China Market Intelligence
Strategic Economic Dialogue
The fourth session of the Strategic Economic Dialogue (SED) between
China and the United States convened in mid-June in Annapolis, Maryland.
PRC Vice Premier Wang Qishan led the PRC delegation, while Treasury
Secretary Henry M. Paulson, Jr. led the US side. The wide-ranging talks
resulted in agreements in several areas. Much of the focus, however, was
on cooperation on energy and the environment and on financial services.
Energy and the environment
Energy and the environment took center stage at the meetings. The two
sides signed a framework agreement to establish the Ten-Year Plan on
Energy and the Environment, which was signed in Beijing last December, and selected
five broad areas—listed as goals—for which each side will
draft action plans detailing specific areas of cooperation. These plans
will be formulated over the next few months and presented at the next
SED in December in Beijing.
The five goals are
- Clean, efficient, and secure electricity production and
transmission Both counties hope to discuss electricity supply and
demand, and diversification of energy resources that supply
electricity.
- Clean and efficient transportation Potential areas of
collaboration include cellulosic biofuel, improvements to existing
transportation infrastructure, and clean vehicle technologies.
- Clean water Prevention and control of pollution from
agriculture and rural areas, evaluation and analysis of clean water
policies, assessment and promotion of the transfer of clean water
technologies, and the provision of safe drinking water are initial
areas of cooperation that the proposed action plan will cover.
- Clean air Last December, the two sides agreed to implement a
sulfur dioxide trading system for China's power sector. This project
will likely be a significant component of the clean air goal.
- Conservation of forest and wetlands ecosystems Both countries
will focus on enhancing cooperation on wetlands conservation
and management and on the establishment and management of protected
areas.
On the US side, the departments of the Treasury, State,
Commerce, and Energy and the Environmental Protection
Agency will coordinate to draft the action plans. On the PRC
side, the National Development and Reform Commission,
State Forestry Administration, State Energy Commission, and
the ministries of Finance, Environmental Protection, Science
and Technology, and Foreign Affairs will draft action plans.
Financial services
The head of each major PRC financial regulator
attended the negotiations and made a number of gestures
that indicate a willingness to cooperate with foreign
participants across multiple financial services sectors.
In insurance, PRC financial regulators agreed to
consider concerns raised by US stakeholders about
proposed regulations restricting foreign investment in
domestic insurance companies. Regulators reportedly plan
to consult with and consider comments submitted by
interested parties before producing a subsequent draft of
the regulations. In addition, China noted that its recent
regulations on overseas investment of insurance funds will
allow China-based insurance companies to invest funds
outside of China's borders.
On the banking front, China confirmed that by the end
of the year it will complete its assessment of allowing
greater foreign participation in China's banking sector
and announced that securities and capital market
regulators would complete a similar study for the
domestic securities, futures, and fund management
sectors, by the same deadline. The results of these
assessments will be recommendations on changes to
foreign participation in the respective domestic markets,
including adjustments to foreign equity share caps.
Other financial-related developments include
- China will reduce the requisite "lockup period" for certain qualified foreign institutional investor quota holders such as US-based funds and money managers.
- Chinese financial regulators said that they would permit joint venture credit rating agencies to apply for securities-related credit rating business licenses that would permit them to rate corporate bonds without having to reduce the size of the foreign partner's existing equity stake.
- PRC regulators have agreed to allow foreign non-deposit-taking financial institutions to provide consumer finance on a pilot project basis.
- The US Department of Agriculture said that it would explore further cooperation with China in developing agricultural insurance, including providing training for PRC officials and industry representatives who want to develop policies for insuring crops and livestock.
- China agreed that it would reduce qualifications for foreign banks seeking to issue renminbi-denominated bonds to raise capital. Regulators also agreed to permit certain foreign companies to list on their exchanges through share or depository receipt issuance.
This article is adapted from a report that
first appeared in China Market Intelligence, the US-China Business
Council's (USCBC) weekly members-only newsletter. To find out more about
USCBC member company benefits, see
www.uschina.org/benefits.html.
Copyright 2008 US-China Business Council
Top of Page
Table of Contents
