to China’s financial system. Both sides are to
continue to implement the G-20’s Over-the-Counter derivatives reforms.
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