U.S. and China Begin High-Level Economic Conference

ANNAPOLIS, Md. —Treasury Secretary Paulson said today that America and China have a strong mutual interest in avoiding energy supply disruptions.At the outset of two days of high-level discussions, Mr. Paulson told a conference at Annapolis, Md., that the two nations need to intensify efforts to cooperate on a variety of energy and environmental issues.“As the two largest net importers of oil, China and the United States face similar challenges as demand for energy increases,” he said at the opening session of a meeting attended by the Bush administration’s top economic policymakers and their counterparts from Beijing.It was Mr. Paulson’s fourth time to head an American delegation of Cabinet officials in such a conference. The Chinese team was being led by a newcomer, Vice Premier Wang Qishan, who took over after the retirement earlier this year of former Vice Premier Wu Yi.Mr. Paulson came up with the idea of the talks when he joined the administration in 2006 after leading investment giant Goldman Sachs. It was his belief that if the discussions between the two countries could be elevated to the highest level, then breakthroughs could be achieved on a number of thorny trade issues.However, the results so far have been disappointing and it is uncertain whether the next administration will decide to continue the talks, known as the Strategic Economic Dialogue.Business groups, who believe the meetings have been beneficial, said it would be wise for the Chinese to produce results as a way of convincing the next occupant of the White House to keep the talks going. But other China experts say the Chinese delegation may believe that it is not worthwhile to offer too many economic concessions to a lame-duck administration when they can wait to negotiate with a new team.This week’s talks are being held at a time when America’s trade deficit with China has jumped to an all-time high of $256.2 billion, the largest deficit ever recorded with a single country and an amount equal to nearly one-third of America’s total trade deficit of $700.3 billion last year.The two days of talks are expected to focus on the challenges both countries face with rising energy and food costs. China is the world’s biggest consumer and producer of coal. Pollution from its coal-fired industries is believed to be a major factor in global warming.But an American effort to get China to promote greater energy efficiency as a way of reducing strains on global supplies is unlikely to achieve much success. That’s because the Chinese have been moving in the opposite direction, providing ever greater subsidies to keep energy prices low as global prices have surged.In a speech last week previewing the talks, Mr. Paulson said the administration intended to keep pursuing a policy of “robust engagement” with China that would include filing unfair trade cases as needed and pressuring the Chinese to move more quickly to revalue their currency. He said it was important for both countries to resist calls for erecting protectionist barriers.The Chinese, however, have complained that the Bush administration has harmed the chances for making progress in the talks by resorting to filing trade cases against China before the World Trade Organization.A top Chinese envoy to the WTO complained last week that America had engaged in continuous abuse against the world trading system by imposing duties on Chinese goods and by allowing the dollar to fall against other currencies, harming the global economy by triggering rising oil and food prices.The soaring trade deficit with China is blamed by critics as a major contributing factor in the loss of more than 3 million American manufacturing jobs since 2001. American executives say the undervalued yuan makes Chinese goods cheaper in this country and American products more expensive in China.The Bush administration acknowledges that the Chinese have allowed their currency to rise in value by about 20% against the dollar since July 2005, but American officials contend that more needs to be done.The administration also wants the Chinese to open their financial system to foreign banks and investment houses, including major American institutions, as a way of gaining needed expertise. However, that effort is meeting strong resistance from the Chinese, given the billions of dollars in losses suffered by American financial giants in the credit crisis that erupted last August.Major business groups like the National Association of Manufacturers, the U.S. Chamber of Commerce, and the Financial Services Forum believe the high-level talks have been worthwhile. But other groups have been more critical, saying the discussions have been a waste of time and Congress should move ahead with legislation to penalize China for its currency policies.

U.S. and China Begin High-Level Economic Conference

U.S. and China Begin High-Level Economic Conference

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