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US Treasury Secretary Henry Paulson, “Opening Statement, Fourth Round of US-China Strategic Dialogue,” June 17, 2008

June 17, 2008

June 17, 2008

Opening Statement by Secretary Henry M. Paulson, Jr.
at the Fourth Meeting of the U.S. – China Strategic Economic Dialogue

Annapolis, Maryland -- Welcome to the distinguished Chinese delegation and U.S. officials who are here today. We are gathering for two days of cooperation, education and work on a range of economic issues vitally important to both of our countries. I offer a particular welcome to my new counterpart, Vice Premier Wang Qishan, in his new role for his country.

This meeting is the first opportunity for my Cabinet colleagues to collectively meet and work with China's newly appointed leadership team. We look forward to continuing our progress towards mutual solutions and shared goals through the Strategic Economic Dialogue.

Today – as has been the case each day since the Sichuan earthquake – our thoughts and prayers are with the Chinese people as they work to meet the challenges resulting from this terrible tragedy. As President Bush has said, the United States stands ready to help in any way possible, including helping China to rebuild the devastated area.

The U.S. – China economic relationship is complex, broad and important to both our countries and to the world economy. The U.S.-China relationship has become central to each nation's interest and to maintaining a stable, secure and prosperous global economic system. Through the on-going, dynamic and respectful discussions of the SED, the relationship is growing in a positive direction. The SED has brought concrete progress on issues important to the U.S., Chinese and global economy faster than would have been possible otherwise.

At this meeting, we will build on previous progress, including landmark agreements on food, feed and product safety announced at our December SED meeting in Beijing. In December, we announced that the U.S. will provide technical assistance for China to develop and implement a nationwide SO2 emission trading program in the power sector and that we have signed a memorandum of understanding to combat illegal logging. The SED has also led to a civil aviation agreement that resulted in a new non-stop flight between Atlanta and Shanghai this past March, and a new group-leisure travel agreement that is estimated to bring up to 100 million Chinese travelers to the United States over the next 15 years.

These are a few examples of success resulting from on-going collaboration through the SED, and candid high-level discussions and understanding each other's priorities and interests. By definition, the U.S. – China economic relationship is complex, yet the complexity has not interfered with our ability to build a base of trust. The United States and China don't always agree on economic issues. Sometimes we may even disagree quite strongly, but we keep talking. That was the purpose of establishing the SED – to keep this most important and complex relationship on an even keel, even in times of tension.

At this week's meeting, we will have a robust discussion of our economic relationship as we envision a future of sustainable economic growth. We will look at managing financial and macroeconomic cycles. Both the United States and the Chinese economies face current challenges, including higher energy and food prices. The United States is working through a housing market correction and re-pricing of risk in credit markets. China is grappling with rising inflation and growing internal and external macroeconomic imbalances.

The state of our economies affects our people, and affects world prosperity. As we manage through the current challenges, we must also focus on the long-term fundamentals that underlie sustainable growth in both our nations. During the course of these two days, I will highlight how free trade, competition and open economies are essential. Openness and trade create jobs and opportunities for people to rise out of poverty, and are necessary for economic growth and stability – in both China and in the United States.

And we will discuss the steps needed to ensure that our countries and the world economy remain open to trade. We will discuss the best way to promote and protect bilateral investment and to counter protectionist pressures. We will discuss how open and competitive financial markets, including currency markets, are more resilient in times of turmoil and more vibrant and efficient in supporting balanced economic growth.

Both China and the United States want to enhance innovation and encourage development of intellectual property-intensive industries. At the same time, we must protect intellectual property rights, further transparency and rule of law, and stop the global trade in fake products. We will discuss our on-going efforts in these areas, as well as efforts to improve food and product quality and safety, and support green energy and environmental product markets.

We will also discuss the structural imbalances and the saving rate challenge facing each of our economies. In the United States our saving rate is too low. In China it is too high. In order to effectively deal with this issue, we must address how to adequately provide for our aging populations, including the role of private and public insurance and financing for social services such as health care and retirement.

Finally, we will also advance joint opportunities for cooperation on energy security and the environment. As the two largest net importers of oil, China and the United States face similar challenges as demand for energy increases, and the global production capacity has remained relatively flat for the past ten years.

We have a strong and shared interest in avoiding supply disruptions, increasing energy efficiency, promoting the efficiency and transparency of the global energy markets to the benefit of all oil importing nations, and expanding the availability and use of alternative energy sources. We will continue working together on joint efforts already in place, such as a five-year commitment to promote alternative fuel technologies for vehicles, and explore new possibilities.

We will address many of these through the framework of ten years of cooperation on energy and environmental issues announced at our December SED meeting. Since December, we have been adding details to this framework and I am pleased with the possibilities for innovation and cooperation ahead of us.

Significant opportunity exists for the United States and China to achieve immediate progress and make long-term strides towards energy security and environmental sustainability. Through a ten year framework of cooperation, I believe that we have the foundation to meet these challenges.

Our meetings today and tomorrow will move the United States and China even further forward to a stronger economic future. Again, welcome to our new Chinese colleagues. We are building upon a shared vision that is possible because of our cooperation, and feasible because of our commitment to the prosperity of our people. Thank you.