The third annual U.S. – China Strategic and Economic Dialogue took place in Washington this week.  It afforded several hundred officials representing both countries the opportunity to discuss issues facing the most important bilateral relationship in the world.

 While no radical changes have resulted from the meeting, nor were any expected, both sides were keen to play up the positives. Hillary Clinton, the US Secretary of State, stated that such talks are contributing to greater understanding between U.S. and Chinese officials while the official Chinese news agency, Xinhua, was even more effusive, proclaiming that the dialogue was bound to usher in new opportunities for greater co-operation between the two countries.

 This may be so, but there remain significant differences between the two sides and the talks reflected this.  The U.S. pressed China on two key points:  the economy and human rights. In return, China promised to improve intellectual copyright protection.  It also promised to alter rules that U.S. companies argue make it difficult to compete for Chinese government contracts without making their technology available to Chinese companies. 

 U.S. concerns over the valuation of China’s currency, the renminbi (RMB), were also raised.  Though the RMB has risen by around 5% since last June, most analysts believe that it remains significantly undervalued, giving Chinese exports a strong advantage while simultaneously making American exports to China less competitive.  This imbalance resulted in a 2010 trade deficit of US$270 billion.

 China, however, had economic arguments of its own, blaming the U.S. for the trade deficit and encouraging the removal of controls blocking both the transfer of high-technology products to China and Chinese investment in the U.S.

 Human right, inevitably, were also a contentious issue given China’s particular sensitivity to what it considers meddling in its internal affairs.  Clinton announced that America remains concerned about the state of human rights in China and went further in an interview with The Atlantic in which she not only stated that China’s record is “deplorable”, but that the country is on a “fool’s errand“ to stop the flow of history.  This seems to be a clear reference to China’s recent crackdown on dissidents which has seen many activists detained, the imprisonment of Liu Xiaobo, the 2010 Nobel Peace Prize winner, and the disappearance of the artist Ai Weiwei.

In conclusion, while the Dialogue achieved little of substance, it remains a conduit through which both sides can build understanding and seek common ground.  As China’s wealth grows and its influence expands, the Dialogue will become increasingly important.