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July 30, 2009

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China, US enhance ties in bid to lead world out of recession

CHINA and the United States have agreed on a broad framework of cooperation as they strive to lead the global economy out of recession and forge a closer alliance on tough environmental and political issues.

At the conclusion of the first round of what will be an annual Strategic and Economic Dialogue, the countries agreed on Tuesday to maintain stimulus spending until economic recovery was secured, signed a memorandum on climate change, energy and the environment, and pledged their support for free trade.

"We have laid the foundation for a positive, cooperative and comprehensive relationship for the 21st century," US Secretary of State Hillary Clinton said at a press conference following two days of high-level talks in Washington.

China and the US would push for a successful finale to world trade talks, while trying to reduce a big imbalance in bilateral trade.

Timothy Geithner, the US Secretary of Treasury, said the two sides agreed during the two days of dialogue on a four-point framework to lay the "foundation for more sustainable and balanced growth."

A key feature of that was the need for both countries to avoid protectionism and to work for a successful outcome of the Doha round of world trade talks, launched nearly eight years ago in the capital of Qatar, Geithner said.

Vice Premier Wang Qishan echoed those comments, adding that both sides supported the "early conclusion of the Doha round on the basis of locking up the existing achievements."

Almost exactly a year ago in Geneva, countries came close to a deal in the talks, only to fail in the end.

The G8 leading industrialized countries, plus five leading developing countries, recently set a new goal to finish the Doha round by the end of 2010.

China and the US also agreed to take steps to reduce trade imbalances, with Washington promising to boost private savings while Beijing works to promote more domestic demand.

Last year, the US trade deficit with China hit a record US$266 billion.

Geithner said the United States and China agreed to take steps to bring trade more into balance.

The US, for its part, would work to boost savings and bring down its huge budget deficit, while China agreed to shift to an economy less dependent on exports for growth and more on domestic demand, he said.

Washington promised to make it easier for US firms to sell high-technology goods to China and to "step up cooperation ... toward the recognition of China's market economy status," the Chinese vise premier said.

China has long argued that easing US export controls on high technology would help erase the huge trade imbalance between the two countries.

China also dislikes that it is still considered a "non-market" economy under US trade laws.

Chinese officials said they hoped for swift US progress on market-economy status but said it was unclear whether a formal policy change would come by a second set of high-level talks that will take place in Beijing in late October.

Vice Commerce Minister Ma Xiuhong said the two sides also wanted to fast-track talks on a bilateral investment treaty after five rounds of talks and agreed to foster a non-discriminatory investment climate.

They pledged to speed up negotiations on China joining the World Trade Organization's government procurement agreement, which would give US firms more access to China's huge public-sector market.


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