Geithner hails ‘progress’ in China talks

©Reuters

The US and China have claimed success after two days of negotiations ended in a series of deals on US access to the Chinese market and Chinese access to sensitive US technology.

China pledged on Tuesday to change regulations so that government contracts are not linked to improvements in its domestic technology base. China also promised improvements in the enforcement of intellectual property such as software.

The US promised “full consideration” of China’s request for “fair treatment” over exports of sensitive US technology and said it welcomes Chinese investment.

The relatively concrete and specific results of the regular “strategic and economic dialogue” between the world’s two largest economies suggest that reduced tension over China’s undervalued currency is making progress easier on trade and investment issues.

Tim Geithner, the US Treasury secretary, hailed “concrete, tangible signs of progress on both sides”. He said China committed to “strengthen the inspection of government software” to make sure that it was paid for and “confirmed that it will no longer employ government procurement preferences for indigenous innovation products at any level of government”.

China also pledged to publish proposed regulations 30 days in advance of implementation, answering a US concern that foreign companies are affected by regulations that they cannot always comment on, and the two sides agreed to discuss export credits for the first time.

US companies complain that China wins overseas contracts by offering heavily subsidised export finance as it does not follow an international agreement on export finance terms.

Wang Qishan, Chinese vice-premier, said the US “commits to accord China fair treatment in the reform of its export control regime [and] relax high-tech exports control towards China”. In financial services, Mr Wang welcomed US willingness to let Chinese banks invest in the US, saying it recognised “China’s enormous progress in capital-adequacy ratio, comprehensive consolidation supervision and other regulatory aspects”.

The US also made some progress on opening up China’s financial system. The US argues that financial reform will make it easier for Chinese consumers to save and borrow, thus boosting domestic consumption in China.

The US also wants to reduce the flow of cheap finance to Chinese state-owned enterprises as a result of caps on interest rates paid to Chinese depositors and create opportunities for US financial companies in the Chinese market.

China said that it will “actively study” allowing foreign-owned insurers to provide car insurance, an important demand given that China will become the world’s largest car market.

In the other direction, the US gave reassurances to China about the stability of its huge investment in US financial assets through its foreign exchange reserves.

Mr Wang said that “the United States commits to further enforce strong supervision of government-sponsored enterprises and to make sure they have enough capital to fulfil financial obligations”.