By Michael O’Brien - 07/23/09 07:37 PM EDT
U.S. officials offering a preview of the American message to China for next week’s annual Strategic and Economic Dialogue meeting said Tuesday that the global financial crisis has fundamentally changed the U.S. economy.
“Perhaps the most important message is that there’s been a fundamental change in the U.S. economy,” a senior administration official told reporters. “The U.S. is going to recover, but this is going to be a different recovery from what the Chinese have seen in the past.
“Our message to the Chinese is that if you want to achieve the growth objective, you’re going to have to find a different way to achieve it than exports,” the official said.
Secretary of State Hillary Rodham Clinton and Treasury Secretary Tim Geithner will lead the U.S. delegation in the July 27-28 meetings with Chinese State Councilor Dai Bingguo and Vice Premier Wang Qishan.
U.S. officials also plan to press Chinese officials to revise their country’s monetary policy, which now pegs the Chinese yuan to the dollar, which critics say contributes to the growing U.S. trade deficit with China.
The Obama administration is under pressure from members of Congress to take action to reduce the U.S.-China trade deficit. U.S. lawmakers argue China keeps its currency artificially low to reduce the cost of its exports to the U.S., to the detriment of U.S. manufacturers.
China, which holds more than $2 trillion in U.S. currency reserves, has grown alarmed at the growing U.S. budget deficits, which could eventually lead to a drop in the dollar’s value. Its leaders are expected to press the U.S. to bring down its deficit as a way of keeping the dollar stable and reducing the risk of inflation.
China’s official Xinhua news service on Wednesday said that at next week’s meetings, China will ask the United States to protect its investment assets.
“I believe the Chinese delegation, especially Vice Premier Wang Qishan, will explicitly raise the hope that the United States should make responsible economic policies, including financial and monetary policies, to maintain stability of the dollar and safeguard … China’s assets,” Zhu Guangyao, assistant finance minister, told Xinhua.
China also has increasingly floated suggestions that the dollar should be replaced as the world’s reserve currency.
Given China’s concerns, Clinton, Geithner and other U.S. officials in recent months have offered assurances to the Chinese that the U.S. plans to reduce its budget deficit.
American officials also said the talks would emphasize the need for China to modernize its own domestic economic infrastructure while opening itself up to standards set to govern international financial relationships.
American officials will also try to “intensify efforts to more open trade and investment” with China, the official said.
The Strategic and Economic Dialogue was established by President Obama and Chinese President Hu Jintao earlier this year. The meeting in Washington next week is the first of many scheduled meetings, which will alternate between the U.S. and Chinese capitals.
Both Clinton and Geithner, who studied Mandarin at Peking University in the early 1980s, have traveled to China this year, though the planned meetings next week are expected to delve more deeply into a variety of issues.