China-US S&ED expected to keep ties on track(2)

ECONOMIC DIALOGUE: PROGRESS EXPECTED IN BIT NEGOTIATIONS

Chinese Vice Finance Minister Zhu Guangyao said Monday that the economic dialogue will focus on three aspects: macro-economy and structural reform, deepening trade and investment cooperation, and financial reform and cross-border supervision.

The US delegation set to attend the economic dialogue, led by Lew, includes Federal Reserve Chairperson Janet Yellen, Commerce Secretary Penny Pritzker, Energy Secretary Ernest Moniz and Trade Representative Michael Froman.

This year, China and the United States are expected to make progress on Bilateral Investment Treaty (BIT) talks.

The BIT talks, started in 2008, entered a substantial phase after the two countries agreed last year that the negotiations would be conducted on the basis of pre-establishment national treatment (PENT) with a negative list approach.

PENT means that foreign investors and their investments will be accorded national treatment in the pre-establishment phase of their businesses. "Negative list" refers to activities to which national treatment and most favored nation status do not apply.

As of June, China and the United States have conducted 13 rounds of BIT negotiations and made great achievements.

"The two sides will reach new agreements on BIT talks. In other words, the two countries will launch the negative list-based negotiations at an early date," Zhu said.

A revised negative list released recently by the Shanghai municipal government has reduced the number of industries restricted for foreign investment in the China (Shanghai) Pilot Free Trade Zone by 27 percent to 139, from a previous total of 190.

"The reduction of the industries restricted or prohibited on the negative list will pave the way for the China-US Economic Dialogue," said Mei Xinyu, a researcher with Chinese Academy of International Trade and Economic Cooperation, adding that the two countries are expected to make progress in the coverage of the negative list.

If the world's largest two economies reach a consensus on BIT negotiations, it will be an historic accomplishment as the agreement will have a positive impact not only on bilateral investment and trade, but also on the development of the world economy, Zhu said.

Regarding the renminbi (RMB) exchange rate, which the United States proposed to discuss during the dialogue, Zhang Yansheng, secretary-general of the academic committee at China's National Development and Reform Commission, said the United States stresses the RMB devaluation to meet the needs of domestic politics and to stimulate exports, create jobs and push for its economic recovery.

The Chinese currency against the US dollar has appreciated by more than 30 percent since China adopted a managed floating exchange rate regime in 2005, Zhang said, adding that many scholars both home and abroad consider the value of the renminbi to be at a reasonable level now.

Chinese Premier Li Keqiang said during his recent visit to Britain that China is accelerating the interest rate liberalization reform and expanding the floating range of RMB's exchange rate.