WASHINGTON — The U.S. will encourage China to move away from an export-driven growth model during talks between officials from the two countries here, set for next week.
Senior Obama administration officials on Thursday said the Strategic & Economic Dialogue — high-level talks chaired by the U.S. State and Treasury Departments — will include discussions of how China can turn away from its long focus on expanding exports to drive its economic recovery toward a domestic-consumption model. China’s currency policy also will be up for discussion, officials said.
The trade deficit the U.S. has with China decreased significantly in the last year, primarily driven by plummeting consumer demand in the U.S. For the first five months of this year, the U.S. trade deficit with China was $84.6 billion, down from $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 the $258.6 billion deficit in the same period a year earlier.
Administration officials said they will communicate to their Chinese counterparts that there has been a shift in the U.S. economy away from consumerism and they should change their growth models accordingly.
“The most important message we have for China is that there has been a fundamental change in the U.S. economy,” said a senior official during a briefing.
The U.S. economy will recover, he said, but in a way that is different from past recoveries, as U.S. households raise their savings rates and shift away from a consumption-driven lifestyle.
“Our message to China will be that, if you want to achieve your growth objectives, you must do it in a different way than export-led growth,” the official said.
China has made strides to increase domestic consumption in recent months, he said, but more needs to be done to keep the historic trade imbalance between China and the U.S. from returning to previous levels.
As for the ongoing issue of China’s currency, which many consider undervalued and unfairly propped up by the government, the officials indicated that reforming its policies are an important step in helping China move away from a dependence on exports.
This is the first Strategic & Economic Dialogue meeting the Obama administration has held with China. Administration officials said other topics that will be part of the talks include climate change and reformation of international economic institutions such as the International Monetary Fund and the World Bank to give large developing economies like China more input.
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