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(Aug 12, 2009) According to a fact sheet released on August 4, 2009, after the first meeting of the economic track under the First U.S.-China Strategic and Economic Dialogue, convened in Washington, D.C., on July 27 and July 28, China and the United States have each made commitments to further financial reforms. The four-part document covers 1) sustainable and balanced economic growth, 2) foundations for a strong financial system, 3) trade and investment, and 4) international economic/financial institutions. An annex addresses institutional arrangements and exchanges. Some highlights of the fact sheet are presented below in connection with each of the four sections. (Full Text: The First U.S.-China Strategic and Economic Dialogue Economic Track Joint Fact Sheet, XINHUA, Aug. 5, 2009, available at http://news.xinhuanet.com/english/2009-08/05/content_11831790.htm [hereinafter Fact Sheet]; China to Deepen Financial System Reform in Support of Domestic Demand: Statement, XINHUA Aug. 5, 2009, available at http://news.xinhuanet.com/english/2009-08/05/content_11831584.htm.)
The United States will take steps to encourage national saving as a share of GDP, through policies to further encourage household saving. It also pledges to reform the country's health care system in order to control rising health care costs and to reduce the federal budget deficit relative to GDP to a sustainable level by 2013. China will continue to implement policies to stimulate domestic demand and increase consumption. To expedite development of its services industry, China will enhance access to the service market and expand areas of and channels for non-government investment. China also commits to social safety net reform.
Foundations for a Strong Financial System
Both sides pledged to promote financial stability and to jointly expedite reform of the financial sector, improve financial regulation and supervision, and further financial market transparency. The two countries pledged to help achieve convergence on "high quality" global accounting standards and will carry out technical exchanges on the development of private pensions and strengthen cooperation on the improvement of insurance regulation. (Fact Sheet, supra.)
The United States, aside from pursuing comprehensive reform, will strengthen regulation and supervision of "financial firms that pose a significant risk to the financial system" and make major financial markets strong enough to bear system-wide stress on the financial structure and large institutions' collapse. The United States also will continue to maintain "strong oversight" of government-sponsored enterprises and ensure that they meet their financial obligations. (Id.)
China has pledged to deepen reform of its financial system and to more efficiently intermediate in support of domestic demand by means of liberalized interest rates and consumer finance. It also will accelerate the allocation of Qualified Foreign Institutional Investor quotas to $30 billion and continue to allow foreign-invested, domestically incorporated banks that meet the relevant requirements to enjoy the same rights as domestic banks in underwriting bonds in the inter-bank market. China commits to gradually increasing the number of qualified joint-venture securities companies that can participate in A-share [domestic, as opposed to foreign-invested shares] brokerage, proprietary trading, and investment advisory services; support qualified foreign companies to list on China's stock exchanges through issuing shares or depository receipts; and support the listing abroad, including in the United States, of qualified Chinese companies. (Id.)
Trade and Investment
The United States and China agreed to strengthen cooperation to expedite China's accession to the WTO Government Procurement Agreement (GPA) and to combat money laundering and terrorist financing, including counterfeiting. They will also cooperate to accelerate implementation of the "Guidelines for China-U.S. High Technology and Strategic Trade Development" and formulation of the Action Plan on Expansion of China-U.S. High Technology and Strategic Trade Cooperation in Priority Sectors. (Id.)
In connection with its joining the GPA, China committed to treating, under its Government Procurement Law, domestic products produced by foreign-invested enterprises the same as domestic products produced by Chinese enterprises. China will also further decentralize approval authority and streamline approval procedures for foreign investment, and gradually raise the threshold for central government review. In another move to promote trade and investment, China agreed to commit to implementation of the Generally Accepted Principles and Practices ("the Santiago Principles") governing sovereign wealth funds. (Id.; SOVEREIGN WEALTH FUNDS: GENERALLY ACCEPTED PRINCIPLES AND PRACTICES, "SANTIAGO PRINCIPLES" (Oct. 2008) [pamphlet], International Working Group on Sovereign Wealth Funds website, available at http://www.iwg-swf.org/pubs/eng/santiagoprinciples.pdf.)
The United States reaffirmed its commitment to the principles identified by the Organization for Economic Cooperation and Development (OECD) for recipients of sovereign wealth fund investment. It also pledged to consult, through the U.S.-China Joint Commission on Commerce and Trade, on working towards China's expeditious achievement of market economy status. (Fact Sheet, supra.)
International Economic/Financial Institutions
The United States expressed support for the continuation and strengthening of China's ties with the Paris Club (an informal group of official creditors, comprising 19 permanent members, who seek to find solutions to the payment difficulties of debtor countries) and the OECD's Global Forum on Taxation. (Fact Sheet, supra; Welcome on the Paris Club Website, Club de Paris website, http://www.clubdeparis.org/en/ (last visited Aug. 5, 2009); Global Forum on Taxation, OECD website, http://www.oecd.org/document/7/0,3343,en_36335986_36339065_38203655_1_1_
1_1,00.html (last visited Aug. 5, 2009).)
|Author:||Wendy Zeldin More by this author|
|Topic:||Foreign trade and international finance More on this topic|
|Jurisdiction:||China More about this jurisdiction|
|United States More about this jurisdiction|
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Last updated: 08/12/2009