U.S. And China Pledge 'Balanced Growth' After Meeting

08/28/2009 05:12 am ET | Updated May 25, 2011

WASHINGTON — The United States and China on Tuesday pledged closer cooperation to deal with global hot spots such as Iran and the worst financial crisis since the 1930s.

While Secretary of State Hillary Clinton and Treasury Secretary Timothy Geithner sought to portray the two days of high-level talks as a positive development in U.S.-China relations, the list of accomplishments on the economics side basically reaffirmed steps both nations have already taken to deal with the financial crisis.

On foreign policy, there were no apparent breakthroughs although the countries pledged closer cooperation in dealing with the nuclear ambitions of North Korea and Iran.

Clinton conceded that differences remained in many areas such as human rights, but she said the candid discussions were important in building the foundations for the two nations going forward.

"Laying the groundwork may not yield a lot of concrete achievements immediately, but every step is a good investment," she told reporters at a closing U.S. news conference.

President Barack Obama, who is scheduled to travel to China before the end of this year, met with the two delegations in the Oval Office at the close of the talks Tuesday.

Clinton and Geithner and their Chinese counterparts, Vice Premier Wang Qishan, the country's top economic policymaker, and State Councilor Dai Bingguo, who oversees foreign policy, both expressed satisfaction with the outcome of the talks.

"In the wake of a severe global financial crisis, we agreed it is vitally important for China and the United States to see through their commitments to repair the financial system and lay the foundation for recovery," Geithner said at the closing news conference.

Clinton noted that Dai had been involved in Chinese policy toward North Korea for some time and that she had spent "quite a bit of time" with him talking about the Chinese perception of North Korea and U.S.-North Korea interactions. "I found that very useful, indeed," she said.

But it was not clear if the China side, long North Korea's strongest ally, had agreed to step up pressure on the North to return to six-nation disarmament talks or halt a provocative series of missile launches and nuclear tests. Those acts prompted the United Nations to impose the strictest sanctions ever on North Korea.

Also unclear was China's willingness to prod Iran to address international concerns over its nuclear program, although Clinton said the U.S. and China shared the view that Iran should not be allowed to develop atomic weapons.

"I was also pleased that China shares our concerns about Iran becoming a nuclear weapons state. The potential for destabilizing the Middle East and Gulf is viewed similarly by the Chinese as it is by us," Clinton said.

But China, along with Russia, has long acted as a spoiler in efforts to impose more sanctions on Iran over its nuclear program, blocking attempts by western nations at the U.N. Security Council to implement additional penalties until the country agrees to suspend nuclear activities that could lead to the development of an atomic weapon.

China has also bristled at U.S. criticism of its human rights record, which Clinton said was "absolutely integral to the strategic and economic dialogue." But Clinton was vague when asked specifically what issues were raised during the talks other than recent deadly ethnic violence in China's western Xinjiang Province.

"We discussed a number of human rights issues, including the situation in Xinjiang and we expressed our concerns. It was certainly a matter of great interest and focus," she said without elaborating.

At a separate Chinese news conference, Vice Foreign Minister Wang Guangya said that China appreciated the "moderate attitude" of the U.S. response.

In another sign of closer relations, the Chinese announced Tuesday that they would be sending a senior general to the United States this year for talks and would welcome U.S. generals to visit China. That was a change from last year when the Chinese were furious after the Bush administration's approval of the sale of a major arms package to China's rival Taiwan. At the time, China broke off military contacts with the United States.

Both nations sought to play down disagreements on trade, exchange rates and climate change and instead offered a picture of harmony with China pledging to work toward a key U.S. goal that it foster greater domestic-led growth to reduce its reliance on exporting to the United States.

For its part, the Obama administration pledged to tackle the budget deficit, which this year is projected to hit a record $1.84 trillion. That flood of red ink has left the Chinese, the world's largest holder of U.S. Treasury securities, distinctly nervous about the safety of their investments.

The talks this week, which Obama opened Monday, represented a modification of discussions that were begun by the Bush administration. Those talks, led by then-Treasury Secretary Henry Paulson, focused primarily on economic issues.

However, Obama expanded the agenda of the renamed Strategic and Economic Agenda to include not just economic disagreements but also foreign policy issues.

In his comments Tuesday, Wang voiced support for a key U.S. goal that China shift to more domestic-led growth rather than depending so much on exports that drive up the U.S. trade deficit.

"China will focus on boosting domestic demand and in particular consumer demand," Wang said, speaking through a translator. But Wang cautioned that this was "not an easy task" and would require "long-term and arduous efforts."

U.S. officials have expressed concerns in the past that China was moving too slowly in making the changes needed such as building a better social safety net that would encourage its citizens to spend more and save less.

Geithner repeated the commitment that the administration would trim its budget deficits once the spending necessary to jump-start the economy and stabilize the financial system had been completed.

However, private economists are worried that the administration has yet to put forward a credible plan to meet Obama's pledge to cut the deficit in half by the end of his first term in office. This year's imbalance is projected to be more than four times the size of last year's.

The economic talks on Tuesday focused on the need to fight against erecting protectionist trade barriers during the economic downturn. Other economic issues on the final day were ways to achieve the goal of overhauling the International Monetary Fund and other global financial agencies to give emerging economies such as China greater say in the operation of the institutions.

On climate control and energy, China did not signal any change in its refusal to agree to a specific cap on those emissions, but the two sides did sign a document that Clinton said would create a platform for cooperation on climate change in the future heading into key climate negotiations in Copenhagen later this year.

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Associated Press writers Matthew Lee, Jim Kuhnhenn, Foster Klug and Daniel Wagner contributed this report.

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