The Strategic & Economic Dialogue / Consultation on People-to-People Exchange Closing Statements

Remarks
John Kerry
Secretary of State
Secretary of the Treasury Jacob Lew, Chinese State Councilor Yang Jiechi, and Chinese Vice Premier Wang Yang
Ben Franklin Room
Washington, DC
June 24, 2015


MODERATOR: Ladies and gentlemen, please welcome the Secretary of State and the Secretary of the Treasury accompanied by Vice Premier Wang Yang and State Councilor Yang Jeichi of the People’s Republic of China.

SECRETARY LEW: Good afternoon and welcome. I’d like to thank Vice Premier Wang Yang, State Councilor Yang Jeichi and the Chinese delegation as well as my U.S. colleagues for their participation in a productive S&ED dialogue over the past several days. Our discussions have been informative, insightful and frank, reflecting the full range of issues that we face in our bilateral relationship.

The mission of the United States-China Strategic and Economic Dialogue is to make concrete progress on the issues that matter to the citizens of both of our countries, cooperating where we can and directly addressing the issues on which we differ. Through the S&EDs we have strengthened our bilateral economic ties and built a mechanism that allows us to constructively address challenges as they arise. And we’ve delivered concrete results.

U.S. exports to China have doubled since 2009, growing more than twice as fast as exports to the rest of the world. China’s RMB has appreciated and the exchange rate has become more flexible with China’s foreign exchange intervention declining over the past year. China’s current account surplus has fallen from a peak of approximately 10 percent of GDP before this Administration took office to 2 percent last year.

But more progress is needed in order to ensure balance and sustainable growth for both our economies. It is critical that China remain on a path toward a more market-determined exchange rate and a more transparent exchange rate policy.

More broadly, our economic discussions over the past two days have focused on a few concrete areas: creating benefits for both our citizens by expanding opportunities for trade and investment; implementing China’s economic reforms to ensure sustained, balanced growth in China and a more rapidly growing Chinese market for the goods and services of the United States and the rest of the world; cooperating to support and strengthen the international financial system including by upholding the highest standards; and coming together to tackle the most pressing global issues of our day including climate change. We’ve also had candid conversations about standards of behavior in cyber space. We agree there is value in bilateral and international cooperation on these issues.

It’s clear from our discussions over the past two days that China’s leaders are working hard to reform China’s economy and growth model. This ambitious set of reforms is needed to reorient China’s economy towards domestic consumption and away from exports, heavy industry and investment. Implementation is still in the early stages, but already we’re starting to see some progress. Let me give a few examples of progress that we’ve made at this year’s S&ED.

With regard to exchange rate reform, China has committed to intervene in the foreign exchange market only when necessitated by disorderly market conditions and to actively consider additional measures to transition to a market-oriented exchange rate. We welcome China’s commitment to publish economic data under the IMF’s SDDS template by the end of the year and the explicit recognition that it’s in China’s own interest to adopt the transparency standards of major reserve currencies.

On information, communication and technology issues, China has committed to ensure that regulations in the commercial banking sector will be non-discriminatory, will not impose nationality-based requirements in the commercial bank ICT space, and will enhance policy transparency in this area. We will continue to push China on this priority.

On the Bilateral Investment Treaty, both sides have reaffirmed that the negotiation of a high-standard bid is a top priority in our economic relationship committing to intensify negotiations and exchange improved negative list offers in early September.

We also had candid discussions on China’s national security review including our concerns regarding its broad scope. We’re also pressing for regulatory certainty under the national security review to avoid retroactive reviews and discussing our concerns regarding possible recognition of third parties.

With regard to the financial sector, China committed to reforms including taking the final steps in liberalizing interest rates, opening capital markets and expanding access to foreign financial service firms and investors. By shifting resources to China’s households and private firms rather than state-owned enterprises, these initiatives will support China’s transition to consumption-led growth that creates opportunities for U.S. workers and firms.

On climate and energy cooperation, both sides agreed to use public resources to finance and encourage the transition towards low-carbon technologies. We’re also determined to work constructively together to support the effective operation of the Green Climate Fund, which we both recognize as the main dedicated multilateral climate finance fund. We further agreed to finalize our G20 fossil fuel subsidy peer review by the end of 2015. We welcome these important steps that China’s leaders have taken and encourage them to follow through on the commitments that they’ve made.

We also held constructive discussions on our joint responsibilities in upholding high governance and standards in the international financial system. China has a significant role in the global economic and financial architecture and we welcome China as a partner in supporting, maintaining and advancing high standards in multilateral institutions as we work together to address the challenges of the 21st century. This is especially critical as we head into China’s G20 host year.

We also discussed the need to lay a strong foundation of economic cooperation and economic reforms for President Xi Jinping’s visit to the United States later this year. While today’s commitments do not resolve all of our concerns or China’s, they do represent real progress that will create opportunities for U.S. workers and companies in a growing 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 Yang for his leadership in these discussions. I look forward to continuing to work with Vice Premier Wang as we build towards a successful visit by President Xi and expand on the good progress that we’ve made here.

Thank you very much. And I’m pleased now to introduce Vice Premier Wang Yang.

VICE PREMIER WANG: (Via interpreter) Friends from the press, good afternoon. With two days of intensive and orderly work, the seventh round of China-U.S. economic dialogue has achieved a full success. The two sides conducted candid and in-depth exchange of views on issues of overarching, long-term and strategic importance to the two economies and the world economy and reached over 70 important outcomes. The two sides promised to further advance structural reform and achieve sustainable and balanced economic growth. And the United States will pay attention to the impact of monetary policy on the international financial system and promise to increase investment, national saving, reduce deficit, reform the test code and to work for fiscal sustainability over the medium term.

The two sides commit to carry out close cooperation within the G20, APEC and other multilateral frameworks. The United States actively supports China assuming the G20 presidency in 2016, promise to implement the plan of IMF quota and Executive Board reform as quickly as possible. And we affirm that the distribution of quota should continue to shift toward dynamic emerging markets and developing countries to better reflect the relative weight of IMF member states in the world economy.

The two sides conducted in-depth discussions on RMB’s inclusion in the SDR and promised to respect IMF’s procedures and process in the upcoming SDR review, and we’ll continue to enhance communication on RMB’s inclusion into the SDR. The two sides reaffirm their support for the multilateral trading system and their commitment to the Doha Round negotiations. The two sides reaffirmed that the BIT negotiations is the top priority in bilateral economic relations. They commend the progress of the negotiations to date and believe that the exchange of negative list is an important milestone – the exchange of negative list in the 19th round is an important milestone of the BIT negotiations. The two sides commit to continue to advance negotiations, improve a negative list offer with a view to reaching a mutually beneficial and high-standard treaty.

The two sides are encouraged by economic – by the progress in the economic cooperation between provinces and cities in China and the U.S. states and cities, and they agree to set up more mechanisms like the Trade and Investment Cooperation Joint Working Groups to create conditions for closer economic exchanges between local governments. The two sides agreed to further enhance cooperation between governments and businesses of both countries on investment in the respective infrastructure sectors, and discussed mutually beneficial and market-based cooperation models.

The United States fully recognizes China’s strong concerns on the issue of export control and reiterates its commitment to encourage and facilitate exports of commercial high-tech items to China for civilian end-users and end-uses. China will send reverse trade missions to the United States in the coming period and work for balanced and sustainable two-way trade. The two sides will enhance communication and dialogue and work toward the reciprocal recognition of bilateral (inaudible) its own transport category airplanes.

The two sides agree to enhance financial cooperation and strengthen information sharing, technological exchange, and regulatory cooperation in the field of cross-border oversight of financial institutions, securities and futures regulation, OTC derivatives regulation, and international convergence of accounting standards. The two sides welcome cooperation between China’s Foreign Exchange Trade System and the Chicago Mercantile Exchange to promote connectivity of financial market infrastructures between the two countries. The United States is willing to discuss the implementation of the Volcker Rule with Chinese financial entities and other interested parties.

This round of economic dialogue has included some innovative features in both contents and formats. We had a special strategic session on our cooperation in the international financial system and shared views on the governance of international financial institution, reform of the international management system. We also had a strategic discussion on multi-trading – multilateral trading system and explored our cooperation within the multilateral trading system. These innovations have enabled the dialogue to focus more on the strategic issues concerning the long-term development of trade and economic cooperation between the two countries. The success of this round of economic dialogue has provided a stronger foundation and drive for the healthy and stable growth of China-U.S. relations and laid the groundwork for the economic agenda of President Xi’s upcoming state visit to the United States in September.

Increasing understanding is an important precondition for willing cooperation between the two major countries of China and the United States, and dialogue and communication is an important way leading to friendly relations between the two countries. The success of the dialogue is yet another testimony to the maturity of our major country relations and it also shows that the S&ED is an indispensable platform for China-U.S. cooperation. Over the past year, I’ve maintained a close communication with Secretary Lew, and we have in-depth exchange of views on many important issues concerning our economic relationship.

The working teams of the two sides have engaged in frequent consultation and they have devoted energy and time for the implementation of the outcomes of the last round and also the delivery of greater outcomes of this round. I want to thank the U.S. side for the thoughtful arrangement, and I also want to thank our journalists for your interest in our dialogue.

I’ll now introduce Secretary Kerry to speak. Thank you.

SECRETARY KERRY: Well, good afternoon, and thank you very much, Vice Premier Wang. I greatly appreciate the serious conversation that you and Secretary Lew had on the – principally the economic side, but also on some of the security. And I want to thank State Councilor Yang for his continued significant engagement with respect to these issues. The depth and breadth of our discussion at this year’s Strategic & Economic Dialogue has been significant, and I think it is fair to say from my perspective, certainly – this is my third dialogue – that this has been perhaps one of the more constructive and productive in terms of the seriousness of the discussion that we’ve had on a very long, comprehensive agenda, with a host of important bilateral, regional, and global issues.

The dialogue that we’ve engaged in here over the course of the last two days and one night really reflects a joint U.S.-China commitment to cooperate in areas of common interest and to seek constructive solutions where we have differences. And the United States, I want to re-emphasize, welcomes the emergence of a stable, peaceful, prosperous China that plays a responsible role in world affairs. And as I have said before, there are very few global challenges that we could not better address through closer U.S.-China collaboration.

For example, on climate change, our dialogue last year set the stage for our President’s historic joint announcement in November. And this year, we agreed to work toward a truly ambitious and global climate deal in Paris. One of the things to come out of this is a very clear determination by both of us as the world’s two largest emitters and the world’s two largest economies to make certain that we are leading the effort as we go into Paris. We exchanged plans on fulfilling our pre- and post-2020 climate commitments, and we announced significant progress on a host of climate change and clean energy initiatives, including the creation of a zero-emissions bus program, the launch of a new initiative to curb emissions from ports and from marine vessels, and the location of the first ever low-carbon cities summit in Los Angeles this fall. And also, the selection of a new carbon capture demonstration project that will bring in the private sector in order to cut carbon emissions for both of our countries from one of the biggest emissions sources, which is coal plants.

On development cooperation, State Councilor Yang and I have repeatedly emphasized how much more we think we can accomplish by aligning our efforts on development. Our countries continued these discussions yesterday in a groundbreaking special session. We will seek to take action on our discussions in the coming months, and to solidify agreement on areas of increased collaboration, extending the successful model that we developed in response to the Ebola crisis toward helping to build health sector capacity in Africa and supporting disaster preparedness and response efforts around the world and promoting regional connectivity in Asia. I might add we are drawing on some of this disaster preparedness from our mutual experiences with respect to Nepal.

Close U.S.-China cooperation is also essential to meet common regional challenges. This year, we agreed to hold exchanges on space security and to expand cooperation between our militaries, which is essential to avoiding misunderstandings, including by developing new annexes to the confidence-building measures that our leaders announced last year. We agreed to deepen our counterterrorism cooperation and convene a meeting on how we can work together to curb the flow of components used by terrorists worldwide to produce IEDs.

We also continued to expand our cooperation by preventing nuclear proliferation. We are very close partners in the P5+1 negotiations, which is working towards an agreement that will resolve international concerns regarding Iran’s nuclear program and block any pathway to obtaining fissile material for a nuclear weapon, and we’re grateful for China’s wholehearted participation in this effort. We are both strongly committed to a stable, prosperous, and denuclearized Korean Peninsula.

On Afghanistan, our countries share a mutual interest in supporting efforts by the government in Kabul to reform its economy and to protect its people from the threat that is posed by violent extremists. And that’s why we’ve pursued multiple rounds of trilateral talks with the Afghan Government in order to expand our cooperation regarding an Afghan-led and Afghan-owned reconciliation process, as well as Afghanistan’s economic development. And today, we agreed to launch a new joint training program for Afghan medical and veterinary professionals.

As expected, our dialogue over the last two and a half days included a very frank discussion of some issues on which we have not always seen eye to eye, and that is, frankly, a sign of a mature and good working relationship. For example, we continued our conversations on cyber security and on cyber theft. And the United States is deeply concerned about cyber incursions that have raised security questions and, frankly, harmed American businesses. We believe very strongly that the United States and China should be working together to develop and implement a shared understanding of appropriate state behavior in cyber space, and I’m pleased to say that China agreed that we must work together to complete a code of conduct regarding cyber activities.

I also reaffirmed that the United States will continue to stand up for universal human rights and freedoms that all people desire and should enjoy. These rights and freedoms are vital to stability and prosperity.

Among other issues, I raised our concerns regarding the pending legislation in China that might seriously undermine the ability of nongovernmental organizations and civil society to continue work that is critical to everything from protecting the environment to advancing rule of law to deepening cultural and academic ties between our countries. And many of our universities and many of our NGOs that are engaged in charitable activity rely on their ability to be able to do that work, and I believe we opened up a window of opportunity to be able to work together to resolve those issues. No great country, whether China or the United States, can seek at once to be more integrated with the outside world while inhibiting the flow of ideas and information from other places.

We also discussed the rise in tension between China and many of its neighbors regarding reclamation and possible militarizing activities in the South China Sea. While the United States does not take sides on the questions of sovereignty that underline territorial disputes in the area, we do have a strong national interest in freedom of navigation and overflight as well as peaceful resolution of disputes. And we believe that countries with competing claims should exercise restraint, refrain from preventative unilateral actions, and settle their differences in accordance with international law.

In parallel with the Security & Economic Dialogue, Vice Premier Liu and I chaired the Consultation on People-to-People Exchange. Among the many initiatives in this arena, we are working to ensure the inclusion of women in the economic success of our countries and expanding the reach of our educational programs, including minority and community colleges. We broadened our dialogue to include this year health care and the building of health care capacity in order to offer rich opportunities for cooperation in years to come and to help, as we did in Ebola, to develop a capacity to deal with crises in various parts of the world.

In addition, we had a lot to discuss this week, and what I have mentioned up until this point is really only a sample. We talked about better coordination in international humanitarian response, oceans policy. We had a unique meeting this morning on our mutual obligations with respect to fisheries and pollution and climate change and its impact on acidification. And we agreed that we will continue to expand that work with an understanding that just as we have joined together on climate change as a whole, we have an ability jointly as two great fishing nations, two nations that are deeply involved in ocean science as well as two great economies, that we have an ability to be able to have an impact on those issues.

We talked about port security, wildlife trafficking, and many other issues.

I want to congratulate and thank the delegation from China, just as I want to thank the delegation of the United States. Our teams did a lot of work leading up to this in order to make this successful and in order to lay the groundwork for an historic visit by President Xi in September. Together I believe we have established a very firm and constructive foundation for President Xi’s visit to the United States and also for other aspects of what is certain to be a very important year in the development of our bilateral relationship.

So in closing, let me just say that I wish the women’s soccer teams from the United States and China a very safe and competitive match on Friday. This is an issue where we have a difference about the outcome. (Laughter.) And I want to say to my counterparts, Vice Premier Wang and Vice Councilor Yang, thank you again for a very, very productive discussion. Thank you for helping to build your partnership in strengthening the ties between our two great countries.

Now I recognize State Councilor Yang for his comments.

STATE COUNCILOR YANG: (Via interpreter) Thank you, Secretary Kerry, friends from the media. Good afternoon. As Vice Premier Wang rightly pointed out, after two days of intense work the curtain is going to draw for the seventh round of China-U.S. Strategic & Economic Dialogue. Over the last two days, our two sides had candid and in-depth exchanges of views on bilateral relations and a host of major topics of mutual interest. We reached broad consensus and produced good results.

On the strategic track, Secretary Kerry and I had thorough discussions on how to build a new model of major country relationship, deepen practical cooperation, enhance China-U.S. cooperation in the Asia Pacific, handle regional hotspots and global challenges, and manage differences in a constructive fashion. Within the framework of the strategic dialogue, we also had the fifth Strategic Security Dialogue and a host of sideline consultations on fighting illegal trade in wildlife, Sudan and South Sudan, green port shipping, United Nations, and multilateral affairs. The dialogue delivered more than 100 specific outcomes covering nine areas. The two sides revealed the positive progress made in our relations since last year. Both sides share the view that President Xi’s state visit to the United States in September at the invitation of President Obama is of great importance and it serves the interests of both sides to ensure the full success of this visit. The two sides should work closely with each other on the preparations for the visit.

The two sides agreed to enhance exchanges and cooperation on counterterrorism, nonproliferation, law enforcement, and anti-corruption; space, science, and technology; customs, health, agriculture, forestry, transport, and local exchanges with a view to bring more tangible benefits to the people of our two countries. The two sides spoke highly of the recent visit to the U.S. by General Fan Changlong, the CMC vice chairman. The two sides expressed readiness to advance the institutional building of the two confidence-building measures and enhance exchanges and cooperation in anti-piracy, humanitarian disaster relief, peacekeeping, and military medical service. The two sides would also carry out positive interactions in the Asia Pacific and beyond and work for further progress in the mil-to-mil relations.

The two sides had a special joint session on climate change and agreed to continue to implement the China-U.S. joint announcement on climate change issued in November last year. The two countries would work with other countries to produce good results from the Paris conference. The two sides also agreed to have more result-oriented cooperation in energy and environmental protection, and we would also explore nuclear power cooperation and third countries.

It also gave me great pleasure to join Secretary Kerry at the first special meeting on ocean. At this meeting, in-depth discussions were held on enhancing our maritime environmental protection, law enforcement, security, the sustainable use of resources, and international maritime affairs. Multiple cooperation outcomes have been reached, showcasing the vast prospect we have for maritime cooperation.

During the dialogue, the Chinese side briefed the U.S. side on China’s domestic and foreign policies. China expressed – talked about its commitment to the path of peaceful development and the win-win strategy of opening up. China would work with all other countries to follow this win-win strategy of opening up to promote peace, stability, and development of the Asia Pacific and beyond. China is a participant, builder, and contributor to the current international system. We hope that China and the U.S. will work together to uphold the victorious outcome of the Second World War and uphold the basic norms governing international relations with the UN, the purposes and principles of the UN Charter at its core. We will work with all other countries to make the international system more just and equitable.

China reaffirmed its principled positions on Taiwan, Tibet-related, maritime, and cyber security, and stressed the need for the U.S. to respect and accommodate the interests and concerns of China and handle differences and sensitive issues with caution. China stressed that it is important for the U.S. to respect China’s sovereignty and territorial integrity; respect the development path chosen by the Chinese people.

In advancing human rights, China’s achievements are there for all to see. At the same time, on the basis of mutual respect and noninterference in the internal affairs of other countries, China is ready for human rights dialogue with the United States.

On maritime issues, China reaffirmed its firm determination to safeguard territorial sovereignty and maritime rights and interests, as well as continued commitment to seeking peaceful solutions to the relevant disputes through dialogue and negotiation with those directly concerned. And on the basis of consensus, China would work with ASEAN countries to advance the consultation on the COC. Navigation freedom in the South China Sea is guaranteed; we do believe that there will not be any issue or problem with navigation freedom in the future. We hope that the U.S. can be impartial and objective to serve peace and stability in this region.

On cyber issues, China affirmed its firm position – firm opposition and crackdown on all forms of cyber hacking, as well as China’s readiness for cooperation with the U.S. on cyber security on the basis of mutual respect and equality and mutual benefit. China urged the U.S. to respect facts, work together with China to improve the cyber relations between the two countries.

With regard to China’s legislation, the Chinese side pointed out that the relevant legislation is an important step of China to advance the rule of law. The legislation is made in the light of China’s national conditions with reference to the experience of other countries after soliciting opinions from various quarters. We hope that the U.S. side will respect that. We believe that to further encourage people-to-people exchanges and exchanges in other areas serves the fundamental interests of the two peoples. China will stay committed to further expanding people-to-people and other exchanges.

The two sides reiterated that the joint project of a China garden at the National Arboretum is of great significance for the friendship between our two peoples, and the two sides would work together to start and complete the project at an early date.

The two sides also had in-depth discussions on the interactions we have in the Asia Pacific. We agreed to step up coordination and communication through various levels of bilateral exchanges and institutionalized platforms on the Asia Pacific affairs. China pointed out that the shared interests of our two countries in the Asia Pacific far outnumber our differences. We need to act in the spirit of mutual respect, openness, inclusiveness, and win-win cooperation to handle our relations and work together with countries – other countries in the region to maintain peace, stability, and development in this region.

In the Asia Pacific region, our two countries have already carried out cooperation to improve people’s living standards and stimulate economic growth. We have already carried out such trilateral, tripartite cooperation. So we will continue to act in the light of the wishes of other countries to continue such bilateral, regional, and trilateral cooperation to serve the economic and social development of the countries in this region.

On the Iranian nuclear issue and the Korean nuclear issue, the two sides also exchanged views. We agreed to maintain close communication and coordination, and to work for the proper solutions of relevant issues. China is also ready to work with the U.S. and the rest of the international community to advance the reconciliation process in Afghanistan.

The competent departments of the two countries also had a dialogue session on development cooperation. The dialogue session reviewed tripartite cooperation in Afghanistan and Timor-Leste as well as the successful experience in jointly combatting Ebola. Meaningful discussions were made on expanding our development cooperation.

Just now Secretary Kerry talked about the outcomes from this round of CPE. Vice Premier Liu also shared the view that this sixth round of CPE is constructive and productive.

Dear colleagues, friends, the success of this round of S&ED fully demonstrates to the international community the readiness of China and the United States to work together to confront major international and regional issues and global challenges, and the outcomes of such work. China is ready to work with the U.S. to develop and to make good use of this dialogue mechanism to further promote our exchanges and cooperation in various areas so that our two peoples – and for that matter the people of the whole world – can benefit from our exchanges and cooperation.

As Vice Premier Wang mentioned, I would also like to join him in thanking our host, the United States, for its thoughtful arrangements and gracious hospitality for this round of dialogue and consultation. I would also like to thank the two teams for the hard work they have put in for this dialogue and consultation. I look forward to meeting you next year. Thank you.