In light of the unprecedented challenges facing the global economy, and the significance of the U.S.-China relationship, the Strategic and Economic Dialogue (S&ED) can serve as a valuable platform for linking two distinct, but mutually reinforcing and inter-related, objectives: economic recovery and growth through greater reform and modernization of China’s financial markets.
The U.S. and China share one of the most important bilateral relationships in the world today. Having grown more than 9 percent annually for two decades, China recently surpassed Germany to become the world’s 3rd largest economy. Since China joined the World Trade Organization (WTO) in December of 2001, trade between the United States and China has more than tripled, U.S. exports to China have grown at six times the pace of our exports to the rest of the world, and China has risen from America’s 9th largest export market to its 3rd largest. China’s influence in the global financial markets also has been growing, as is demonstrated by its recent membership in the Financial Stability Board. Without question, how this critical relationship is managed will greatly impact the growth and vitality of the U.S. and global economies in the 21st century.
The S&ED is the ideal forum to address many important issues in this relationship including facilitation of continued reform and modernization of China’s underdeveloped financial sector. A modern financial system is critical to China achieving its own economic goals of maintaining high rates of growth and job creation, and building a more services-based, consumer-driven economy – goals very much in the interest of the United States. Fair and competitive access to China’s fast-growing middle class and business sector represents an enormous commercial opportunity for American manufacturers, farmers, and service providers. A more active Chinese consumer is part of the solution to persistent trade imbalances, and a strong and effective financial system is critical to the growth and job-creating capacity of any economy.
The ongoing financial crisis and the global economic downturn have only further highlighted the degree to which the U.S. and Chinese economies are interconnected. While current circumstances have complicated the U.S.-China relationship, they also offer a unique opportunity for the United States and China to build a more balanced, durable, and mutually beneficial relationship.
Surely, it will take time and a variety of approaches and efforts to move the U.S. out of this economic crisis. Continued engagement with China, and other important trading partners, through such vehicles as the U.S.-China Strategic and Economic Dialogue is an imperative in today’s fragile global economy. I applaud U.S. and Chinese officials for giving these talks the focus and determination they call for at this crucial time.
Rob Nichols is President & COO of the Financial Services Forum