Briefing on the Upcoming U.S.-China Strategic and Economic Dialogue

Special Briefing
Kurt M. Campbell
Assistant Secretary, Bureau of East Asian and Pacific Affairs
Treasury Department Senior Coordinator for China Affairs David Loevinger
Washington, DC
May 19, 2010

MR. CROWLEY: Good morning and welcome to the Department of State. As we announced yesterday, the Secretary leaves tomorrow for a very important trip to Tokyo, Shanghai, Beijing, and Seoul. Obviously, she’ll have important meetings in Tokyo and in Seoul on regional security issues, but at the heart of her visit to China will be the visit to the Shanghai Expo and most particularly the next round of the Strategic and Economic Dialogue with a number of counterparts from the U.S. Government and a range of officials from the Chinese Government. So to kind of put the trip into context and in particular outline our objectives for the Strategic and Economic Dialogue, we have brought together senior officials from here at State and the Department of Treasury. We’ll start off with Kurt Campbell, our Assistant Secretary for East Asia and Pacific Affairs, also known as the ambassador to the Department of Treasury. And our Senior Coordinator for China Affairs at the Department of Treasury, David Loevinger, will follow and then they’ll answer your questions.


ASSISTANT SECRETARY CAMPBELL: Thanks. Good morning, everyone. Let me just take a few moments, if I could, to lay out the schedule and then some of our hopes and plans for the next several days. Tomorrow morning, Secretary Clinton and her team leave for a weeklong trip to Asia. Our first stop will be in Tokyo. While in Japan, Secretary Clinton will meet with Foreign Minister Okada and prime minister, and during those sessions she will discuss a number of specific matters. We will review the developing security situation on the Korean Peninsula. We will discuss the recently concluded P-5+1 agreement on a common approach towards Iran. We will discuss the ongoing troubles in Thailand and we will also review our common approaches to engagement of China. We’ll also be discussing security and defense-related issues, including developments on Okinawa. We will be working closely with our Japanese friends to underscore the importance of our alliance. Prime Minister Hatoyama has been very gracious in inviting the Secretary to come by the residence and we’ll look forward to that.


We will then be off to Shanghai. In Shanghai, Secretary Clinton will visit the American Pavilion as part of the Shanghai Expo. This is a signature initiative that she has been involved in to bring into life this wonderful exhibit which highlights American life. This is one of the largest expos of its kind in history. A very substantial number of Chinese citizens and visitors from around Asia are expected. We’re very much looking forward to the opportunity to engage with Chinese friends and also with a number of American business groups and civic organizations while we are in Shanghai.


We then proceed to our primary stop, which is going to be in Beijing, for the Strategic and Economic Dialogue. I think as you all know, if you look at the signature institutional innovations of the Obama Administration, in addition to the creation of the G-20, there has also been the creation of the Strategic and Economic Dialogue, working closely with Secretary Geithner. Secretary Clinton and Secretary Geithner convened this group of economic, political, and strategic players from across the Administration to engage in two and a half days of deep dialogue with Chinese friends on a host of issues, ranging from financial matters to regional concerns, North Korea, Iran, Afghanistan-Pakistan, and also, obviously, pressing global challenges like climate change.


This is our second meeting of the Strategic and Economic Dialogue. Our first meeting took place last summer. Obviously, Secretary Clinton will seek to underscore her continuing commitment to the principal issues that she underscored in 2009 which continue to animate U.S.-China relations, and that is cooperation on regional security matters, work together on global financial issues, and obviously, climate change as well.


This is one of the largest groups of cabinet and subcabinet officials from the United States ever to visit China. We’ll have a total group of almost 200 officials that will be there during this two-day session. It includes virtually all elements of the U.S. Government, also key players from the Department of Defense and U.S. Pacific Command as well.


After our time in Beijing, Secretary Clinton will proceed to Seoul, South Korea, where she will meet directly with Foreign Minister Yu and also President Myung-bak for close consultations, again, on both developments associated with the tragic sinking of the South Korean corvette, the Cheonan, but also other developments on the Korean Peninsula. And then we will be returning back to the United States next Wednesday.


That’s the general overarching game plan. This is Secretary Clinton’s fifth trip to Asia since she’s been sworn in as Secretary of State. Obviously, very critical issues across the spectrum. And in a few minutes, I’ll look forward to taking your questions. Thank you.


MR. LOEVINGER: Good morning. I think I’ll start talking about Secretary Geithner’s schedule over the next few days and then talk a bit about our objectives for the economic track of the Strategic and Economic Dialogue.


On Friday evening, Secretary Geithner will depart for Beijing, arriving Sunday morning. He’s going to have a working lunch with Governor Zhou of the People’s Bank of China, and then that evening he’ll have a working dinner with Vice Premier Wang Qishan.


On Monday, Geithner will deliver remarks at the opening session of the Strategic and Economic Dialogue. And this is all going to be open press at the opening session. And he’s also going to deliver remarks at the opening session of the economic track. Again, that’s going to be open press.


I’ll get into a moment the substance of the discussions in the economic track, but that’s going to comprise the rest of Monday. Monday night, there’s going to be a welcoming dinner – a banquet – for both the strategic and economic track participants.


On Tuesday, in one of the innovations that Assistant Secretary Campbell talked about with the Strategic and Economic Dialogue, is we’re going to have a joint session of both the economic and strategic tracks to talk about development issues. And then in the afternoon, both Secretary Clinton and Secretary Geithner will meet with Premier Wen Jiabao and President Hu Jintao.


They’ll also participate in closing statements, and again, that will be open press. And then both secretaries will conduct a U.S. press conference before Secretary Geithner departs Beijing.


Now let me just talk a bit about our objectives for the economic track. Our relationship with China is one of the most important in the world, and President Obama is committed to making it more beneficial to the American people. President Obama has underscored the very tight link between trade and U.S. job creation, and he has set a goal of doubling exports over the next five years to create 2 million additional American jobs. Combating barriers that prevent U.S. workers and companies from getting free and fair access to foreign markets and ensuring that large economies like China with large current account surpluses depend more on their own domestic demand for growth, are key components of our efforts to achieve this goal of doubling exports in five years.


As the world’s largest and fastest-growing major economy, China presents enormous opportunities for U.S. companies and U.S. workers, but also some of our biggest economic challenges. The Strategic and Economic Dialogue allows U.S. and Chinese officials at the very highest levels to work together to address these challenges, to comprehensive and candid engagement and discussion. That’s why Secretary Geithner and Secretary Clinton are leading such a large delegation to Beijing.


While we hope to make progress on a range of issues, not all of the thorniest issues in our bilateral relationship will get resolved in a single meeting, and we will continue to promote U.S. interests in our bilateral economic relations with China using every tool – the S&ED, the JCCT, the G-20, other fora, and of course, WTO-consistent trade remedies.


Let me just tell you, on the economic side who’s going to be participating on the U.S. side. It’ll, of course, be led by Secretary Geithner. We’ll also have Ambassador Huntsman, Secretary Locke, Health and Human Services Secretary Sebelius, Ambassador Kirk, CEA Chair Romer, Director of the White House Office of Science and Technology Policy Holdren, Chairman of the Federal Reserve Bernanke, President of the U.S. Export-Import Bank Hochberg, Chairman of the FDIC Sheila Bair, and Director of the U.S. Trade and Development Agency Zak.


Now, they’re going to be participating in the economic track, but again, as Assistant Secretary Campbell mentioned, one of the innovations is we’re bringing kind of the strategic side and the economic side of our governments together. And many of these participants that I just listed are also going to be participating in the strategic track.


On the substance of the discussions last year, we agreed with China that there are kind of four key areas in our economic relationship that we’re going to focus our engagement and discussions on. One is combating trade and investment barriers. Two is promoting a strong recovery and more balanced growth. Three is promoting more resilient, open, and market-oriented financial systems. And the last one is strengthening the international economic and financial architecture.


And I’ll just finish up by briefly talking about our messages in each of those sessions. On trade and investment, it’s clear that both the U.S. and China have benefited greatly from a rule-based global trade and investment regime, but it’s also clear that American workers and American firms and the U.S. Government have concerns about some of China’s trade and investment policies, most recently and perhaps most notably, some of China’s policies to promote what’s called indigenous innovation. Again, we have no problem with China promoting innovation. We do it. Lots of countries do it. But we want to make sure that they do it in a way that doesn’t close off markets for U.S. goods and services.


On promoting more balanced growth, again, as I said, our highest priority now is to create jobs for American workers, and this will require that both countries take steps to rebalance the way they grow. The U.S. economy is recovering, but U.S. households are rebuilding their wealth. We’ve seen household savings come up from the lows before the crisis, and also the Administration is very committed once the recovery is fully assured to bringing the fiscal deficit down to a sustainable level.


The implications for China is that the U.S. consumer is going to play a different role in this recovery than in previous recoveries. And it’s more important than ever that China accelerate its efforts to promote homegrown, consumption-based growth.


On promoting more resilient and open financial sectors, the U.S. and China face very different challenges. But at the same time, reforming our financial sectors and strengthening regulation and supervision is critical both to have strong and sustainable growth and reduce the risks of further booms and busts. We are also working very hard to strengthen cooperation among our financial regulators. This has to keep pace with the integration of our financial sectors to ensure the integrity of our markets, cut off regulatory arbitrage, contain systemic risks, and protect small investors from fraud.


Lastly, on strengthening the international financial and economic architecture, both the U.S. and China recognize that multilateral institutions and mechanisms – like the G-20, like the IMF, like the World Bank – have a very important role to play in supporting a strong recovery, job creation, global standards of good governance, open trade and investment, poverty reduction, and a strong international financial system. And we’re going to talk with China about ways we can work together to make sure that these institutions are both legitimate, effective, and have the resources to do their jobs.


MR. CROWLEY: We’ll take questions.


ASSISTANT SECRETARY CAMPBELL: Thank you very much. And identify yourself if you would, please.


MR. CROWLEY: We’ll start with Charlie.


QUESTION: Secretary Campbell, you mentioned that there will be part of the discussion --


MR. CROWLEY: Charlie Wolfson with CBS.


QUESTION: Sorry. Charlie Wolfson, CBS. You mentioned that there’d be discussions of the situation in Thailand. Can you bring us up to date on what the situation is in Thailand, the U.S. Embassy itself and Americans there, but how you see the situation?


ASSISTANT SECRETARY CAMPBELL: Thank you. I think it would be fair to say that we are still gathering information from last night’s events. There was widespread action. The government did move against the key encampments in the middle of the city. Much of those – many of those groups have been disbanded. There has been substantial burning, substantial looting throughout the city, and there are reports of sporadic incidents throughout the country as a whole. We continue to monitor the situation very closely.


And we will be issuing a statement later. I will be meeting with representatives from the Thai Government today to get their take of developments on the ground. I spoke to the Thai ambassador – excuse me, the American ambassador in Thailand this morning. I think – I expect we’ll have more for you later today.


MR. CROWLEY: (Off-mike.)


QUESTION: Wait, can we do this the way we usually do it? Thanks. Matt Lee with the AP. You also mentioned earlier in your opening remarks that the South Korean ship sinking would be an issue. Recognizing the report actually hasn’t been released, I don’t think, but a pretty open secret what it says, can you talk about what goes into the calculus of a response in terms of how you determine what’s appropriate?


ASSISTANT SECRETARY CAMPBELL: I can’t, because the report has not been released and it will be released about 2200 tonight in Seoul. I can tell you that the United States has been deeply and actively involved in all aspects of the investigation and the United States strongly supports its conclusions, as it will be rolled out this evening.


I will tell you that Secretary Clinton, one of the reasons and purposes for her trip will be to have the closest possibly consultation with Japan, China, and South Korea on the next phase. Obviously, we have a deep, enduring, and profound interest in the maintenance of peace and stability on the Korean Peninsula, but we will be working closely, particularly with our South Korean friends, about the next phase.


QUESTION: Well, just whatever the report ends up saying, although we all know what it is going to say, are there concerns that a response that you might take or that anyone –


ASSISTANT SECRETARY CAMPBELL: I think I’ll just stay – stick where we are. The Secretary will have much more to be talking about on this matter as the situation develops in the next couple of days.


QUESTION: Dan Neumann with Inside U.S. Trade with a question for Mr. Loevinger. Could you talk a bit about how currency is going to fit into those four topics that you outlined on the economic track, and especially how these talks fit in with the somewhat nebulous timing for the – well, no longer April – currency report, but the delayed currency report that Secretary Geithner talked about last month?


MR. LOEVINGER: Yeah. I mean, we’ve been very clear in our discussions that China moving to a more market-determined and stronger exchange rate is an important part of a range of policies that are going to promote more balanced and sustained growth in the global economy. As Secretary Geithner said in early April, when we announced that we were delaying the release of the report, we’re in intensive discussions with the Chinese both bilaterally in the run-up to the S&ED and multilaterally in the G-20. He said, at that time, that he believes it’s in the U.S. interest to let these discussions play out.


We’ve remained confident that what we don’t know when China is going to move, we remain confident that they’re going to determine that it’s in their interest to move to a more market-determined exchange rate.


Yes. The gentleman right here.


QUESTION: Lalit Jha from Press Trust of India. In March, you went to Delhi to talk with the Indian Government on China and Asisn-related issues. And in April, Assistant Secretary Blake went to Beijing for U.S.-China Sub-Dialogue on South Asia. So can you give us a sense of the dynamics between U.S., China, and India as you try to make moves on regional and global issues?


And secondly, where do we stand on U.S.-Burma relations after your second trip to Burma? Have you seen anything moving forward in that?


ASSISTANT SECRETARY CAMPBELL: Let me answer the first question first. And I can talk to you primarily about my own engagement with India. I took a delegation to Delhi for discussions with Indian friends about developments in Asia generally. We talked about Southeast Asia, China, Northeast Asia and developments there. And I think our desire is to continue a strong dialogue with India about their so-called “Look East” strategy, which obviously involves India playing a larger role economically, politically, strategically in the Asian-Pacific region. We welcome that, we support that, we think that’s an important development in the next phase of Asia’s growth. We talked about regional architecture and the desire to see India play a larger role in the emerging architecture of the Asian-Pacific region. And I must say we were quite satisfied by our discussions and we, I think, look forward to continuing deeper discussions with Indian friends about developments in the wider Asian-Pacific region.


As you just suggested, I returned from a trip to Burma last week. It was my second trip. While I was there, I had the opportunity to interact directly with the government, also with elements of the opposition ethnic groups, key groups that are going to be competing in the upcoming election, the NLD, and also I had a chance to meet Aung San Suu Kyi. In my statement at the conclusion of my visit, I did underscore that the United States remains quite dissatisfied with what we’ve seen to date in terms of movement on the part of the government on the specific issues that we’ve laid out. We were hoping to see an internal dialogue among the key parties in advance of the upcoming election. We sought movement on issues associated with political prisoners inside the country. We had hoped for more specific steps to ease tensions between the government and ethnic minority groups. And lastly, we wanted to see more progress on issues associated with UN Security Resolution 1874. On each of these issues, we are troubled by developments and we are calling on the government to follow through on specific steps to allow not only a better relationship with the United States and the international community but a better future for its people overall.


MR. CROWLEY: We’ll take – back in the back, right there. Yes (inaudible).


QUESTION: Hi. Emma Ashburn. I’m with Asahi Shimbun. Just to follow up on the question earlier on the RMB from Mr. Loevinger, does it – do you see – do you think that the S&ED and the timing of the S&ED has forced China to push back any movement on the RMB? And do you think that the S&ED helps or hurts Chinese thoughts on the RMB?


And secondly, do you have a date for the April FX report release? Or will it just be pushed back indefinitely? Thanks.


MR. LOEVINGER: Okay. I think it’s very important on this issue – and again, we’ve made very clear that a more market-determined exchange rate by China will make an important contribution to more sustained and balanced global growth. It’s important to have both the bilateral channel and the multilateral channel, and we’re actively engaged in both channels. And we remain confident that China’s going to decide it’s in its interest. And if you look at what’s happening in the Chinese economy, their recovery is strengthening, their trade is growing, prices are rising, they’re increasingly worried about the rise of housing prices. And a stronger, more flexible, exchange rate would help them manage challenges they face in their own economy.


QUESTION: And the FX report?


MR. LOEVINGER: Oh. As I said, in early April when we announced we were delaying the report, we said that we were in intensive discussions, bilaterally through the S&ED and multilaterally through the G-20. And the best thing to encourage an early move by China on the exchange rate is to let these discussions play out. I don’t want to prejudge how those discussions are going to play out.


MR. CROWLEY: Go there, and then come back to this row.


QUESTION: Ian Talley, Dow Jones Newswires. Firstly, just housekeeping. How many agency heads are going over? I heard something north of 200 or –




QUESTION: Total officials.


ASSISTANT SECRETARY CAMPBELL: No, total officials that are going, or people from the U.S. Government.




ASSISTANT SECRETARY CAMPBELL: What’s the total number? I think it’s around – between – I think it’s between 15 and 18. So we’ll – I’m hearing 16, but it may be slightly different than that as we go forward.




ASSISTANT SECRETARY CAMPBELL: And that includes both in the strategic and the economic track.


QUESTION: Okay. Gotcha. And secondly, what changed – earlier this year, Treasury Secretary Geithner had said he was going to press the Chinese; he was going to be more rhetorical on his urging them to appreciate their currency. There is obviously a move to be less rhetorical about that. What changed the mind and what influences did euro devaluation have on this?


And then finally, indigenous innovation, what deliverables do you expect? Or is this just a part of a process? Yeah.


MR. LOEVINGER: Okay. First of all, I don’t think there’s been any change in Secretary Geithner’s approach on the RMB. We’ve been very clear with the Chinese that this remains a top priority. And I think what’s happening in Europe reinforces the imperative that China move quickly to promote homegrown consumption-led growth in its own economy.


Indigenous innovation is also a very important issue. We’ve made that very clear to the Chinese. Again, we understand and support their efforts to move up the value-added chain, to promote technological development, but we just want to make sure that they do it in a way that doesn’t close markets and doesn’t cut off access for U.S. goods and services and doesn’t discriminate against U.S. companies operating in China. I think we’ve made some progress so far. That’s going to be an important part of our discussions on Monday and Tuesday. And I think this is an issue that we’re going to continue to discuss for a while.


MR. CROWLEY: Mark, and then --


QUESTION: Question for Assistant Secretary Campbell. Mark Landler at The New York Times. Two questions, actually, Kim Jong-Il was, as you know, in China. Do you have hopes that you will learn from the Chinese substantive things about his regime and maybe even things related to the Cheonan affair, given that they have seen him recently? That’s the first question.


The second question, on Iran, the annexes to the sanctions resolution are still under negotiation. Is there going to be substantive negotiation on that in the course of this S&ED? Would you expect to maybe come out of the S&ED with a completed resolution package?


ASSISTANT SECRETARY CAMPBELL: Thank you, Mark. Good questions on both side. Let me try to answer both. First of all, we anticipate – I was in Beijing on Monday. We obviously discussed with Chinese friends developments on the Korean Peninsula. I anticipate a central issue of discussion for Secretary Clinton with her interlocutors, Dai Bingguo and also the Chinese leaders, will be on their assessments and – their assessments of developments in North Korea and their reaction to the report that will be released later today as already discussed.


Mark, my understanding is that most of the work on the last phases of the resolution will be taking place in New York under the direction of Ambassador Rice. I do expect, however, that Secretary Clinton will be talking specifically about next steps with Chinese interlocutors associated with Iran.


QUESTION: This is for Ambassador Campbell. Rosalind Jordan with Al Jazeera English. Following on North Korea, specifically what is the U.S.’s thought process at this point about dealing with the sinking of the South Korea ship? And how does that tie in with any attempts to try to hold North Korea accountable for its attempts to expand its nuclear program?


ASSISTANT SECRETARY CAMPBELL: If I can say, I don’t – we already had a good question. I don’t mean to be avoiding the discussion about this matter, but the truth is that the official report, which we have played a central role in, will be rolled out today at about 10 p.m. tonight in South Korea. At that time --


MR. CROWLEY: 10 p.m. our time.


ASSISTANT SECRETARY CAMPBELL: 10 p.m. our time. I apologize. At that time, the South Koreans, with the United States and other countries, will lay out the results of the examination and the assessments of what caused the sinking. Thereafter, the United States will have a statement and that one of the reasons that Secretary Clinton is traveling to the region and traveling to both Japan and South Korea is to articulate and put in place a set of responses. And we’ll have more to say about that in the coming days. Thank you.


QUESTION: But isn’t there concern, though, sir, about the apparent amount of time it has taken not just to investigate this but to hold North Korea accountable for what seems to be a growing number of provocative actions in the region?


ASSISTANT SECRETARY CAMPBELL: We have stated on several occasions that we are concerned by a number of steps that North Korea has taken that we consider to be provocative: nuclear tests, missile launches, and other regional activities. The United States still believes that North Korea must comply by its commitments that it’s made in 2005 to relinquish its nuclear pursuits. We are, however, facing a very serious set of circumstances in the coming days. And as I indicated, we’ll have more to say specifically about the tragic sinking of the Cheonan in the coming days. Thanks.


QUESTION: Okay. Thank you.


QUESTION: Parameswaran from Agence France Presse. A question for you, sir. Just a follow-up to your answer on the euro. You said that basically what happens in Europe makes it more necessary for China to beef up domestic consumption. But can I be more specific in the sense that does the depreciation of the euro against the dollar make it more compelling for China to revalue the yuan, especially when the dollar has gone up so rapidly and makes it more – or dampens U.S. competitiveness?


MR. LOEVINGER: Yeah. I mean, as I said, I think the challenge that Europe faces and the prospects that growth may be slower reinforces the imperative that other major economies step up their effort to promote homegrown domestic demand, consumption-led growth. I talked about what we’re going to tell the Chinese about the U.S. economy. We’re recovering, but U.S. households are rebuilding their wealth and the U.S. consumer is going to play a very different role in this recovery than they’ve played in previous recoveries. So you’ve got challenges in Europe, you’ve got a different kind of recovery in the U.S., you’ve got challenges in Japan. That’s why we feel that it’s more important than ever that China do everything that it can to promote homegrown growth, including through a more market-oriented currency.


QUESTION: Paul Eckert of Reuters –




QUESTION: Assistant Secretary Campbell, on Okinawa, some segments of the Japanese media have said that Prime Minister Hatoyama has decided to postpone that whole decision until the end of the year, until about November. Have you heard anything about that through official channels from Japan? And how are you going to approach this issue? Do you see a lot of downside if the whole matter is put off for another six months?


ASSISTANT SECRETARY CAMPBELL: I can say quite simply we have not heard anything officially of that sort from Japanese interlocutors, official or otherwise. And obviously, one of the reasons that Secretary Clinton is looking forward to her interactions with both the prime minister and the foreign minister is to hear quite clearly from them about what their plans are for the next steps associated with Okinawa.


QUESTION: Thanks. Rebecca Christie from Bloomberg. Some in the business community have expressed concerns that because of all the security issues on the table, the economic agenda might be politicized or overshadowed and therefore less effective. How do you respond to those?


MR. LOEVINGER: I think one of the advantages of having the Strategic and Economic Dialogue is we can make very clear to the Chinese what the U.S. Government’s priorities are in our bilateral relationship. Assistant Secretary Campbell has talked about the priorities on the strategic side and Secretary Geithner has made very clear what our priorities are on the economic side: exchange rate, indigenous innovation, other issues that I talked about. But those are really the top two.


QUESTION: Are you worried, though, that by having both at the same time you’re sending a mixed message about which of those is more important, particularly if things like Iran and North Korea are in the headlines so much these days?


ASSISTANT SECRETARY CAMPBELL: I’m not, and I just tried to begin by suggesting if you look carefully at what Secretary Clinton said when she visited China after being appointed as Secretary of State, she made very clear that one of the issues at the very top of the agenda was the global economic situation and the role – the critical role that the United States and China play in that situation. So I think there’s no lack of recognition on both sides of the economic and strategic spectrum that we have a host of issues that we need to work on together – both strategic, regional, and particularly economic and financial.


MR. CROWLEY: We have time for a couple of more. We’ll take one back here.


QUESTION: 21st Century Business Herald, a Chinese newspaper. My question is to Mr. Loevinger. Last – over the last Strategic and Economic Dialogue, the first commitment that U.S. Government made is that the U.S. is going to reduce its debt and deficit when the recovery is coming back. So I wonder, by now do you have clear roadmap for the Chinese about what you plan to do to address this issue. And we can look – if you look back, how much of this commitment made over the past Strategic and Economic Dialogue are being exercised? Are you satisfied with the situation of how many of them are exercised?


MR. LOEVINGER: Okay. I’ll answer the last question first. As part of our preparations for this Strategic and Economic Dialogue, we spent a lot of time with our Chinese counterparts going through the accounting exercise of making sure that both sides fulfill on their commitments. We take this very seriously, and I know that the Chinese side does as well. I’d say, while not every commitment has been fulfilled, I think if you go back and look at the joint fact sheet from the last S&ED, you’ll see that most – not all, but most commitments have been filled by both sides.


On U.S. fiscal policy, again, we’re going to be very clear with the Chinese because we know they have questions, that this Administration is committed to bringing down the fiscal deficit and the government’s debt to a sustainable level. But we’re not going to do that until the recovery is fully established. That’s the best thing for China, it’s the best thing for the world, it’s the best thing for the U.S.


President Obama has already put forth a set of proposals to bring the U.S. deficit back down to a sustainable level. Working with the Congress, we’ve created a commission that is going to come up with further recommendations on how we can do this, and particularly deal with the growth of entitlement spending. And we look forward to those recommendations by the end of the year.


MR. CROWLEY: So we’ll finish up with two more questions. I’ll take a question here and I’ll take question here. What’s your question?


QUESTION: Thank you. South Korean foreign minister said he will take the Cheonan incident to the UN Security Council. Do you support that? Also are you considering re-listing North Korea as a state sponsor of terrorism? Thank you.


MR. CROWLEY: And your question? Okay.


QUESTION: My question is for Ambassador Campbell. Will strategic dialogue discuss resuming military-to-military exchange? And will there be any senior official from Pentagon to participate in strategic dialogue?


ASSISTANT SECRETARY CAMPBELL: Let me take the last question and then I’ll take the question from our Korean friend.


Members of the delegation, Secretary Clinton’s delegation and Secretary Geithner’s delegation, will include senior members from the Pentagon, and we will have briefings with Chinese friends on a range of issues, including the recently concluded Nuclear Posture Review and issues associated with the Quadrennial Defense Review. We will also be joined by Admiral Willard. He is the commander of U.S. Forces in the Pacific, and he will interact directly with both members of the Chinese delegation and others about how U.S. Forces Pacific see areas where the United States and China can work closely together on humanitarian and other matters confronting our nations in the Asian-Pacific region. And of course, it is our hope that mil-to-mil relations will pick up steam in the latter half here of 2010. And I believe that there will be some discussions to that effect during our time in Beijing.


And to the specific question, I can tell you that the United States supports South Korea unequivocally and strongly. And President Myung-bak and President Obama spoke on the phone earlier this week about a joint strategy on the way forward, and we will be discussing a variety of possible areas of coordination during our upcoming visits to the region and during the meetings between Secretary Clinton and Foreign Minister Yu, yes.


MR. CROWLEY: Thank you very much.


PRN: 2010/653