U.S.-CHINA STRATEGIC TRACK SELECT OUCOMES

FROM:  U.S. DEPARTMENT OF STATE 
U.S.-China Strategic and Economic Dialogue V Strategic Track Select Outcomes
Fact Sheet
Office of the Spokesperson
Washington, DC
July 12, 2013

On the occasion of the Strategic and Economic Dialogue (S&ED) July 10-11, 2013, the United States and China agreed to, among other things:

Promote an open, cooperative, secure, and reliable cyber space: Prior to the S&ED, the United States and China held the first meeting of the civilian-military Cyber Working Group, where the two sides committed to work together on cooperative activities and further discussions on international norms of state behavior in cyberspace. Both sides commented positively on the candid, in-depth dialogue and agreed to hold the next meeting before the end of 2013.

Build healthy, stable, and reliable military-to-military ties: Senior civilian and military officials used the July 9 Strategic Security Dialogue to address some of the most sensitive issues in the bilateral relationship, expanding their discussion this year from cyber and maritime security to missile defense and nuclear policy. To build confidence, our two militaries agreed to actively explore a notification mechanism for major military activities and continue to discuss the rules of behavior for air and maritime activities.

Work toward shared goals on DPRK: Secretary Kerry and State Councilor Yang held in-depth consultations on the situation on the Korean Peninsula and agreed on the fundamental importance of the denuclearization of the Korean Peninsula in a peaceful manner and reiterated their joint commitment to continue high-level discussions to achieve this shared goal. The two sides called for full implementation of UNSCR 2094 and other relevant resolutions by all UN Member States, and for the necessary steps by all parties that would create the conditions for the resumption of the Six-Party Talks.

Call on Iran to satisfy its obligations: The United States and China discussed Iran’s nuclear program, agreed that Iran should fulfill its international obligations under the Non-Proliferation Treaty, and called for full implementation of the relevant UN Security Council resolutions. The United States and China reaffirmed their commitment to taking active part in the P5+1 negotiations with Iran and called on Iran to take concrete actions to satisfy the concerns of the international community through negotiations with the P5+1.

Push for a peaceful solution to the crisis in Syria: The United States and China reiterated their shared commitment to preparing for the Geneva Conference on Syria and to resolving the crisis through political means in order to bring about a Syrian-led peaceful political transition that establishes a transitional governing body. We reaffirmed opposition to the use or proliferation of chemical weapons and called for measures to alleviate the suffering of the Syrian people.

Combat Climate Change and Protect the Environment: The United States and China agreed to accelerate action on climate change through five new action initiatives on heavy-duty and other vehicles; carbon capture, utilization, and storage; greenhouse gas data collection and management; smart grids; and energy efficiency in buildings and industry. These reflect the first of the recommendations made by the Climate Change Working Group that Secretary Kerry announced in April. They will also work together to implement the agreement of Presidents Obama and Xi on HFCs. The United States and China announced new efforts to share best practices in air quality planning, pollution reduction, environmental law and adjudication, and the study of greenhouse gases, as well as agreement to work together to combat wildlife trafficking..

Support Global Energy Security: The United States and China discussed measures to drive energy innovation and investment. They agreed to address barriers to further development of their energy production potential, including regulatory and pricing issues. Both countries agreed to cooperate on energy efficiency, renewable energy, emergency responses, phasing out fossil fuel subsidies, and sharing data on energy supply, demand, and reserves.

Enhance Cooperation on Global Development: The Unites States and China agreed to carry out joint projects in Afghanistan and Timor-Leste and announced a new Dialogue on Global Development – the first-ever regular mechanism for the two sides to exchange views on development issues and jointly advance our shared goals of poverty reduction, economic growth, and sustainable development.

STRATEGIC AND ECONOMIC DIALOGUE JOINT OPENING SESSION REMARKS

FROM:  U.S. STATE DEPARTMENT 
Participate in the Strategic and Economic Dialogue Joint Opening Session
Remarks
John Kerry
Secretary of State
Vice President Joe Biden, Secretary of Treasury Jacob Lew, State Councilor Yang Jiechi, and Vice Premier Wang Yang
Dean Acheson Auditorium
Washington, DC
July 10, 2013

SECRETARY KERRY: Good morning, everybody. I want to thank my good friend of almost 40-plus years, the Vice President of the United States, for coming today. I don’t think there’s ever been a Vice President who is as steeped in foreign policy, as knowledgeable, and whose instincts are as honed as Vice President Joe Biden’s. And he, believe it or not, began his visits to China as a young senator on the first visit to meet with Deng Xiaoping in 1979. And he has been many times since and has received many Chinese leaders here.

I will tell you that the Vice President, on so many different issues in the discussions that we have, has just an inherent native sense of direction with respect to foreign policy. And I won’t say too much more here except to say that we who had the privilege of working with him in the Senate – I think I was there with him for 26 years – saw a person whose word is good, whose instincts are sound, and whose principles and values are just as basic and as based in America and in common sense as you could desire. So, ladies and gentlemen, without further ado, the Vice President of the United States, Joe Biden. (Applause.)

VICE PRESIDENT BIDEN: Vice Premier Wang, I hope you understand not to believe a word of what the Secretary just said. (Laughter.) The one thing I do know for sure, that this Strategic and Economic Dialogue is essential, is essential to get right for both our countries. There’s no more important relationship.

State Councilor Yang, it’s good to see you again. I am honored to be with you. I’d point out to the State Councilor, we’ve known each other for a while. His elocution and his mastery of English exceeds mine, and so I seek his advice occasionally on speeches. (Laughter.) But honored to welcome your delegation to Washington.

I want to start by expressing my sadness, the sadness of, quite frankly, the American people in the loss of two beautiful young lives, young Chinese students in the Asiana plane crash on Saturday. Our sympathies to their families and to your country. It was remarkable to see that plane and the state it was in and – but the loss of those two young lives is, for families, the most devastating thing that happens in our lives.

We meet at a time of transition on both sides. China has a new president and new leaders. I’ve had the great pleasure and honor of spending a fair amount of time with President Xi when President Hu and President Obama thought the two vice presidents could – should get to know one another, and we ended up spending about 10 days together, five in each of our countries traveling around, and you get to know someone fairly well. When I congratulated him on his elevation, I asked if he could possibly help me – (laughter) – but he made no commitment whatsoever. (Laughter.)

But all kidding aside, we welcome and look forward to the transition that’s taking place on both sides. And Vice Premier, I want you to know that in the persons of John Kerry and Jack Lew as part of the change in the guard here, we have sent you, in this case, in this meeting, two of the best, most seasoned, qualified public servants that this nation has to offer. And that is not hyperbole. They generally are. I think Jack’s had every job in the Administration, in every administration, and he sometimes in our meetings gets confused to whether he’s supposed to be calling for spending less money or more money – (laughter) – based on whether he’s director of OMB or the Secretary of Treasury.

But all kidding aside, we – this transition that’s taken place in the last six months or so is important, and that I think it’s vitally important that the relationships among the four men behind me are deepened and become more personal. I look out and see our trade rep. He’s heard me say that – there’s a famous American politician, a former Speaker of the House, Tip O’Neill, and he used to say all politics is local. Well, I think a significant part of international politics, foreign policy, is personal, trust. One of the most important things that we need to continue to establish and deepen between our peoples and between our governments is trust. We don’t have to agree on everything, but you have to trust. And I think it’s – in building these relationships, both our countries will be much better for it in the years ahead.

The stakes are very high because it’s fair to say that the dynamic that emerges between our nations will affect not just our peoples, but quite frankly, have a significant impact on the entire world. And let me be blunt: There are strong voices on both sides of the Pacific that talk about a relationship in terms of mistrust and suspicion. They still exist in both our countries. Our relationship is subject to all kinds of caricatures. I’ve heard the U.S.-China relationship described as everything from the next Cold War to the new G-2. And the truth is neither are accurate. Neither are accurate. The truth is more complicated.

Our relationship is and will continue to be, God willing, a mix of competition and cooperation. And competition can be good for both of us and cooperation is essential. For two nations as large and influential as ours, it’s only natural that there be competition. And if the game is fair and healthy, political and economic competition can then marshal the best energies of both our societies. But this mix places added – an added burden on both of us. The relationship – a relationship like ours will work only if the leaders and citizens approach it with a sense of vision and a spirit of maturity. We will have our disagreements. We have them now. But if we are straightforward, clear, and predictable with one another, we can find solutions that work for both of us.

I made clear on my list visit to China that we are a Pacific power; we have been and we’re going to remain one. That should be viewed – and in my discussions in China was viewed by many – as a stabilizing influence. But as we implement President Obama’s policy of rebalancing toward the Asia Pacific, it’s important that the United States and China communicate clearly and work closely with one another on what is going on.

We have big issues to deal with. We each have important contributions to make to global and economic stability. And my country – my country has been, in the last four years, grappling with such challenges as infrastructure, education, our fiscal picture; too many Americans still remain out of work. But China faces serious challenges as well. It needs to create high skill jobs for young people, deal with grave environmental problems, reform China’s banking sector, respond to market forces, and bring its shadow financial sector to heel.

The United States is making progress. Our economy has now added private sector jobs for 40 consecutive months – not enough in the view of this Administration, but 40 consecutive months. The manufacturing sector is once again growing, growing at the fastest pace in decades. And our deficit next year is projected to be less than half of what it was in 2009 as a share of our economy.

And the next steps China – and the next steps that China needs to take for its own economy happen to be in the interest of the United States as well. Your own plans call for the kind of changes that have to take place that are difficult, like here. But if they do, they will benefit us both, including freeing exchange rates, shifting to a consumption-led economy, enforcing intellectual property rights, and renewed innovation.

It’s easy for pundits to point out to us, in both our countries, what we need to do. But there are political realities. These things are not easy to do quickly, but they must be done. Some argue that China should continue on its current path, enhancing some aspects of its free market system while rising political openness gradually occurs, maintaining the state’s deep involvement in the Chinese economy.

I do not pretend to know whether – what – with any degree of certainty, precision, what will allow China to rise above those economic challenges. But I believe that history offers us both some lessons. History shows that prosperity is greatest when governments allow not just the free exchange of goods but the free exchange of ideas, that innovation, which thrives in open economies and societies, thrives in open economies and societies. That is – that’s the currency of the 21st century success, that in the long run greater openness, transparency, respect for universal rights, actually is a source of national and international stability.

As I’ve said before, I believe that China – presumptuous of me – but will be stronger and more stable and more innovative if it represents and respects international human rights norms. But there are differences that we have. We also have significant challenges – strategic challenges to discuss. Together we need to be addressing the longstanding disagreements and, when sensitive issues arise, work hard not to create new ones.

For example, our military is – your military is modernizing and expanding its presence in Asia. Ours is updating its global posture as two wars come to an end and we recalibrate and rebalance in Asia. These trends will bring us into closer contact. Leading the military dimension of our dialogue underdeveloped on both sides causes us to run unnecessary risk.

So I welcomed yesterday the round of strategic security dialogue and the enhanced dialogue between our senior military leaders. More of it must occur. It’s critical to expand our military-to-military dialogue, exchanges in cooperation, as we go forward. We have to know what each other are doing. The truth is, we have a common interest in defending a wide range of public goods and international rules that will only grow more compelling as China looks beyond its borders.

For example, we both benefit from freedom of navigation and uninhibited lawful commerce. That will deepen and it will also become more apparent a need, and it will depend on how China approaches its territorial disputes with its neighbors and how we work together to advance common interest.

We both will benefit from an open, secure, reliable internet. Outright cyber-enabling theft that U.S. companies are experiencing now must be viewed as out of bounds and needs to stop.

The race to develop cleaner, more affordable energy sources through a mix of competition and cooperation, to state the obvious, can benefit both our people and the people in the world. So I welcome the new energy and climate dialogue and our agreement to reduce the pollutants known as HFCs, which make an outsized contribution to climate change.

And of course, the security of both our nations, as we have discussed privately and somewhat publicly, is threatened by North Korea’s nuclear missile programs. Neither of us – neither of us – will accept a North Korea that is a nuclear-armed state. Our presidents have agreed that ending that threat is a critical priority not only to our relationship – in our relationship, but for each of our nations. We’re determined to intensify our cooperation with China to denuclearize North Korea.

Many of the most pressing challenges will be very difficult to solve unless we are willing to continue to work together, as we are doing today and have been doing for some time. China now has the second-largest economy in the world, and God-willing, will continue to grow. It’s in our interest. It’s no longer the discussion, when I was a young senator, of zero-sum games here. We used to talk about if another nation grows and benefits, somehow that – it’s the exact opposite, to state the obvious.

With that new – not new, but emerging and continuing growth of the Chinese economy and the second largest in the world now, that’s the good news. The bad news is it comes with some new international responsibilities. It’s understandable that China wants to be involved in international rules-setting, as you should be, but is weary about taking additional international burdens on. Ultimately, the two go hand in hand, because in 2013, the world’s environment and rule-based economic order cannot sustain an exception the size of China. Your country is simply too immense and too important.

As John pointed out, I first visited China in 1976 as a young senator. It was already clear then that China stood on the cusp of remarkable change. I believed then and I believe now that your country’s rise would be and is good for America and the world. That is just a simple statement of fact. But it’s never been inevitable. The greatest cause for optimism is what happens when our people come together. We see a lot of ourselves in each other – a striving entrepreneurial spirit, an optimism about the future. I see that when I speak to young Americans across this country, and I saw it when I was accompanied by your President and spoke to college students in Chengdu.

Mechanisms like the Strategic and Economic Dialogue play an important role in managing our complex relationship. If together we get it right, we can leave behind a much better future for our children and for their children, and quite frankly, for the world. That sounds somewhat chauvinistic, just to be talking about as we get our relationship right it has such a consequence for the world. But it does. It does. And nothing matters more.

So I welcome you. I know this is your – not the first day, but I welcome you on behalf of the President, and I wish you a great deal of luck. We have a great deal of work to do. The promise is real. The competition will, in fact – as I said to President Xi when he was Vice President – the competition is good. It’s good for us, it’s good for you. We welcome it. We welcome it. And we’ll both be better for, as I said, as a consequence. If we get it right, so will the world.

So thank you for the important work you’re doing here today. I wish you luck the remainder of this discussion, and I look forward to seeing you in China. Thank you. (Applause.)

MODERATOR: Please welcome the Vice Premier of the People’s Republic of China.

VICE PREMIER WANG: (Via interpreter) (In progress) host together with State Councilor Yang Jiechi to co-host the fifth round of the China-U.S. Strategic and Economic Dialogues with my American counterparts. I would like to thank the U.S. side for the thoughtful arrangements they have made for the meeting, and also pay tribute to the tremendous work our teams have been doing for this meeting.

I came to the United States 10 years ago. And this time I am here again as the special representative of President Xi Jinping, and I’m here to co-host the S&ED. I don’t know what kind of situation I’m going to face on this visit and what changes have taken place in the United States in these 10 years. Well, in the past two days, I can see that the Americans are still taller than the Chinese and still have a stronger body and longer nose than the Chinese. And nothing much has changed, so I feel more confident of my visit this time.

(Inaudible), there are also things that have changed in these past 10 years. That is the economic relationship between our two countries. A lot of things have changed in our economic relationship. We are becoming closely connected with each other on the economic side. In particular, one month ago President Xi Jinping and President Obama had a historic meeting in California. During that meeting, the two presidents, with great vision and foresight, reached an important agreement on working together to build a new model of major country relationship between China and the United States. This charted the course for the future growth of China-U.S. relations. Our job, in this forum of the S&ED, is to turn the important agreement between the two presidents into tangible outcomes and add substances to this new model of major country relationship so as to bring benefits to the people of the two countries and the world around.

China-U.S. relationship is one of the most important bilateral relations in the world. The S&ED, jointly initiated by our two presidents in 2009, has served as an important platform for the two countries to enhance mutual trust, expand cooperation, and manage differences. Over the past four years, the two sides have had close communication and candid discussions on issues of long-term strategic and overarching importance. Well, this has enabled the (inaudible) of China-U.S. relationship to always forge ahead in the right direction against the surging waves and changes in a political – international, political, and economic landscape.

History of the world tells us that for countries, dialogue works better than confrontation, and debate better than fight. Before China and the United States established diplomatic ties, the two countries were in a state of no contact and often found themselves to be exchanging accusations and abuses without actually seeing each other. The Chinese were calling the Americans imperialists. I don’t know what the Americans were labeling China, maybe a communist (inaudible), I don’t know. However, this kind of exchange of accusations and abuses had failed to settle anything.

Since the establishment of diplomatic ties, particularly since China’s accession to the WTO, the exchanges between China and the United States have become increasingly close, and we have carried out frequent dialogues of various forms at all levels. While we did have a fair amount of bitter argument, sometimes heated ones, both of us had actually benefitted from such exchanges.

One of the accomplishments is the surge of two-way trade from 333 billion – point-seven billion U.S. dollars during the 2008 global financial crisis, to nearly 500 billion U.S. dollars in 2012. What has happened shows that to maintain long-term dialogue between our two big countries not only benefits the Chinese and American people, but also serves peace and the development of the world.

I think that dialogue and debate are often found to be important means that lead to creative ideas. When cornered by a rival in a debate, one would often come up with some quick wits. In his meeting with President Obama, President Xi Jinping said that, “Well, when the rabbit was cornered in a fight with a strong opponent like an eagle, the rabbit would then, well, come with some courage to fight back.” So in the – as the Chinese poem goes, after endless mountains and rivers that leaved out whether there is a way out, suddenly one encounters the shadowed willows, bright flowers, and finds the path to another village.

And I also believe that dialogue is an important means to advance the progress of human civilizations. I think it’s my personal belief that also has a color of philosophical thinking. I think dialogue is important for both countries, we are ready to have dialogue, listen to different voices, and be receptive to the right views through our dialogue with all parties, including the United States. And by way of listening to different views and opinions, we have detected some of the problems that hindered our steps forward and that, in turn, helped us to improve on what we do.

Naturally, like the United States, we will never accept views, however presented, that undermine our basic system or national interest. To us, a dialogue like that is simply unacceptable. This is our bottom line and we will never give up. This round of the S&ED provides an opportunity for us to build on past achievements and then look ahead towards the future.

The international landscape is undergoing profound and complex changes. Despite many of our differences, our common interests are also growing. For us, candid dialogue and sincere cooperation remains the right direction. We need to raise our strategic, mutual trust to new heights through dialogue, and trust starts with communication and exchanges. The more communication exchanges we have, the less misunderstanding and disagreement. We also need to forge new consensus on upholding world peace and development through dialogue.

China is the world’s largest developing country, the United States the largest developed one. The importance of our relations have gone far beyond the bilateral scope and acquired a global significance. Good cooperation between China and United States can serve as an anchor for world peace and stability and an engine for prosperity and development.

Dear colleagues, this round of S&ED presents a new model of major country relationship that is based on non-conflict, non-confrontation, mutual respect, and willing cooperation. I’m sure that the outcomes of the dialogue will further boost our confidence in building a new model of major country relationship. Let’s join hands and write a new chapter in our cooperation across the Pacific. Thank you. (Applause.)

MODERATOR: Please welcome the Secretary of the Treasury of the United States.

SECRETARY LEW: It’s a pleasure for me to join Vice President Biden, Secretary Kerry, in welcoming Vice Premier Wang, State Councilor Yang, and the entire Chinese delegation to Washington for this fifth round of the Strategic and Economic Dialogues. I’m pleased that Secretary Kerry could make it back, and I know everyone joins me in wishing Teresa a speedy recovery.

It’s also nice to be back among so many friends in the familiar halls of the State Department. I’m happy to be back here today. And I offer my condolences to the families and friends of the two Chinese students killed in Saturday’s tragic plane crash in San Francisco, and the American people you know have those two students in our thoughts and prayers, and their families and friends.

We meet at a time when the citizens in both of our countries are looking to their policymakers to advance policies that lead to greater prosperity, equity, and opportunity. Major economies like ours are consistently challenged to reform and adapt and to strengthen our institutions. We know this from our own experience recovering from the financial crisis, and you know this from your ongoing transition to the next stage of your economic development.

Five years ago, after the worst crisis in a generation, the United States promised the world that we would address the vulnerabilities in our economy, and we did. We recapitalized and repaired our banks, overhauled our system of financial regulation, and jumpstarted a recovery in private demand. As a result of these bold policies, our economy has grown for 40 straight months, and we’re poised for continued strong and broad-based growth. Our businesses have created more than seven million jobs, and our housing market is recovering.

But we have a lot of work ahead of us. Our top priority is to grow our economy and to create good middle class jobs. In China, your economy is undergoing a systemic transition where significant and fundamental shifts in policy will be required to sustain growth in the future. We welcome the market-oriented reform commitments that you’ve made. These reforms recognize the imperative of shifting to domestic consumption, greater private sector innovation, an economy that’s more open to competition with more flexible prices, including the exchange rate and interest rates, and a more flexible financial system.

Now, while we must each guide our economic futures by expanding the middle class of our nations, what we each do domestically matters enormously to one another. Yes, our economies are interconnected, but what makes matters difficult is ensuring that our economies are growing in a way that is balanced, beneficial, and mutually compatible. That’s our challenge.

In the world’s two largest economies, too much is at stake for us to let our differences come in the way of progress. For the United States, this means an economic relationship where our firms and workers operate on a level playing field and where the rights of those who participate in the global economy, including innovators and the holders of intellectual property, are preserved and protected from government-sponsored cyber intrusion. It means working together to address our common challenges, such as climate change, energy and food security, and conduct in cyberspace. Cooperation on these fronts is absolutely critical to our futures and the world’s future as well.

As our two presidents have made clear, we’re cooperating to address the challenges that we face, identifying common interests where we can, and directly addressing our differences. The Strategic and Economic Dialogue is critical to generating practical cooperation on issues across our relationship and a place where we can make real progress. This dialogue brings together the key decision makers from both of our countries to address the critical issues that we face. It has led to important, tangible results for both sides, and I’m confident that we will continue to make concrete progress.

During our discussions, I will encourage China to follow through decisively on important commitments it has made to transition to a more balanced and sustainable pattern of growth. This transition will be critical to China’s success and consequential to the world economy. Moving forward, I think there’s much we can achieve together, and therefore I encourage us to work diligently, cooperatively, and sincerely as we address the challenges that we face.

Thank you, and I welcome our visitors for these two days of meetings. (Applause.)

MODERATOR: Please welcome the State Councilor of the People’s Republic of China.

STATE COUNCILOR YANG: (Via interpreter) The Honorable Secretary of State John Kerry, the Honorable Secretary of the Treasury Jacob Lew, Your Excellency Vice Premier Wang Yang, ladies and gentlemen, dear friends. First of all, on behalf of Vice Premier Wang and in my own name, I wish to express my appreciation to the U.S. side for your expression of condolence on the jet crash, the death of the two Chinese young students, and the injury of the other Chinese nationals.

It gives me great pleasure to co-chair the fifth round of China-U.S. Strategic and Economic Dialogues together with Vice Premier Wang, Secretary Kerry, and Secretary Lew. A key feature of this round of dialogue is that many things are new. Both China and the United States have entered a new period. President Obama has started his second term in which he aims to revitalize the economy and advance social reforms. China, in its over three decades of reform and opening up, has made tremendous economic and social progress guided by the new central leadership with comrade Xi Jinping as the general secretary. The Chinese people are striving to realize the Chinese dream, a dream that seeks to bring about prosperity of the country, the renewal of the nation, and the happiness of the people. The Chinese dream and the beautiful dreams of people across the world, including the American dream, are concerted and mutually complementary to each other.

The China-U.S. relationship has reached a new starting point. During the strategic, constructive, and historic meeting held between our two presidents at the Annenberg Estate last month, the two sides agreed to work together to build a new model of major country relationship based on mutual respect and win-win cooperation. This charts the course and it draws the blueprint for the future development of China-U.S. relations. Under the new situation faced with new opportunities, the S&ED has taken on new missions and tasks. Vice Premier Wang, my other Chinese colleagues, and I have come here for the purpose of implementing the agreement reached between our presidents and advancing the new model of major country relationship between our two countries.

At this round of the S&ED, we hope to further increase mutual understanding with the U.S. side. China is endeavoring to meet what we call the two centenary goals, namely to complete the building of a moderately prosperous society in all respects by the 100th anniversary of the Communist Party of China, and to turn China into a socialist modern country that is strong, prosperous, democratic, culturally advanced and harmonious by the centenary of the People’s Republic of China. China will stay committed to reform on opening up, stick to the path of peaceful development, and the win-win strategy of opening up, be a responsible player in and contribute to the building of the international system. We do this because we want to deliver a better life to our people and help the world – help make the world a more peaceful, stable, and prosperous place. At this round of the S&ED, we hope to expand and deepen practical cooperation with the U.S. side.

Huge cooperation exists in both countries’ economic structural adjustment. Military-to-military relations enjoy good momentum of development which needs to be valued and maintained by both sides. Our people are well disposed to each other, and there is broad space for some national, cultural, and people-to-people exchanges and cooperation. China is ready to carry out all dimensional cooperation with the U.S. side to produce as many mutually beneficial results as possible for the benefit of our two peoples. At this round of the S&ED, we hope to enhance coordination and cooperation with the U.S. side on international, regional, and global issues. The two sides should step up macroeconomic policy coordination, deepen communication on regional hotspot issues, work together to tackle such global challenges as climate change and cyber security, promote global economic growth, maintain regional stability, and protect our homeland, planet Earth.

At this round of the S&ED, we hope to explore with the U.S. side the enhancement of our dialogue mechanism. We welcome the positive results of the third Strategic Security Dialogue, the Climate Change Working Group, and the Cyber Working Group. We look forward to the two small-group meetings with our U.S. colleagues on energy security and climate change to strengthen policy communication and practical cooperation in these fields. And we will explore the establishment of new sub-dialogues and working groups to meet and serve the demands of our growing relationship.

China is the biggest developing country and the United States is the largest developed country. There are many common interests between us as well as some frictions and difficulties. However, our common interests far outweigh our differences. We must seek consensus while sharing differences and turn our disputes and differences into commonalities. And we should work together to advance our relationship. China is a responsible major country, and we have been working with the United States and other countries to respond to the international financial crisis. And we also work with all countries in the world to fight against terrorism.

According to authoritative international statistics, China contributes to over 80 percent to Asians’ economic growth, and among the P-5 countries of the United Nations Security Council, China is the largest troop – peacekeeping troop-contributing nation. And within its capability as a member of the P-5, China will contribute to world peace, stability, and development. We believe that the vast Asia-Pacific Ocean can accommodate the common development of China and United States, and that we are ready to work with the U.S. and other countries to make our due contribution to the development of Asia and the development of the Pacific region. We also hope that relevant countries would honor their commitments and through bilateral consultations and negotiations, in particular those among and between countries concerned, properly work on and settle differences on territories. And on the basis of equality and mutual respect, we are ready to conduct human rights dialogue with the United States.

The growth of military-to-military relationship between our two countries is developing towards a sound direction, and at the same time, it is my view that the potential of China-U.S. cooperation remains to be tapped. With development of its science and technology, China has enhanced its competitiveness in certain areas. However, such growth is limited to certain areas, and there is still a big gap between us and the developed world. There are competitions, but these competitions should be conducted on the basis of mutual respect, and these should be sound competitions.

Ladies and gentlemen, dear friends, it is important to tap new thinking and to take active actions to build the new model of major country relationship between China and the United States. Let us build on the past four S&EDs, forge ahead in the direction set by our presidents, and work innovatively for positive and fruitful results at this round of dialogues so as to inject fresh impetus into the China-U.S. cooperation across the Pacific Ocean. Thank you. (Applause.)

MODERATOR: Please welcome the Secretary of State of the United States.

SECRETARY KERRY: Vice Premier Wang and State Councilor Yang, thank you for being here with us. Welcome to the United States and to the State Department. And Secretary Lew, good to have you over here, and I’m happy to welcome other members of both the Chinese and the American delegation, and particularly our new colleague in the Cabinet, Penny Pritzker, Secretary of Commerce, and our Trade Representative Mike Froman, and our newly minted, approved last night by the United States Senate, new Assistant Secretary of State for East Asia Pacific Affairs Danny Russel. Congratulations to you. We’re happy for you.

I – before I start about my comments, I just want to thank everybody for your extraordinary well wishes in the last days. Teresa is doing better, under evaluation, and we hope improving. I want to thank everybody for the remarkable outpouring of good wishes. It’s been really pretty special.

We are very, very humbled by the expressions of support. I think she’s coming along, and I know when she’s able to, she’ll thank everybody herself.


That said, I want to thank everybody for coming here this morning. I want to thank the Vice President for his comments and his very long and devoted efforts with respect to the relationship with China. And Secretary Lew, thank you for co-chairing. And my other co-chairs, we’re honored to be here with you.

This is the fifth dialogue, and I want to thank our friends from China for the extremely generous, warm welcome that I received when I went to Beijing a few months ago. I had the privilege of sitting with the State Councilor in the Diaoyutai Guesthouse, right in the very room where Henry Kissinger received an invitation for President Nixon to visit with Mao Zedong, the invitation coming from Chou En-lai.

And I think it is fair to say that since then there’s been a remarkable journey between our countries. And we have, as the saying goes, the journey of a thousand miles begins with a single step, and that step was taken back then. But we still have a lot of steps that we can take together.

And as I expressed to the State Councilor last night at dinner, there is no question in my mind that long after all of us have finished our turn at these dialogues, long after we have left the public life, China and the United States will continue, throughout this century, to be able to set the example as the two most powerful economies, the two countries with the greatest global reach, and the greatest ability to able to affect the outcome of a life on this planet. I say that looking at the challenges that we face, with respect to conflicts in the world, nuclear proliferation, global climate change, the issues of cyberspace and cyber warfare and other complicated challenges of this time.

I had the opportunity when I was in Beijing to see firsthand the way that this partnership is thriving and, frankly, can thrive even more. I walked through an exhibit of energy projects, working side-by-side American and Chinese leaders from government and the private sector and civil society, demonstrated a whole series of technological breakthroughs. And that came from the pooling of ideas and resources and the commitment of both sides to work together, not just, Mr. Vice Premier, to have a dialogue, but to take out of the dialogue specific proposals and ways in which we can, in fact, cooperate and make a difference.

When I first went to China in the early 1990s as a senator, that cooperation simply didn’t exist. But today, thanks to initiatives like this dialogue, we know that it is possible, but not only possibly but absolutely essential that if we’re going to meet the global challenges facing both of our countries we need to find ways to cooperate together more effectively.

So Vice Premier and State Councilor, we’re glad that we have the opportunity now to return your hospitality, to keep those conversations going, and to look for more ways to collaborate and to innovate together. So I welcome everybody from both delegations.

The first Strategic and Economic Dialogue was really a landmark event. It was a new chapter in the relationship between the United States and China. And with each passing year, we have been able to build on this dialogue and we now, I think, made it into the key mechanism for managing cooperation and competition between our countries. I think the Vice President said, and I heard both of our Chinese interlocutors say, that this dialogue is important to our ability to be able to manage conflict, even as we have differences between us. And we’ve seen very high-level participation on both sides.

Our agenda is broad and it cuts across strategic and economic tracks. And as an outgrowth of the S&ED, we’ve added the strategic security dialogue in 2011 and new working groups on cyber issues and on climate change this year. I think that underscores the importance of these two days of meetings.

This year’s dialogue, obviously, brings a number of new faces to the table, including my own. And we’re all here because we know that our shared concerns are, in fact, complex. But recognizing that complexity, we also recognize the urgency of China and the United States finding common ground, bringing together counterparts from across our governments to look for honest, wide-ranging conversations and ways of cooperating.


We’re here because our governments are committed to the idea that really underpins this mechanism, and it is the same idea that brought our presidents together for that often referred to historic meeting out in California. When we find ways to strengthen our economic ties, it spurs innovation, it spurs growth, it creates jobs in both of our countries.

When we deepen our cooperation on regional and global security issues, it helps all of our people to be safer and it projects stability across the world. And frankly, in a world where increasingly governments are failing and populations are rising up and looking for order and structure and possibilities, it is important for the two leading nations of the world to find a way to set an example for success between governments. When we work together to build trust and goodwill and understanding, it opens the door to greater collaboration.

Now, I want to underscore that when we make a decision, it has ripple effects that reach far beyond both of our borders. I was in Addis Ababa recently at the 50th anniversary of the African Union. As we know, China, Russia, the United States are all investing in China[1], all making a difference. And China is the biggest investor of all.

We’re already working on some of the challenges that threaten global security. We’re pushing for a nuclear-free Korean Peninsula, preventing together a nuclear Iran. And we’re promoting stability in maritime East Asia.

We together have a responsibility to meet the emerging challenges that affect us and draw attention to those challenges to the rest of the world. How will we curb climate change? How will we pioneer new energy technology, which is, in fact, the response to climate change? Energy policy is the solution to climate change. How will we support inclusive, broad-based growth in a rules-based order across the Asia Pacific?

Our people, as well as people around the world, are looking to our two countries to help answer these questions. And here in the next two days, working together, we can get closer to those answers.

My friends, while this dialogue is about cooperating on our shared interests, it is – as the State Councilor and the Vice Premier have said, it is also about addressing our differences, speaking candidly about them, and trying to find ways to manage them. We will never agree on everything and we will have candid conversation on those issues where we don’t see eye-to-eye, because that is absolutely the best way to constructively manage our differences and increase understanding.

So the importance of this dialogue really couldn’t be any clearer. I’m confident that the next two days are going to be productive and that we will be able to build on what this dialogue has achieved in the last four years.

So I thank everybody for their commitment to this effort and for everything that all of the members of this working group, who’ve been working towards this two-day meeting, have done to help make this a constructive two days. We look forward to positive results. Thank you for being with us. (Applause.)

PRESIDENT OBAMA AND CHINESE PRESIDENT XI MEET IN PALM SPRINGS

FROM: U.S. DEPARTMENT OF DEFENSE

Obama, Xi Emphasize Importance of U.S.-China Relationship
American Forces Press Service

WASHINGTON, June 7, 2013 - President Barack Obama and Chinese President Xi Jinping both highlighted the importance of the U.S.-China relationship during their remarks made today before the start of their informal talks at the Sunnylands estate in Palm Springs, Calif.


In welcoming the Chinese president, Obama noted that Xi just took office in March.

"Our decision to meet so early, I think, signifies the importance of the U.S.-China relationship," Obama said. "It's important not only for the prosperity of our two countries and the security of our two countries, but it's also important for the Asia-Pacific region and important for the world."

Obama said he and Xi thought that meeting in sunny California would provide "the opportunity for a more extended and more informal conversation, in which we were able to share both our visions for our respective countries and how we can forge a new model of cooperation between countries based on mutual interest and mutual respect."

The president said he believes "both of us agree that continuous and candid and constructive conversation and communication is critically important to shaping our relationship for years to come."

Obama said the United States "welcomes the continuing peaceful rise of China as a world power and that, in fact, it is in the United States' interest that China continues on the path of success, because we believe that a peaceful and stable and prosperous China is not only good for Chinese but also good for the world and for the United States."

And, as two of the largest economies in the world, the U.S. and China are going to have a healthy economic competition, Obama acknowledged.

"But we also have a whole range of challenges on which we have to cooperate, from a nuclear North Korea -- or North Korea's nuclear and missile programs -- to proliferation, to issues like climate change," Obama said.

The United States seeks an international economy and international economic order, Obama said, where "nations are playing by the same rules, where trade is free and fair, and where the United States and China work together to address issues like cybersecurity and the protection of intellectual property."

And, "in addition to the strategic concerns that we share and the economic challenges that each of our countries face, I will continue to emphasize the importance of human rights," Obama said. President Xi, he added, "has spoken of a nation and a people that are committed to continuous self-improvement and progress, and history shows that upholding universal rights are ultimately a key to success and prosperity and justice for all nations."

Obama acknowledged there are "areas of tension" between the United States and China.

"But what I've learned over the last four years is both the Chinese people and the American people want a strong, cooperative relationship," Obama said, "and that I think there's a strong recognition on the part of both President Xi and myself that it is very much in our interest to work together to meet the global challenges that we face."

"And I'm very much looking forward to this being a strong foundation for the kind of new model of cooperation that we can establish for years to come," Obama added.

Through an interpreter Xi thanked Obama for the welcome, noting, "This is a wonderful place, a place of sunshine, and it's very close to the Pacific Ocean. And on the other side of the ocean is China. When I visited the United States last year, I stated that the vast Pacific Ocean has enough space for the two large countries of China and the United States. I still believe so."

Xi said he and Obama are meeting "to chart the future of China-U.S. relations and draw a blueprint for this relationship and continue our cooperation across the Pacific Ocean."

The Chinese president recalled "what happened over 40 years ago when the leaders of China and the United States, with the strategists' political courage and wisdom, realized a handshake across the Pacific Ocean and reopened the door of exchanges between China and the United States."

Since then, Xi said, "the China-U.S. relationship has gone through winds and rains and it made historical progress. And our two peoples and the people elsewhere in the world have reaped huge benefits from this."

Today, the China-U.S. relationship has reached a new historical starting point, Xi said.

"Our two countries have vast convergence of shared interests, from promoting our respective economic growth at home to ensuring the stability of the global economy; from addressing international and regional hotspot issues to dealing with all kinds of global challenges," Xi said. "On all these issues, our two countries need to increase exchanges and cooperation."

And, China and the United States need to take a close look at their bilateral relationship, Xi said.

"What kind of China-U.S. relationship do we both want? What kind of cooperation can our two nations carry out for mutual benefit?" Xi asked. "And how can our two nations join together to promote peace and development in the world? These are things that not just the people in our two countries are watching closely, but the whole world is also watching very closely."

Xi said China and the U.S. should both proceed from the fundamental interests of their people and to bear in mind human development and progress.

"We need to think creatively and act energetically, so that working together we can build a new model of major country relationship," Xi said.

"President Obama, I look forward to having in-depth communication with you on major strategic issues of common interest to deepen our mutual understanding and to push forward all-round cooperation," Xi said. "I'm confident that our meeting will achieve positive outcomes and inject fresh momentum into the China-U.S. relationship. Thank you."

U.S.-MACAU RELATIONS

FROM:  U.S. STATE DEPATMENT
U.S. Relations With Macau
Bureau of East Asian and Pacific Affairs
Fact Sheet
July 3, 2012

In 1999, Macau returned to Chinese sovereignty from Portuguese administration. Macau is a Special Administrative Region of the People's Republic of China. Its foreign relations and defense are the responsibility of China. However, China grants Macau considerable autonomy in economic and commercial relations. Macau is a separate customs territory and economic entity from the rest of China and is able to enter into international agreements on its own behalf in commercial and economic matters.

U.S. policy toward Macau is grounded in the U.S. Macau Policy Act of 1999 and reflects U.S. support for Macau’s autonomy under the “One Country, Two Systems” framework established in Macau’s Basic Law. The U.S. promotes trade and investment in Macau, supports broadening law enforcement cooperation, works to bolster academic, educational, and cultural links, supports official U.S. visitors to Macau, and serves the growing numbers of U.S. citizen residents and visitors in Macau. U.S. residents in Macau are estimated at over 4,000.

U.S. Assistance to Macau
The United States provides no foreign assistance to Macau.

Bilateral Economic Relations
In 2011, the United States accounted for 8.0% of Macau's exports and 6.0% of its imports. U.S. investment has played a leading role in the development of Macau’s gaming and entertainment sector. According to the most recent Macau Government statistics, U.S. direct investment in Macau totaled $2.2 billion at the end of 2010, although unofficial numbers put the figure between $8 billion and $10 billion. There are over 30 U.S. firms doing business in Macau.

Macau's Membership in International Organizations
Macau and the United States belong to a number of the same international organizations, including the World Trade Organization; the Egmont Group, an informal international gathering of financial intelligence units; and the Asia/Pacific Group on Money Laundering, a Financial Action Task Force-style regional body.

Bilateral Representation
The U.S. Government has no offices in Macau. U.S. interests are represented by the U.S. Consulate General in Hong Kong.

CHINA WILL JOIN GLOBAL ALLIANCE FOR CLEAN COOK STOVES

FROM:  U.S. STATE DEPARTMENT

U.S. and Chinese Officials to Discuss Partnerships for Development and Diplomacy at Roundtable Event

Notice to the Press

Office of the Spokesperson

Washington, DC

June 12, 2012

On June 13, the Global Partnership Initiative in collaboration with the Center for Strategic and International Studies will host a roundtable discussion about the value of public-private partnerships for strategic diplomacy and development outcomes. The event will focus on China’s recent announcement that it will join the Global Alliance for Clean Cookstoves, a public-private partnership of leading countries and private sector representatives working together to reduce one of the leading causes of death amongst women in the developing world -- exposure to harmful cookstove smoke.

The Secretary’s Special Representative for Global Partnerships Kris Balderston, Economic Counselor of the Chinese Embassy in the U.S. Li Bin, the Environmental Protection Agency’s Assistant Administrator for the Office of Air and Radiation’s Gina McCarthy, and Executive Director for the Global Alliance for Clean Cookstoves’ Radha Muthiah will participate in the roundtable discussion.

The Global Alliance for Clean Cookstoves is a public-private partnership that seeks to save lives, improve livelihoods, empower women, and combat climate change by creating a thriving global market for clean and efficient household cooking solutions.

PENTAGON SPOKESMAN SAYS CHINA NOT THE OBJECT OF U.S. MILITARY CHANGES IN THE PACIFIC

FROM:  AMERICAN FORCES PRESS SERVICE

China Not Focus of Asia-Pacific Rebalancing, Spokesman Says

By Army Sgt. 1st Class Tyrone C. Marshall Jr.

WASHINGTON, June 5, 2012 - The U.S. strategy to rebalance military forces toward the Asia-Pacific region is not intended to restrict China's growth, Pentagon spokesman Navy Capt. John Kirby told reporters today.

"It's not aimed at rebuffing or trying to limit the growth and development of any one country," Kirby said at a Pentagon news briefing. "In fact, [Defense Secretary Leon E. Panetta] also made it clear that the peaceful, prosperous rise of China is a good thing, not just for that region, but for the world."

Panetta has repeatedly said the new Asia-Pacific defense strategy doesn't target any specific nation in the region, Kirby told reporters.  "Secretary [Panetta] has made it clear on his trip that the defense strategy, which includes a rebalancing and more focus on the Asia-Pacific region, is not targeted at any one country in that region, but rather the region as a whole," Kirby said.

Kirby noted it is the Defense Department's firm belief that the U.S. has significant security interests in the Asia-Pacific region and significant security commitments to its allies and partners there.

The Pentagon spokesman also responded to a reporter's question about reports citing Chinese officials as describing the rebalancing as "untimely." "As for the timeliness, I think we would all agree that the defense strategy, as written, and as endorsed, by not only this department, but by President [Barack Obama], is absolutely timely," Kirby said.  "This is the right time to be looking at the Asia-Pacific region to renew our commitments there, and to rebalance our resources, and our attention there," he said.

U.S. STATE DEPARTMENT STATEMENT ON 23RD ANNIVERSARY OF TIENANMEN SQUARE VIOLENT CRACKDOWN

FROM:  U.S.  STATE DEPARTMENT

Message on the Twenty-Third Anniversary of Tiananmen Square

Press Statement

Mark C. Toner
Deputy Spokesperson, Office of the Spokesperson

Washington, DC

June 3, 2012

On this the twenty-third anniversary of the violent suppression by Chinese authorities of the spring 1989 Tiananmen Square demonstrations, the United States joins the international community in remembering the tragic loss of innocent lives.

We encourage the Chinese government to release all those still serving sentences for their participation in the demonstrations; to provide a full public accounting of those killed, detained or missing; and to end the continued harassment of demonstration participants and their families.

We renew our call for China to protect the universal human rights of all its citizens; release those who have been wrongfully detained, prosecuted, incarcerated, forcibly disappeared, or placed under house arrest; and end the ongoing harassment of human rights activists and their families.

AFTERNOON PRESS STAND-UP BEIJING INTERNATIONAL AIRPORT

FROM:  U.S. STATE DEPARTMENT
Afternoon Press Stand-Up at Beijing International Airport
Remarks Glyn Davies
Special Representative for North Korea Policy Beijing, China
May 23, 2012
AMBASSADOR DAVIES: Hello, everybody. It's great to see you all. I have a little bit of a problem. I am really, really late for my flight. So I simply want to say, number one, thank-you very much for coming out. Number two, a very good visit to Beijing. I had a chance to meet with key officials here. I just came from the CCID and my meeting with Vice Minister Liu Jieyi. We had a terrific conversation, very wide-ranging. And it was so good that it went late. So I am now late, so I have to run.

I look forward to getting to Tokyo and meeting with officials there. I get there tonight and I'll have meetings there tomorrow, and a little bit on Friday as well.

So with your permission, I hope you understand, I've got to get on my flight. Thank-you very much for coming out. I look forward to coming back. All the very best to you.

QUESTION: Are you convinced that the North Koreans will not go ahead with this nuclear test?

AMBASSADOR DAVIES: Well, I certainly hope that they don't go ahead with their nuclear test. That would be a highly provocative and inappropriate miscalculation on their part. Thank-you very much, I’ve got to run…

QUESTION: Is there anything the Chinese said that could…

AMBASSADOR DAVIES: I am going to keep our diplomatic conversations with the Chinese between us at this stage. Thank-you so much, really appreciate it. I have to run, all the best.

QUESTION: [inaudible]

AMBASSADOR DAVIES: I have to run, thanks so much.
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REMARKS: SEC.'S CLINTON AND GEITHNER AT STRATEGIC AND ECONOMIC DIALOGUE U.S. PRESS CONFERENCE

FROM:  U.S. STATE DEPARTMENT
Remarks at the Strategic and Economic Dialogue U.S. Press Conference
Remarks Hillary Rodham Clinton
Secretary of State Secretary of the Treasury Timothy Geithner
JW Marriott
Beijing, China
May 4, 2012
MS. NULAND: Thank you all for joining us this evening. As you know, the two Secretaries made statements a little bit earlier with their Chinese counterparts. So we’ll have four questions this evening – two from each side. And our first question goes to AP, Matt Lee, please.

QUESTION: Thank you. Okay. Madam Secretary, it won’t surprise you, I think, to get the questions that you’re about to get from me, which all have to do with the elephant in the room that’s been dogging us --

SECRETARY CLINTON: The elephant that has been dogging us. That’s good – a good start, Matt. (Laughter.)

QUESTION: Dogging us for the last week. So here it goes: What are the current status of the negotiations with the Chinese over the fate of Mr. Chen? How did the Chinese officials that you spoke to, the senior leadership, respond to your appeals on his behalf? Are you confident that they will allow him to leave the country to go to the States with his family so that he can study? And how do you respond to critics at home and elsewhere who say that the Administration has really bungled this? Thank you.

SECRETARY CLINTON: Well first, let me start by saying that from the beginning, all of our efforts with Mr. Chen have been guided by his choices and our values. And I’m pleased that today our ambassador has spoken with him again, our Embassy staff and our doctor had a chance to meet with him, and he confirms that he and his family now want to go to the United States so he can pursue his studies.

In that regard, we are also encouraged by the official statement issued today by the Chinese Government confirming that he can apply to travel abroad for this purpose. Over the course of the day, progress has been made to help him have the future that he wants, and we will be staying in touch with him as this process moves forward.
But let me also add, this is not just about well-known activists. It’s about the human rights and aspirations of more than a billion people here in China and billions more around the world. And it’s about the future of this great nation and all nations. We will continue engaging with the Chinese Government at the highest levels in putting these concerns at the heart of our diplomacy.
So I think we have been very clear and very committed to honoring both his choices and our values.

MS. NULAND: Next question goes to Lu Quoi (inaudible) from Xinhua, please.

QUESTION: (Via interpreter) This is a question from Xinhua News Agency. What do you think that China and the U.S. will do to build a new relationship between big countries, as China proposed? Some scholars hold that the U.S. want to contend China as it shifts its strategic focus eastward in the high profile. What do you think of such a statement?

SECRETARY CLINTON: Sir, do you want me to start?
Well, I think that, as President Obama and I have said many times, and as we repeated again over the last two days, the United States welcomes a strong, prosperous, and successful China. We want to see China not only deliver economic prosperity for its large population, but also play a key role in world affairs. And our countries and our peoples gain far more from cooperation then from competition, so we are committed to pursuing a positive, cooperative, comprehensive relationship.

And I want to underscore the importance of events like this 4th Annual Strategic and Economic Dialogue. We use it to maximize mutual understanding and areas of cooperation while also speaking frankly to one another about those areas about which we have disagreements. Now, given all that we are doing together bilaterally, regionally, and globally, we need this kind of open, regular mechanism for strengthening our partnership and managing those areas where there are tensions and differences.

I said something earlier today that I would repeat for you, because together the United States and China are trying to do something that is historically unprecedented, to write a new answer to the age-old question of what happens when an established power and a rising power meet. And for the United States, we see this as an opportunity, not a threat. We look at the future with great optimism. And we believe that neither of us can afford to keep looking at the world through old lenses, whether it’s the legacy of imperialism, the Cold War, or balance-of-power politics. Zero sum thinking will lead to negative sum results.

And so instead, what we are trying to do is to build a resilient relationship that allows both of our nations to thrive without unhealthy competition, rivalry, or conflict while meeting our national, regional, and global responsibilities.

SECRETARY GEITHNER: Perhaps I could just add two examples of the commitment that the Secretary laid out on the economic and financial side. As many of you know, we’ve been very supportive of trying to make sure that China not only has a seat at the table in the most important for a globally for discussing international, economic and financial issues, but we’ve been very supportive of expanding China’s role, its relative influence, in those major institutions. And it underscores our recognition that our interests are completely consistent with a rising, growing, stronger kind of China economically and financially.

MS. NULAND: Next question, Ian Katz from Bloomberg, please.

QUESTION: Thank you. For Secretary Geithner, do you think the yuan needs to strengthen as much as you thought it did two years ago, or a year ago? And at what point – and do you know at one point it is strengthened enough?

And also – and if I could, I wanted also to follow up a question to Madam Secretary. Do you believe that the Chinese are – the Chinese government is serious about wanting to find a resolution to the Chen situation?

SECRETARY GEITHNER: On the exchange rate, let me just describe the full scope of what’s happened on that front over the last three years or so. China’s yuan has allowed the exchange rate to appreciate against the dollar by about 13 percent in real terms over the last 20, 22 months or so, more than 40 percent in real terms over the last five years or so. That’s very consequential.

They acted just recently to widen the ban to allow the exchange rate to move in response to market forces. They’ve significantly reduced the amount of intervention in the exchange markets. Their external surplus, their trading current account imbalances have come down very substantially. And they have continued to move progressively to relax the controls on capital movements and encourage greater convertibility, greater international use of the yuan. So if – you want to look at the full scope of those changes to see the extent and the consequence of the Chinese commitment to reform in that context.

Now, it is our view – and it’s the view of the IMF, looking at the broad measures we have available – that the exchange rate is likely to and needs to continue to appreciate further against the dollar and the major currencies. And that’s based on the basic judgment about the fundamentals that drive exchange rates, including what’s likely to be a long period of relatively rapid productivity growth in China.

SECRETARY CLINTON: As I said, we are encouraged by the progress we’ve seen today, but there is more to work to do, so we will stay engaged as this moves forward.

MS. NULAND: And our last question this evening is from Han Wei at HuaSheng.

QUESTION: (Via interpreter) This is a question from HuaSheng Media. As we all know, many new challenges arise between China and the United States while some historical and structural issues still exist and sometimes emerge at the end. What do you think the two sides can do to avoid derailing the world’s most important bilateral relationship?

SECRETARY GEITHNER: Well, as we both said over the last couple of days, you have to start by trying to make sure that we understand as much as we can the broad interests and the intentions of our two nations. And we’ve made a substantial investment in doing that. You have to be open and direct where we disagree. We have to be as clear as possible as we can where our interests are in conflict. And we try to bring that basic spirit and approach to these discussions from the beginning, and I think that’s the only way to do it.

SECRETARY CLINTON: I have to add that this has been a very productive fourth session of the Strategic and Economic Dialogue. It is a testament to how far we’ve come in building a strong and resilient relationship and being able to have very candid, open discussions about issues where there is disagreement without it endangering the entire range of significant matters that we are working on together.
Having participated in all four of the Strategic and Economic Dialogues, I have seen how far we’ve come over the last four meetings and all of the meetings in between. There is no shortcut to spending time listening, exchanging views, looking for ways to build strategic trust and understanding. And it is a long-term proposition. The United States and China have the most consequential relationship of the 21st century. So it is not only the current leadership of our two countries, but leadership for many years to come who have to remain engaged and to use this platform to pursue the kind of mutual respect and mutual benefits that are important to the bilateral relationship but also very important for the global relationships as well.

So having had the privilege along with Secretary Geithner of leading the American side for four dialogues now, I believe that we are building a foundation for future cooperation that will benefit both our nations and the world.
MS. NULAND: Thank you very much, all of you, for joining us.