Economy expected to top summit
Think tanks and analysts in Washington expect economic issues to be on top of the agenda for the upcoming summit between Chinese President Xi Jinping and US President Barack Obama later this month.
During a seminar at the Center for Strategic & International Studies (CSIS) on Tuesday, economic experts said the two leaders are expected to exchange their ideas on key subjects such as Chinese economic policies, the Bilateral Investment Treaty (BIT), currency exchange rate, high-tech industries and technical innovations.
The Rhodium Group released a report on the Chinese economy at the seminar. Daniel Rosen, partner at Rhodium, said Xi needs to give Obama a clear understanding of what economic pressure there is on China and the consequences.
“We need to know the overall outlook for Chinese economic growth, as the US doesn’t have a good understanding of this yet. This (summit) is a good opportunity for both presidents,” Rosen said.
Rosen said China’s economic performance affects the United States, and the US has a vital need to understand what Xi is doing and what should be expected in the future. He said that foreign direct investment is one of the areas for new growth. US investors have put billions of dollars into the Chinese market, and a new trend seems to be starting. Chinese FDI has grown from almost nothing to more than $10 billion a year just in the past few years, the analyst said.
Rosen said another important issue concerns the most promising industries for the United States and for China — information and communications industries and technologies that have changed people’s lives.
However, that industry has been troubled with reported national security concerns. “High-tech industries need clarity from the leaders of what changes are going to look like in the regulatory environment in the years ahead,” Rosen said. “If it’s a very restrictive regulatory environment, then it’s not going to contribute to global economic growth. Some national security concern is just a protectionist way to keep competition out,” Rosen said.
During the past decade, China has been requiring the US to lift restrictions on hightech equipment exported to China. The area may be one of the topics for both presidents, but Nicholas Lardy, a senior fellow at the Peterson Institute for International Economics, doubted any substantial progress would be made on it at the summit.
Exchange rates also may draw attention. Rosen said China has made reforms in currency management, but there is a long way to go.
“What China has been doing in regulating the exchange rate was supported by the US, and I don’t see any possibility to refer to it in this summit,” Lardy said.
China and the US have had rounds of negotiations to forge a BIT, regarded by many economists to be a new driving force for Chinese economic growth.