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Structural reforms to aim for stable growth

Li Xiang/Xin Zhiming
Updated: Jun 8,2016 7:39 AM     China Daily

Vice-Premier Wang Yang (second from right), State Councilor Yang Jiechi (right), US Secretary of State John Kerry (left) and US Treasury Secretary Jacob Lew attend an entrepreneur breakfast meeting at the eighth China-US Strategic and Economic Dialogue in Beijing on June 7.[Photo by Zou Hong/China Daily]

China and the United States reached dozens of agreements in such fields as policy coordination, bilateral investment and financial cooperation during the economic track of the high-level dialogue in Beijing, said Vice-Premier Wang Yang on June 7.

“As expected, although we did not, and could not, eliminate all our differences, we have achieved more than 60 results,” he told a news conference after the conclusion of the two-day China-US Strategic and Economic Dialogue.

The two sides agreed to maintain stable and sustainable economic growth through structural reforms, he said.

Wang said China agreed to strengthen its supply-side structural reform while moderately expanding aggregate demand, or total demand for final goods and services at all price levels.

The US agreed to make efforts to raise its savings rate, increase investment, especially for infrastructure, and improve productivity to achieve midterm fiscal sustainability, he added.

The US also agreed to fully consider the impact of its interest rate changes on international financial markets and to improve policy transparency and predictability. Expectations of the US Federal Reserve’s interest rate hikes have driven global financial markets to fluctuate dramatically in the past year.

Wang said the two sides are aware that the excess production capacity of steel and other sectors is a result of the slow global economic recovery and weak global demand, and should therefore be tackled collectively by countries through legal and market-based measures.

The two sides agreed to accelerate bilateral investment treaty negotiations and exchange by the middle of this month the “negative list” of sectors that are off-limits to the other country’s investors, Wang said.

“We will try to ink a mutually beneficial and high-quality treaty as soon as possible,” he said.

“China is the first major economy to have reduced excessive production capacity, which should be commended,” Zhu Guangyao, vice-minister of finance, told a news conference on June 7. “The US side recognizes and commends China’s consistent efforts to reduce overcapacity,” he said.

The two countries agreed to discuss export regulation through a special working group and work on certifying aircraft airworthiness to promote reciprocal acceptance of civil aircraft.

Bilateral trade and investment between Chinese and US cities will be promoted, and cooperation in infrastructure construction, intellectual property rights protection, agriculture and clean energy will be strengthened, Wang said.

Bilateral financial cooperation has made headway, Wang said. The two countries will strengthen cooperation in renminbi trading and clearing, and China has agreed to grant US investors a 250 billion yuan ($38 billion) quota under its Renminbi Qualified Foreign Institutional Investor program.

They also reached consensus that more of the International Monetary Fund voting quota should be given to emerging-market and developing countries, and the IMF should study the possibility of expanding the use of special drawing rights, Wang said.

US Treasury Secretary Jacob Lew said China has committed to continuing “market-oriented exchange rate reform that allows for two-way flexibility” of the yuan.

Yi Gang, deputy governor of the People’s Bank of China, the central bank, said China’s yuan exchange rate formation procedure is becoming more stable and transparent, and the internationalization of the currency will be market-oriented.

Yi also said that the bank is prepared for a possible US Federal Reserve rate increase.