Breakthrough expected in China-US economic co-op

The upcoming China-US Strategic and Economic Dialogue (S&ED) in Washington is expected to give a fresh look to the deals and disputes between the two countries, bringing about breakthrough in the bilateral economic and trade cooperation, an expert from a US think tank told Xinhua in the latest interview.

Familiar issues, new faces

Concerns about trade ties and investor relations will continue to be the key issues on the economic agenda of the dialogue, said Yukon Huang, a senior associate in the Asia Program of the Carnegie Endowment for International Peace.

The two-day high-level forum will be the first major platform for the two governments to discuss a series of major issues of common concern after the Sunnylands summit between Chinese President Xi Jinping and US President Barack Obama.

In terms of trade, "China wants to make sure that the US continues to be a fairly open trade regime that doesn't resort to protectionist tariffs to deal with what they would see as concerns," said Huang.

He added that China has been under a number of investigations and WTO appeals including solar equipment, turbine engines and other product lines.

From the US side, they will continue to talk about whether or not Chinese exporters and producers have unfair advantages in terms of subsidies or interest rates.

On the investment front, "China will want to talk about the barriers they see in terms of overseas investment from China to the US that have political sensitivities as well as technological restrictions in terms of areas they can invest," said Huang.

The US Senate will hold a hearing on the proposed purchase of Smithfield Foods, the world's largest pork producer, by China's Shuanghui International on Wednesday, the same day when the S&ED kicks off.

The proposed $4.7 billion deal, the biggest acquisition of a US company by a Chinese firm, has been taken as a real test of the US appetite for Chinese investment.

From the US side, there are concerns that American companies don't get fair treatment on an equal playing field when they go to China, Huang said.

"None of these issues are what I would call new, and they have been subject to discussion for many years," noted Huang. "I think the point to recognize is that there are essentially new players on both sides. Many of the key officials are new to the game."

The S&ED will be co-chaired by new leaders on both sides -- Vice Premier Wang Yang and State Councilor Yang Jiechi for China, as well as US Secretary of State John Kerry and Treasury Secretary Jacob Lew.

Climate change, energy cooperation

Huang believes climate change is also on the agenda of the upcoming S&ED as it can be a source of cooperation rather than competition.

In April, China and the US agreed to launch a working group on climate change and work closely to reduce the production and consumption of hydrofluorocarbons (HFCs), potent greenhouse gases that flow through refrigerators and air conditioners.

"China is experimenting with options in terms of taxing carbon, more so than is being thought about in the United States. So I think both sides can learn a lot and benefit by collaboration," Huang said.

As China has a massive production capacity, while the US has the highest technology standards, Huang hopes the two sides can elevate cooperation on renewable green technologies to get their costs down to affordable levels.

"They should be able to partner and get a cooperative solution on both sides. But right now they are actually fighting each other with accusations on subsidizing green technology," he argued.

Huang also said China should welcome the US to participate in its shale gas exploration, as American oil and energy companies have advanced drilling and survey technologies.

"If they did so, China could move much more rapidly forward in developing oil and gas reserves, which could substitute for coal. Otherwise I think China will lag by a decade or more if they try to do it themselves," Huang noted.

Lucky accident,better outcomes

Meanwhile, Huang said former US spy agency contractor Edward Snowden's revelations of widespread snooping by US security authorities on China might be a "lucky accident" and could lead to "better outcomes" for the forum this week.

"Overall, this issue seems very negative, certainly in the American public opinion," however, "my personal sense is that in some ways this is actually a lucky accident," Huang told Xinhua.

"The issue can reduce the force by which the US addresses the concern vis-a-vis China, thereby China will not feel like it has to be in such a defensive position," argued Huang, who served as the World Bank's country director for China in 1997-2004.

"If (the Snowden issue) allows both sides to not feel like they are the aggressor or the villain, then you might get a better outcome," he said.

"It could allow both sides to sit down and agree on what kinds of cyber activities can both sides agree upon as being inappropriate, and they can talk about it as equal partners in the discussion, rather than one side being the prosecution and the other side being the defense," explained the expert.

"Both sides should step back and say, let's try to tone down the accusations and talk about this more substantively. That has the possibility of yielding better outcomes," Huang added.

China and the US have been preparing a working group specialized in cyber security under the S&ED to deal with the growing tension in the cyberspace.