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Print Edition> World
UPDATED: May 13, 2011 NO. 20 MAY 19, 2011
Working for Better Cooperation
China and the United States seek to iron out differences at the recent Strategic and Economic Dialogue

Business issues

At a time when business ties between China and the United States are thriving, it is essential the United States put the agreements in the framework signed during the third round of the S&ED into practice and remove obstacles for Chinese investors, said Zhou Shijian, a senior research fellow with the Center for U.S.-China Relations at Tsinghua University in Beijing.

Chinese statistics show Sino-U.S. trade reached $385.34 billion in 2010, up 29.2 percent over the previous year. The two countries are currently each other's second largest trade partners.

But Chinese companies' efforts to invest in the United States had long been hindered by the U.S. Government in the name of protecting national security, Zhou said.

The Committee on Foreign Investment in the United States (CFIUS) has rejected a series of Chinese investment bids in recent years. For instance, earlier this year, China's leading telecom solutions provider Huawei Technologies was forced to drop a deal to purchase a share of U.S. server technology company 3Leaf Systems, due to CFIUS interference, which deemed the $2-million deal a possible risk to U.S. national security.

Chinese investment in the United States was helpful for the U.S. economic recovery and could create more job opportunities for Americans, Zhou said. "The United States should eliminate political factors interfering with economic activities," he said.

Chinese Commerce Minister Chen Deming said Chinese investment in the United States accounted for a small portion of China's total outward investment. In 2010, China's total outward investment, not including financial sector investment, amounted to $59 billion, while its investment in the United States represented only 2.4 percent of the total figure.

"We hope the United States will treat Chinese investment and investment of Chinese state-owned enterprises in the United States in a fair manner," Chen said.

It is unfair the United States still regards China as a non-market economy, Zhou said. China has carried out economic reforms since 1978 and joined the WTO in 2001.

On entering the WTO, China agreed with other members it would be regarded as a "transition economy" for 15 years before automatically gaining market economy status in 2016.

There are only five years to go, and by then, the United States will not be able to use the market economy status as a bargaining chip against China, Zhou said.

While the United States claims accelerated appreciation of the yuan can help ease China's ongoing inflation, Zhou said Washington's real purpose is to weaken China's competitiveness in exports.

"As long as it has a trade deficit against China, the United States will keep pressuring the yuan to appreciate," he said.

Chinese exports to and imports from the United States totaled $283.3 billion and $102.04 billion respectively in 2010, posting a surplus of more than $180 billion for China.

The trade surplus with the United States accounted for 99 percent of China's total trade surplus, said Chen.

He said the way to resolve these imbalances was for the United States to ease its export restrictions toward China and to encourage U.S. exports to China rather than restricting Chinese exports to the United States.

The United States exercises export license administration on more than 2,000 hi-tech items to China. Under this system, the authorities give export licenses only after the end use of the products is verified.

Obama announced a decision to reform the U.S. export control regime in December last year, granting 164 countries license exemptions, but China was not on the list.

(With reporting by Chen Wen in Washington, D.C.)

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