By  on July 29, 2009

WASHINGTON — The U.S. and China agreed to a framework of objectives here on Tuesday, including a commitment from China to move away from export and toward economic growth through domestic consumption and a pledge by the U.S. to expeditiously consider China’s bid for market economy status.

Secretary of State Hillary Rodham Clinton and Treasury Secretary Timothy Geithner wrapped up two days of intense, high-level talks known as the Strategic Economic Dialogue — the first under the Obama administration — with their counterparts, Chinese Vice Premier Wang Qishan and State Councilor Dai Bingguo. The two nations said they reached agreement on a broad working plan to address several initiatives, ranging from continuing to institute financial regulatory reforms to lowering trade barriers and avoiding protectionism to addressing efforts to combat global climate change.

“Recognizing that cooperation between China and the United States will remain vital not only to the well-being of our two nations, but also the health of the global economy, we agreed to undertake policies to bring about sustainable, balanced global growth once economic recovery is firmly in place,” said Geithner.

He said the U.S. and China have laid out a framework in four key areas.

“China will rebalance towards domestic demand-led growth and increase the share of consumption in GDP,” Geithner said. “Greater development of China’s services sector and the shift away from dependence on exports and heavy industry will have a powerful effect not only on rebalancing [trade and growth], but also supporting the transition to a green economy.”

The U.S. trade deficit with China declined significantly in the last year, driven primarily by falling consumer demand in the U.S. For the first five months of the year, the U.S. trade deficit with China was $84.6 billion, down from the $96.8 billion for the same period in 2008. For the 12-month period through May, the goods trade deficit with China was $255.8 billion, down from a deficit of $258.6 billion in the same period last year.

On trade, the two sides reaffirmed their commitment to completing the Doha Round of global trade talks that seeks to strike a worldwide accord to eliminate most industrial and agricultural tariffs. China also revealed its intention to further open its service markets to private investment and decentralize its foreign investment review.

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