US, China bridge some economic differences in Washington talks

WASHINGTON: US and Chinese negotiators bridged some differences over economic policy in annual bilateral talks Wednesday, even as the two countries continue to wrestle with major strategic disagreements. Both sides suggested they closed gaps in talks on a bilateral investment treaty (BIT) following the talks. And Washington appeared more ready to support a major step in the internationalization of the Chinese yuan, its inclusion in the basket underpinning the International Monetary Fund's SDR currency. But there was little sign that Washington was ready to embrace China's new Asian Infrastructure Investment Bank, which the US says risks undermining social and environmental standards for loans established by the World Bank. US treasury secretary Jacob Lew said at the end of the two-day US-China Strategic and Economic Dialogue that China had agreed to hold off on interventions in the foreign exchange markets to manage the yuan's value except in situations of "disorderly market conditions." China also agreed "to actively consider" additional steps to move the yuan, which the US has long criticized is forcefully kept undervalued, to a market-based exchange rate. Lew also welcomed China's commitment to begin publishing economic data to meet a key IMF standard by the end of 2015. "It is in China's own interest to adopt the transparency standards of major reserve currencies." Earlier this year Beijing asked the IMF to consider including the yuan, also called the renminbi, in the basket on which the SDR is based. That would constitute a major recognition of the yuan as one of the 10 most important currencies in the world. Chinese vice premier Wang Yang confirmed that Washington had shown support for the yuan's consideration by the IMF, a decision likely to take place only next year. Wang also said the two sides had placed high priority on the BIT, as they weigh each others' proposed "negative list," a register of business sectors they want to keep protected from foreign investment. The two sides committed to "improve the negative list offer with a view to reaching a mutually beneficial and high-standard treaty," he told reporters after the meeting. The talks, which deal with a broad range of often technical issues, appeared to avoid flashpoint economic issues, like the AIIB that Beijing has launched, and the Trans-Pacific Partnership, the US-driven free trade area that notably excludes China, the second-largest US trade partner. A key new complaint at the top of the US list in economic and trade issues, cyber-spying and cyber-theft of secrets and intellectual property from US companies that is allegedly backed by the Chinese government, was discussed, according to Lew. The two sides "had candid conversations about standards of behavior in cyberspace. We agree that there is value in bilateral and international cooperation on these issues," he said. Wang meanwhile said that Washington had acknowledged its complaints about US economic policy, and would weigh the impact of its expected monetary tightening on the rest of the world. "The United States will pay attention to the impact of monetary policy on international financial systems and promised increased investment, national savings, a reduced deficit... and fiscal sustainability over the medium term," Wang said. -TOI