U.S., China Pledge Economic Overhauls

China agrees to reduce dependence on exports

The two-day U.S.-China Strategic and Economic Dialogue, ended July 28 with the two countries agreeing to step up their cooperation on economic and financial issues and take individual measures to address their imbalances.

The United States, saddled with a huge trade deficit with China, has long called on China to wean itself from exports and develop a more demand-led economy.

China, for its part, committed to encouraging more domestic spending to shift its economy away from dependence on exports to fuel growth.

Chinese Vice Premier Wang Qishan, who co-chaired the economic track with Geithner, said the two sides agreed "to jointly build a strong financial system."

"To stimulate economic growth remains the top priority," Wang said in translated comments.

U.S. Treasury Secretary Timothy Geithner gave the Chinese officials assurances that the Obama administration would reduce the yawning U.S. fiscal deficit.

China, which has more than $2 trillion in foreign exchange reserves and is the biggest holder of U.S. debt, said its delegation had voiced concerns about the security of China's foreign reserve investment in the U.S.

Geithner downplayed the issue, noting that both countries had put in place massive stimulus efforts to tackle the worst global downturn in decades.

"China understands that as Washington sees the recovery take root, those stimulus actions will need to be reversed," he said.

"As China will do, we will move to bring our fiscal deficits down over the medium term," he added.

The Obama administration reaffirmed its commitment to reduce the federal budget deficit relative to gross domestic product to a sustainable level by 2013.

China and the United States also pledged to work together to promote free trade, fight protectionism, and reach a successful conclusion to the long-stalled Doha round of international trade negotiations.

Geithner said that the two countries, which are the world's largest developed and developing economies, were firmly opposed to protectionism as the world recovers from financial doldrums.

"The United States and China are among the biggest beneficiaries of the global trading system and share a common interest in ensuring that global trade and investment remain open and rules-based," Geithner said.

Copyright Agence France-Presse, 2009

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