Remarks
William J. Burns
Deputy Secretary of State
Secretary of Treasury Jacob Lew and Chinese State Councilor Yang Jiechi and Chinese Vice Premier Wang Yang
U.S. Department of Treasury, Cash Room
Washington, DC
July 11, 2013


SECRETARY LEW: My thanks and my compliments to Vice Premier Wang Yang and State Councilor Yang Jiechi and their colleagues, as well to my U.S. colleagues. Our discussions have been informative, insightful, and sometimes direct, as discussions amongst friends are.

During their recent meetings at Sunnylands, President Obama and President Xi set the framework that defined our discussions over the last two days, emphasizing the historic opportunity to advance U.S.-China relations in ways that promote global growth and stability and then lead to a more balanced and beneficial U.S.-China relationship.

The mission of the Strategic and Economic Dialogue is to make concrete progress on the issues that matter to each and every one of us, on both sides of the Pacific and beyond. Over the past four years, we’ve made significant advances in deepening and strengthening our economic relationship with China. U.S. exports to China have doubled since early 2009, growing more than fast as exports to the rest of the world. And the RMB exchange rate has appreciated. As a result, China’s current account surplus has begun to adjust, falling from a peak of over 10 percent of GDP before this Administration took office to less than 3 percent today. While this is welcome, more progress is needed.

It was clear from our discussions over the past two days that China’s leaders understand that China’s growth and development challenges of the future will not be met by China’s growth model of the past. China’s new leaders have turned to an ambitious set of reforms that will reorient China’s economy towards domestic consumption and away from exports, heavy industry, and investments.

China’s reform process is in early stages, but already we’re starting to see some positive changes, including through progress we’ve made over the course of our discussions. Let me give you a few examples: China announced its intention to negotiate a high standard bilateral investment treaty with us that will include all stages of investment and all sectors – a significant breakthrough, and the first time China has agreed to do so with another country. We had a healthy discussion among our senior economic officials about growing U.S. concerns with cyber-enabled theft and the need to address this issue head on.

As part of its broader reform agenda, China has committed to open further to foreign investment, including through the recently announced Shanghai free trade zone pilot for services. China announced that it intends to submit a revised offer to join the WTO Government Procurement Agreement by the end of 2013, and then will begin intensive technical discussions with the United States this summer to ensure that its offer is commensurate with the coverage of other GPA parties.

China has committed to further exchange rate reform and is actively considering joining the international standard for public reporting of reserves data, the IMF’s special data dissemination standard, a standard that’s played a major role in enhancing foreign exchange reserve transparency.

China’s security regulator announced that it will begin providing certain requested audit work papers to our market regulators, an important step towards resolving longstanding impasse over enforcement cooperation related to companies listed in the United States.

Going forward, China’s leaders have indicated that they will continue to make significant changes to the exchange rate system, the financial system, state-owned enterprises, and the existing mix of taxes on businesses. We welcome the important step that China’s leaders have taken and encourage them to follow through on the commitments that they’ve made.

We want China to succeed in implementing these reforms because a prosperous China is not only good for China, but it’s good for the United States and for the whole world. While today’s commitments do not resolve all of the concerns of either side, they do represent real progress, progress that will create new opportunities for U.S. workers and companies in an expanding Chinese market.

Finally, I want to thank the delegations on both sides for their candor and openness during our conversations. Clear communication is critical for a successful bilateral relationship. And I want to personally thank Vice Premier Wang for his wisdom and leadership in guiding these discussions. While strongly defending China’s interests, he demonstrated a commitment to building a relationship of mutual trust. I look forward to working with the Vice Premier in the future and with his colleagues to continue the good progress that we’ve made here.

Thank you very much.

VICE PREMIER WANG: (Via interpreter.) Friends from the press, sorry for keeping you waiting. Thanks to the efforts of both sides, the fifth round of the China-U.S. economic and strategic dialogue has achieved a great success. The main task of this round of economic dialogue is to implement the agreement reached by President Xi Jinping and President Obama in California early June, and to further consolidate, and a boost to the sound momentum of China-U.S. economic relations.

Over the past two days, we have had candid and in-depth exchanges on the overarching long-term and strategic issues concerning our two economies and the global economy, and reached nearly 90 important outcomes in macroeconomy, trade, investment, finance, and other areas.

The two sides are committed to promoting economic structural reform and sustainable and a balanced growth. The United States pledged increase investment, raise savings rate, cut deficit, reduce debt, endeavor to achieve midterm fiscal sustainability, and pay close attention to the spillover effect and global ramifications of its monetary policy.

The two sides will have timely discussions on major economic policies. The two sides pledged to strengthen coordination and cooperation within the framework of G-20 and APEC, among others, enhanced macroeconomic policy coordination, push forward the reform of international financial institutions, encourage multilateral development banks to raise lending capacity, and work for global economic recovery and of growth.

The two sides agreed to begin substantive negotiations on a bilateral investment treaty on the basis of pre-establishment nature, national treatment, and negative lift. The United States pledges to treat Chinese investment equally and fairly. The United States pledges to welcome investment from China, including investment of SOEs and sovereign wealth funds. U.S. side also pledged that CFIUS security review will only based – be based on national security rather than other factors.

The United States will thoroughly consider China’s market economy status. The two sides also pledged to support multilateral trading system and oppose trade protectionism. The United States pledged to give fair treatment to China in its export control reform and also carry out discussions with China on China-related articles in the Consolidated and Continuing Appropriation Act for the Fiscal Year 2013.

The United States also pledged to recognize China’s market economy status in expeditious and non-discriminative way. The United States supports LNG exports to non-FTA countries, including China, and the U.S. Department of Energy is carrying out review of relevant cases on a case-by-case basis.

The two sides agreed to increase financial cooperation in such areas as financial institution regulation, law enforcement, cross-border supervision, shadow banking, OTC derivatives, international convergence of accounting standards, and the Foreign Account Tax Compliance Act. The United States welcomes Chinese financial institutions to invest in the U.S. market.

Mutual understanding and trust is an important prerequisite for win-win cooperation between our two major countries. In addition to what is recorded in the outcome list, there is one more outcome of this dialogue; that is, the two new teams, through their first meeting, have increased mutual understanding and have forged friendship. This has made a solid foundation for future cooperation. I can say that I have already become very good friends with Secretary Jacob Lew. I’d also like to thank Secretary Lew for the contribution he has made for our economic dialogue, and I also want to thank the teams of the two sides for the efforts they have made for this meeting.

Well, taking – through this meeting, I feel that Secretary Lew is smarter than me. Well, that will certainly help us to find a way forward, and it will be a source of new ideas for us to make joint progress. I am sure that the S&ED will continue to serve as important platform for the two sides, expand consensus, deepen cooperation, and manage our differences, and will play an even bigger role in our joint efforts to build a new model of major country relations. Because of health conditions of his wife, Secretary Kerry has not been able to attend the meeting for both of the two days. I hope that Secretary Kerry’s wife will recover speedily.

Thank you.

DEPUTY SECRETARY BURNS: Thank you very much, and good evening. I want to express my appreciation to Secretary Lew and to our distinguished Chinese guests, Vice Premier Wang and State Councilor Yang. I’m very grateful for the breadth and depth of the discussions that we’ve had over the course of the past two days.

This is the fifth time that senior officials from our countries have come together for the Strategic and Economic Dialogue. The idea that underpins this dialogue is as clear as it is compelling: The success of our countries depends on one another. Building a more constructive and cooperative relationship between the United States and China is vital to our future and will contribute to a more peaceful, stable, and prosperous world. It is a simple fact that effectively addressing today’s international challenges, from climate change to nuclear proliferation and poverty to cyber security, requires active and sustained partnership between China and the United States.

As the world’s largest emitter today and history’s largest cumulative emitter, China and the United States have a special responsibility to ensure sustainable economic growth. The important initiatives we’ve announced on climate change and China’s pledge to enhance the transparency of its energy data reflect our shared commitment to securing sustainable, affordable energy and reducing greenhouse gas emissions.

We also have an obligation to adhere to international rules and norms. This is true on a wide range of issues from maritime security in East Asia, to our trade and investment ties, to how we treat our people. Cyber security is a critical new area where we need to reach a shared understanding of the rules of the road. And the reality is clear: The technological ties that bind us together also introduce a new challenge to our bilateral relationship. During our engagement this week, we underscored that the cyber-enabled theft of trade secrets, intellectual property, and confidential business information is unacceptable.

We also addressed the need for cooperation on a range of pressing regional and global challenges, from Iran and North Korea to global poverty and maritime security. Together, we reaffirmed our strong commitment to the goal of denuclearization and the need for North Korea to take meaningful steps toward this end. And we created a Dialogue on Global Development to enhance our efforts to reduce poverty in the developing world.

Of course, U.S.-China relations remain a work in progress. Our interests can differ, and so can our approaches. When we encounter differences or sensitive issues, we need to address them directly in consultation with one another. And that is why we were very disappointed with how the authorities in Beijing and Hong Kong handled the Snowden case, which undermined our effort to build the trust needed to manage difficult issues. Over the past two days, we made clear that China’s handling of this case was not consistent with the spirit of Sunnylands or with the type of relationship – the new model – that we both seek to build.

During the course of the dialogue, we also expressed our ongoing concerns about human rights in China, particularly recent instability in Tibetan and Uighur areas of China. The goal of this conversation is to emphasize the importance of human rights to the bilateral relationship. We firmly believe that respect for universal rights and fundamental freedoms will make China more peaceful, more prosperous, and ultimately more secure.

As we seek to foster a cooperative partnership between our two nations, we must also continue to build ties not only between governments but also between our peoples. Our growing people-to-people contacts may be the most consequential and enduring legacy of our diplomacy.

In fact, right now, a team of Chinese and American designers is meeting to finalize plans for a classical Chinese garden that will be built here in Washington in the National Arboretum. I hope that the China garden will stand as a permanent tribute to the people-to-people exchanges that lie at the heart of U.S.-China relations.

In the end, our relationship will be judged not by our words, but by what we can achieve together.

Vice Premier Wang, State Councilor Yang, thank you again for very productive meetings this week. I am convinced that we can work together not just to manage this relationship over the short term, but to cultivate it over the long term. That will surely be an investment that pays enormous dividends for us all. Thank you very much.

STATE COUNCILOR YANG: (Via interpreter) Friends of the press, ladies and gentlemen, good afternoon. The fifth round of the S&ED is wrapping up. In the past two days, the two sides held candid and in-depth discussions on implementing the consensus reached between our presidents at Sunnylands and advancing the building of a new model of major country relationship between China and the United States.

We reached broad consensus and achieved important and positive outcomes. The success of this round would not have been possible without the support and guidance of our presidents. President Xi Jinping conveyed a message to President Obama. President Obama met with the two Chinese special representatives. Vice President Biden attended and addressed the joint opening session and the welcoming dinner. Their personal endorsement and leadership gave strong impetus to the work of the Chinese and American teams.

During the Strategic Dialogue, Secretary Kerry and Deputy Secretary Burns and I had sincere, in-depth, and constructive discussions on advancing the building of a new model of major country relationship, increasing strategic trust, forging sound interactions in the Asia Pacific, and expanding cooperation on such global issues and regional hotspots as climate change, cyber security, the Middle East, and South Asia.

The relevant departments of the two sides held the third Strategic Security Dialogue, the first meeting of the Cyber Working Group, and other sub-dialogues and breakout sessions on climate change, customs, illicit wildlife trade, UN peacekeeping, and South Asian and Latin American affairs. The two sides reached a number of specific outcomes, covering a wide range of areas.

The two sides believe that the China-U.S. relationship has reached a new starting point and that each has a stake in the other’s success. The two sides agreed to continue to work actively to promote the building of a new model of major country relationship in the all-around way. The two sides welcome and support the participation by people from all walks of life in both countries in this worthy cause. The two sides agreed to strengthen high-level exchanges and dialogue and consultation at various levels. The two sides decided to continue to improve and develop military-to-military relations and explore the establishment of a notification mechanism for major military activities.

We also agreed to actively expand and deepen dialogue and cooperation on climate change, cyber, energy, science and technology, justice, ocean, customs, nuclear security, forestry, counterterrorism, and law enforcement. The two sides signed MOUs or action plans on EcoPartnerships, prevention of illicit trafficking of nuclear materials, supply chain security, and joint customs training. And today, the first direct flight between Beijing and Houston is taking off.

Both sides are of the view that efforts to build a new model of major country relationship should start in the Asia Pacific. The two sides decided to hold the next round of Asia Pacific consultations this fall and jointly uphold peace, stability, and development in the Asia Pacific. China stated its principled position on the East China Sea, the South China Sea, and other sensitive issues, and expressed the hope that the United States will support the efforts of the parties concerned to properly handle and resolve the relevant disputes through dialogue.

China said it will remain committed to denuclearization on the Korean Peninsula and upholding peace and stability on the peninsula, and create conditions for the early resumption of the Six-Party Talks. The two sides also decided to enhance dialogue and coordination on the Iranian nuclear issue, Syria, Afghanistan, and other regional and global issues.

The two sides fully recognized the progress made by the Climate Change Working Group and the Cyber Working Group within the framework of the Strategic Dialogue, and pledged support for the two working groups in conducting practical cooperation in such areas as shale gas, smart grid, combating cyber crime, and the development of international laws in cyber space.

The Chinese side pointed out that China is a victim of hacking attacks. China’s view is that the relevant international cyber rules should be developed by the UN to help uphold cyber security in all countries.

The two sides praised the important role of the S&ED in expanding cooperation and managing differences between China and the United States. As two major countries different in history, culture, social system, and development stage, China and the United States naturally do not always see eye-to-eye on every issue. The Chinese people will firmly go down the path they have chosen, and the prospects of China will be brighter and brighter. China will remain committed to the path of socialism with Chinese characteristics. We believe that all countries, including China and the United States, need to have their governments respect basic norms governing international relations and respect the choices made by people in other countries. China has made important progress in its human rights. People in various regions in China, including Shenzhen and Tibet are enjoying happier lives, and they’re enjoying unprecedented freedoms and human rights.

We hope the U.S. side will view China’s economic and social development in an objective way, and we hope the United States will improve its own human rights situation on the basis of mutual respect and no intervention in each other’s internal affairs. We stand ready to continue our human rights dialogue with the United States. China is the firmest promoter of the freedom of navigation in all oceans around the world. And China will continue to firmly implement this policy.

With regard to the Snowden case, the central government of China has always respected the Hong Kong SAR government’s handling of cases in accordance with law. The Hong Kong SAR government has handled the Snowden case in accordance with law, and its approach is beyond reproach. Others should respect this, and I believe China and the United States have sufficient wisdom to tap the potential of cooperation between the two sides. We hope and believe the two sides have the wisdom to manage well our differences. Most importantly, we should stay firmly committed to the cause charted by our presidents, follow the principles of mutual respect and win-win cooperation, and advance the building of a new model of major country relationship.

A journey of a thousand miles begins with the first step. As long as both sides have a firm resolve and work toward the same goal, we will succeed in this joint endeavor. Through the joint efforts of both sides, the amazing project of the China Garden in Washington has made a lot of progress. We hope that through our concerted efforts in the near future, the China Garden will appear on the horizon of this city and become a brand new and important symbol of friendship and exchanges between the Chinese and American people.

I wish to extend my sincere appreciation to both teams for their hard work during this round of the S&ED. I sincerely thank Secretary Kerry and Deputy Secretary Burns and other American colleagues for the good arrangements they have made for the S&ED and for the warm hospitality shown to me and my colleagues. On behalf of my colleagues and myself, I would like to wish the wife of Secretary Kerry a speedy recovery. We look forward to meeting the U.S. team next year in Beijing.

Thank you.

SECRETARY LEW: With that, we bring to a close this fifth round of the U.S.-China Strategic and Economic Dialogue. I think from our closing statements, from the course of the last two days, it’s clear that we have made progress and we have engaged on the matters in which we have differences, and we have a joint commitment to build the relationship and go forward.

I would just like to close with a word of condolences to the victims of the terrible storms in China and to the two students who lost their lives in a plane crash just the other day. We extend our condolences through the special representatives to the Chinese people.

And with that, I bring this session to a close. Thank you.



PRN: 2013/0878