It is said that most developing countries have similar concerns in protecting their domestic industries. What is your opinion?

Opening to international competition does not mean compromising China’s rules or its identity. If China opens its markets to foreign participants, those participants will be subject to Chinese regulation and supervision. While undoubtedly international companies will have some foreign managers, the bulk of the people trained and employed in China’s service sector will be Chinese and the benefits generated will largely stay in China.

Regarding rising protectionism across the world, is it an inevitable outcome of globalization?

As the Special Envoy for China and the Strategic Economic Dialogue, I have argued passionately that protectionist policies do not work and that the collateral damage from these policies is high. By closing off competition and blocking the forces of change, protectionism reduces the losses of the present by sacrificing the opportunities of the future.

Nations should search for ways to moderate income disparities and help those who lose their jobs to international competition. We in the United States must think creatively about how to assist those who fall behind. The most effective method for generating new, high-quality jobs, and higher living standards is to develop the skills and the technologies that promote economic competitiveness. This means helping people of all ages pursue first-rate education and training opportunities.

Regarding future economic trends, the case for trade is clear and compelling. The Peterson Institute for International Economics in Washington has estimated that the integration of the global economy generates a net economic gain of $１ trillion to the U.S. economy every year. The Chinese people, too, have benefited greatly from China’s integration into the global economy. China’s GDP has grown １０ fold over the last ２７ years, and China is now the world’s third largest trading nation. Global economic integration leads to a lower cost of goods and services, more opportunities for investors to achieve higher returns, and more stable long-term economic growth. This is the foundation of prosperity, jobs and opportunity.

What is your opinion on how external pressure affects China’s economic policies? In particular, U.S. lawmakers are threatening to introduce punitive legislation on Chinese imports. How will that affect political and economic relations? What is the most effective strategy the United States could take in improving trade relations with China?

When disagreements arise, it is important to discuss them candidly, find ways to bridge differences, and make progress where possible so that the economic relationship benefits both countries. Our ongoing discussions with Chinese leaders have become more focused and effective with the launch of the strategic economic dialogue last December. Presidents Bush and Hu established the strategic economic dialogue as a high-level communication framework, each country speaking with one voice at the highest levels. This approach is helping us break down communication barriers both within our two governments and between them.

The second strategic economic dialogue will be held in May here in Washington. It comes at an important point in our relationship. We and our Chinese counterparts are looking for tangible results in tackling the problems that we face. We are focused on long-term structural reforms while simultaneously working toward near-term agreements that build confidence on both sides--what you might call signposts along the way to long-term success.

At this month’s strategic economic dialogue, we and our Chinese counterparts seek to achieve tangible results in several key strategic areas. The first is services, investment and transparency. Structural reforms in both the financial service and non-financial service sectors are very important to China and important to us as well. One specific agenda item is an open-sky agreement between the United States and China, which would increase access to each other’s markets in both air cargo and air passenger travel. The second key area is energy and the environment. Through the strategic economic dialogue, we are collaborating on a series of issues from tariffs and non-tariff barriers on environmental goods and services to improving energy efficiency and sharing technologies. The third area is innovation/IPR (intellectual property rights). Competition and investment, along with industrial and intellectual policies that reward competition, create strong incentives for firms to increase productivity and provide the framework within which creative ideas can flourish.

Finally, a major facet of our discussions is the need to rebalance domestic growth. As Vice Premier Wu Yi and Chairman Ma Kai noted at the first strategic economic dialogue, reducing external and internal macroeconomic imbalances in China will require household consumption to play a larger role, and investments and exports to play smaller roles, in driving China’s economic growth. This is a goal we both share, and we will work together to help China manage this transition.

What is your opinion on your strategic economic dialogue partners from China? How do you rate them in terms of cooperation and effort in resolving bilateral economic disputes?

The strategic economic dialogue has served as a catalyst for cooperation between U.S. government agencies and their Chinese counterparts, as well as for interagency cooperation within the U.S. and Chinese governments on the strategic areas I just mentioned. This unprecedented collaboration between our governments has produced significant results for the U.S.-China economic relationship. And we look forward to making further progress at the second strategic economic dialogue in Washington later this month.

(Wang Yanjuan and Chen Wen reporting from New York)