Obama administration officials said Monday they were pleased with the first day of their two-day summit with top Chinese officials, saying that the talks avoided diplomatic niceties and focused on pragmatic ways to build bridges between the two sides.
"These are guys who know each other very well. So I’d say they dispensed pretty quickly with the diplomatic speak” a senior U.S. official said.
In the run-up to the talks, U.S. officials expressed firm belief in the usefulness of the annual face-to-face talks with Chinese officials.
Vice President Joe Biden summed up the U.S. view on Monday morning when he said the talks help avoid “misperception and miscalculation” between the two countries.
"My father used to say the only disagreement worse than one that is intended is one that is unintended,” Biden said in a speech opening the talks.
"That is why it is so critically important we talk to each other honestly,” Biden said.
Chinese officials also expressed hope that the talks would blaze new trails in bilateral cooperation but also insisted that the U.S. side respect Chinese positions.
Economics
On the economic talks, the day seemed to end in a draw.
The U.S. seemed to win one round when People’s Bank of China Gov. Zhou Xiachuan downplayed Standard & Poor’s recent downgrade of the U.S. debt outlook.
Rather than saying he was agitated by the downgrade, Zhou said only that big governments like China and the U.S. must rely more on their own internal assessments and not credit-rating agencies.
But the U.S. seemed to lose a round when China’s Minister of Commerce Chen Deming complained about hostility in the U.S. to Chinese direct investment. Chen also said U.S. concern about the low value of China’s currency is misguided.
Chen said that some Chinese companies complain that the Committee on Foreign Investment in the United States (CFIUS) does not carry out reviews in a transparent or fair manner.
CFIUS is the U.S. inter-agency committee that reviews foreign purchases of U.S. firms to determine if they might harm national security.
Poor treatment has made other Chinese companies reluctant to attempt to invest in the U.S., Chen said. As a result, China only invested 2.4% of its $59 billion outward investment last year in the U.S., he said.
Chen went on to complain that U.S. media outlets don’t report on U.S. decisions that block Chinese investment.
U.S. officials insist that the American economy is open for all countries including China.
U.S. officials focused their summary of the first day of the talks on efforts to open China’s financial sector.
"We talked about how important it is also for China to provide a more level playing field for U.S. financial firms,” a senior U.S. official said.
Rob Nichols, president of the Financial Services Forum which represents major financial institutions, said he was watching the talks closely.
U.S. financial firms could help provide “the financial products and services that China’s citizens and businesses need to save, invest, insure against risk, and consume at higher levels,” Nichols said.
It remains to be seen whether U.S. companies will get the outcome they desire from the talks. They are looking for progress on Chinese government procurement, intellectual property rights protection and foreign direct investment. Read ‘Companies want results from U.S.-China talks.’
Monday evening, the four top negotiators - Treasury Secretary Timothy Geithner and Secretary of State Hilary Clinton for the U.S., and China’s Vice-Premier Wang Qishan and State Councilor Dai Bingguo will meet with President Obama.
The two sides will meet again Tuesday morning ahead of closing statements and press conferences in the afternoon.
Exchange rate
Zhou refused to comment on the controversial yuan-dollar exchange rate beyond noting recent statements from Geithner supporting a strong dollar.
"We…take notice of the repeated position from the U.S. Treasury that a strong U.S. dollar is in the interest of the U.S. economy and the world economy,” Zhou told reporters.
China’s Commerce Minister Chen was tougher.
"From the perspective of trade, the West’s fears and worries about China’s renminbi are unfounded because over the past three years China’s trade surplus has continuously dropped,” Chen said.
During the talks Monday, Geithner pushed China to allow its currency to strengthen at a faster pace.
One bright spot for U.S. officials is that leaders of China’s military came to Washington for the summit. Clinton said the U.S. wants a more “substantive” military to military dialogue with China.
U.S. officials insisted that they delivered a clear message to China about human rights
