WASHINGTON — China agreed to expand bilateral trade in services with the United States during the first China-US Comprehensive Economic Dialogue (CED) concluded on July 19.
“Despite a huge deficit in services trade with the United States, China nevertheless believed that trade in services between China and the United States is mutually beneficial, and is willing to engage in mutually-beneficial and win-win cooperation in trade in services,” a Chinese delegate to the one-day talks said on July 20 in a statement to Xinhua.
Given the differences between China and the United States in the size and structure of their services industries, it is possible to exploit their own comparative advantages and complement each other, the statement said, adding that “expanding bilateral trade in services can also promote balanced trading relations between the two sides.”
The two countries discussed trade in services in the high-level economic dialogue, and the United States expected China to further open up its services market, according to the statement.
“China agreed to further open up, deepen its cooperation with the United States, and forge new areas of growth in bilateral commercial cooperation,” said the Chinese delegate.
The Chinese State Council last week approved a pilot plan to open up Beijing’s service industry by removing some restrictions on the sector. Local governments will ease restrictions on foreign investments, streamline regulations and encourage innovation.
The plan also highlights reforms in major areas, including science and technology services, internet and communication, culture, education, finance and tourism.
China has been trying to shift its economy toward a growth model powered by consumption, services and innovation. The service sector accounted for more than half of the Chinese economy last year.
David Dollar, a senior fellow at the Brookings Institution (a century-old US think tank based in Washington), and former official with the US Treasury Department, believed a high-quality US-China bilateral investment treaty (BIT) would help US export services to China and build the foundation for a better bilateral trading relationship.
“The US primarily exports services. It’s hard to export services if you cannot invest. So I see the bilateral treaty as an opportunity for US firms to have new business in China, and that’s going to encourage more exports and create good jobs in the United States,” Dollar told Xinhua.
In Dollar’s view, the Trump administration may not have enough resources to resume BIT negotiations with China in the next two years, as the administration has chosen to renegotiate the North American Free Trade Agreement with Canada and Mexico and modify its free trade agreement with South Korea.
“The United States Trade Representative’s Office is actually quite a small department with limited capacity...It’s hard for them to then have a third priority,” he said.
Vice Finance Minister Zhu Guangyao said on July 19 that China understands that the Trump administration has to revise all the bilateral and multilateral investment and trade deals with other countries, which could take some time.
However, there are growing calls from the US and Chinese business community to sign the investment treaty as soon as possible, he said.