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Analysts: China-US economic dialogue set to continue

By Xin Zhiming (China Daily)
Updated: 2008-12-05 07:41

China and the US will continue their bilateral economic dialogue even after president-elect Barack Obama is sworn in, although the mechanism may take a different form, analysts have said.

Special coverage: The 5th China-US Strategic Economic Dialogue

Related readings:  Commerce chief: Yuan's depreciation "small and normal"  Yuan's fall not part of policy  Coping with financial crisis a common task of China, US

The Obama transition team has not made explicit whether the new administration would continue with the current Strategic Economic Dialogue (SED) mechanism, a major channel for economic policy engagement between the two major economies.

"Such a dialogue is set to continue," said Dong Xian'an, economist with China Southwest Securities. "Obama is very inclusive and his administration would continue such a mechanism."

However, the modalities of the dialogue may change since the new administration may have a policy focus different from that of the outgoing Bush administration, he said.

It is in the interest of the US to maintain stable economic relations with China and, therefore, the new government will promote bilateral economic engagement, he said.

China and the US have many channels to discuss bilateral economic issues and would find a dialogue mechanism similar to the SED, said Ma Ming, economist with the Beijing Institute of Technology.

"China's role in the world economy will become increasingly important and Sino-US engagement will be ever closer."

Some opponents of the SED in the US believe the Obama administration should call a halt to the mechanism, citing the "failure" to persuade China to let its currency appreciate and redress the bilateral trade imbalance.

Others contend that it is necessary for the powerhouses to continue to remain engaged, pointing to the many successes the talks have yielded.

Some US scholars, such as Fred Bergsten, director of Peterson Institute for International Economics, and Niall Ferguson, a well-known historian in Harvard University, are reported to have proposed the two countries set up the Group of Two (G2) and even forge a "Chimerica" between them.

Chinese analysts say the US must realize the root cause of the current financial crisis lies in its own flawed economic structure and take active steps to reform it.

"The debt-based consumption mode that drives the US economy is unsustainable and must be reformed," said Yang Fan, economist with the China University of Political Science and Law.

Central bank governor Zhou Xiaochuan told US officials attending the ongoing SED session on Thursday that their country should raise its savings rate and curb excessive consumption to rebalance its economy and help solve the financial crisis.