U.S. Treasury Secretary Jack Lew has told President Xi Jinping the United States supports China's efforts to cut excess industrial capacity. He made the comment as the annual U.S.-China Strategic and Economic Dialogue got underway in Beijing. Ivor Bennett reports.
It's not so much a marriage of convenience, as one of necessity. They are, after all, the two biggest economies in the world. While the family photo suggests this year's talks will be a happy anniversary. At least one side feels a need to talk. (SOUNDBITE) (English) U.S. TREASURY SECRETARY, JACK LEW, SAYING: "Excess capacity has a distorting and damaging effect on global markets, and implementing policies to substantially reduce production in a range of sectors suffering from overcapacity, including steel and aluminum, is critical to the function and stability of international markets." The US blames Chinese government subsidies for encouraging over-production. And has imposed anti-dumping duties as a result. In the past, China has called these irrational. And imposed their own regulations which Washington feels unfairly punish foreign companies. But for now at least, the he-said-she-said has stopped. (SOUNDBITE) (Mandarin) CHINESE PRESIDENT, XI JINPING, SAYING: "We must make our best efforts to achieve a mutually beneficial China-U.S. investment agreement at an early date and create new bright spots in bilateral economic and trade cooperation." The high-level talks - almost an annual counseling session - have proved fruitful in the past. Previous discussions are credited with easing currency tensions. But in this case, compromise may prove harder. SOUNDBITE (English) MIKE INGRAM, MARKETS STRATEGIST, BGC MARKETS, SAYING: "I think that the Chinese are reverting back to pump priming, to currency devaluation and there's relatively little sign of the sort of deep structural reform in state economic enterprises that they promised." Every relationship has its problems of course. But in this case, it's not just a domestic issue.