Confronting US & China Relations Head On

WASHINGTON, July 27, 2009 -- President Obama today kicked off senior-level talks in Washington between the United States and rising world power China to tackle economic and foreign policy issues.

"The relationship between the United States and China will shape the 21st century, which makes it as important as any bilateral relationship in the world. That reality must underpin our partnership. That is the responsibility that together we bear," the president said this morning at the Ronald Reagan Building in the nation's capital.

Over the next two days, the U.S. side of the Strategic & Economic Dialogue with China will be led by Secretary of State Hillary Clinton and Treasury Secretary Tim Geithner.

Geithner said that the countries' cooperation in confronting the global recession was a "turning point" in their relationship.

"Our joint response to the global financial crisis marks a turning point in our cooperation with China on global challenges," said the Treasury boss. "This crisis will be remembered not only for its severity and global reach, but also for the speed and strength of the international response. The actions taken by the United States and China have made a very substantial contribution to our collective success in blunting the force of this economic recession and beginning to restore confidence."

"At this moment of crisis, we acted together," he said.

"At present the world economy is at a critical moment of moving out of crisis and toward recovery," said Chinese Vice Premier Wang Qishan.

One point of emphasis for U.S. officials will be making it clear to the Chinese that they should not count on U.S. consumer spending to help rescue their export-heavy economy from recession .

As some $15 trillion in U.S. household wealth has been lost during the 18-month long recession, consumers have been saving more money and spending far less. In turn, U.S. officials want more Chinese domestic spending as a way to boost economic growth worldwide.

"China's success in shifting the structure of the economy towards domestic-led growth, including a greater role for spending by consumers, will be a huge contribution to our global challenge of bringing about a more rapid, more balanced, and more sustainable global recovery," observed Geithner, who studied in China twice and has already traveled there in his first six months as Treasury chief.

Another pressing economic issue is Beijing's concern about the soaring U.S. budget deficit, which has risen to record-high levels as Washington has spent hundreds of billions of dollars to stop the recession. China, as the largest foreign holder of U.S. government debt, has a lot riding on the health of the U.S. economy.

"We are committed to taking the necessary measures to bring our fiscal deficit down to a more sustainable level once recovery is firmly established," Geithner said today, reiterating a common administration refrain.

In an op-ed in Monday's Wall Street Journal, Clinton and Geithner also pledged to discuss security concerns, including North Korea and Afghanistan.

"To meet these threats, we must find common ground and work together in common purpose, even as we may disagree on certain issues," Clinton said today.

Geithner and Clinton also pledged to discuss other contentious issues like climate change. The U.S. has urged China and other developing countries to agree to carbon emissions caps to fight global warming, but have so far been rebuffed because those countries fear doing so would harm their economic growth.

Last week in India, Clinton was unable to convince New Delhi to similar emissions cuts.

"It is our hope that this dialogue we initiate today will enable us to shape a common agenda," Clinton said today. The summit, she stated, "marks the beginning of an unprecedented effort to lay the foundation for a positive, cooperative, and comprehensive U.S.-Chinese relationship in the 21st century."

The meetings in Washington will take place on Monday and Tuesday. As the Chinese State Councilor Dai Bingguo said Monday at the Reagan Building, quoting President Obama's famous campaign slogan, "Yes we can!"