WASHINGTON—The United States and China concluded two days of "strategic" discussions here Wednesday, notching a number of minor advances to pry open the Chinese market for U.S. business but failing to win a commitment from China that it would revalue its currency.
The "Strategic Economic Dialogue" was the brainchild of Treasury Secretary Henry Paulson, who thinks that through constant engagement, the world's largest economy—ours—and the world's fastest-growing economy—theirs—will be able to prevent potholes from becoming sinkholes in an increasingly interdependent and complicated relationship.
In that broad sense, the meetings yielded a number of agreements to work together, on everything from biofuels and energy-efficiency programs to combating illegal logging globally. They also produced a greater opening of China's restrictive financial-services sector.
In addition, China agreed to a joint study into the costs in both countries associated with more controls on electricity generation and coal-fired power plants.
The Bush administration also pushed China to step up its inspection of food and drug exports amid growing global concerns about its ability to police its own industry.
The most concrete advance was an announced increase in passenger flights between the United States and China, from the current 10 daily to 23 by 2012. This deal is likely to allow American Airlines to bid for a route from Dallas to China. U.S. air cargo carriers also would get expanded access across almost all of China by 2011.
In a statement, Transportation Secretary Mary E. Peters said China would add one new daily flight from the United States this year and next, four daily flights in 2009 and three more in 2010. In 2011 and 2012, two more daily flights per year will be added. The agreement allows the U.S. government to designate three more U.S. carriers to operate in China, one this year and two in 2009.
These advances are unlikely to mollify Congress, where anger is growing over China's gaping trade surplus with the United States, which exceeded $232 billion last year. That's likely to be surpassed this year, given the $57 billion first-quarter trade deficit with China.
Democrats and a growing number of Republicans want punitive sanctions slapped on China if it doesn't revalue its currency and move more swiftly toward a market-determined exchange rate.
Chinese officials planned to meet Wednesday and Thursday with several U.S. lawmakers. In a closing news conference, Paulson said the Chinese were "expecting that they will hear some strong views."
Lawmakers want the Chinese leaders to understand that the executive branch isn't the only game in town.
"Administrations come and go. It is Congress that remains in the driver's seat on the key trade and economic issues affecting our two countries," Sen. Max Baucus, D-Mont., the chairman of the Senate Finance Committee, said in a statement ahead of his meeting Thursday with Vice Premier Wu Yi. Any move to slap tariffs on Chinese-made goods for failing to revalue the currency would come through his committee.
Other advances include:
_Expansion of financial services: China agreed to remove a freeze on new foreign securities firms and resume licensing joint ventures between Chinese and foreign securities firms. Before the next Strategic Economic Dialogue meeting, China will allow foreign securities firms to expand operations to include brokerage, proprietary trading and fund management.
_Insurance: The China Insurance Regulatory Commission will move by August on long-pending applications to convert insurance company branch offices to foreign subsidiaries.
_Credit cards: China will allow U.S. and other foreign banks to offer credit and debit cards denominated in the Chinese currency, and thus compete against Chinese banks.
_Illegal logging: China, already a party to international agreements on endangered wood products, has agreed to create a mechanism by 2008 to work with U.S. Customs and resource authorities to ensure that the non-endangered timber it imports comes from sustainable forestry.
_Mine safety: China and the U.S. will work closely on coal mine methane-capture technologies. China uses twice as much coal as the U.S. and could use four times as much by 2020.
_Energy efficiency: China will consider programs similar to the Energy Star certification used in U.S. appliances to ensure energy-efficiency standards.
_Labor: The U.S. Labor Department will work with China to improve the collection of labor-market data, and will help China move toward employer-provided pensions and an unemployment-insurance system.
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