China agrees to currency, procurement reforms in talks with U.S
WASHINGTON (Reuters) - China acknowledged U.S. concerns about cyber theft of intellectual property and trade secrets and agreed to steps that would open its financial and government procurement markets, the U.S. Treasury Department said on Friday.
In a statement on outcomes of the annual U.S.-China Strategic & Economic Dialogue that concluded Thursday in Washington, the Treasury Department also said China had committed to move to a market-determined exchange rate for its yuan currency.
"During the S&ED, Chinese officials acknowledged U.S. concerns over the growing problem of the cyber-enabled theft of trade secrets and business confidential information," the statement said.
"China pledged to better protect against trade secret misappropriation through strengthened enforcement," it added, referring to an issue that Washington has made a top priority with China as U.S. economic losses from intellectual property theft mounted.
Previous U.S. efforts to get Beijing to address the issue of hacking into American networks to steal intellectual property had met denials and a tendency by China to conflate cyber espionage with cyber-enabled trade secret theft.
Fugitive spy agency contractor Edward Snowden's disclosure of U.S. surveillance programs compounded the difficult for Washington in raising the issue.
China's commitment in the talks to move to a market-determined exchange rate for its currency "is a critical part of China's efforts to rebalance its economy," Treasury said.
A market-based exchange rate "will both reorient Chinese production towards goods for domestic residents and strengthen the purchasing power of the growing Chinese middle class," it added.
U.S. politicians and labor groups have long accused China of suppressing the value of the yuan, or renminbi, to make Chinese exports cheaper.
Treasury noted that the renminbi had appreciated by over 16 percent against the dollar in inflation-adjusted terms since June 2010 and had gained 35 percent against the U.S. unit since 2005.
China's financial sector liberalization offers included a pledge that locally-incorporated foreign banks and securities firms will be allowed to directly trade government bond futures and sell them to foreign and domestic institutional investors.
"China also welcomed participation by foreign firms in corporate bond underwriting and pledged to facilitate further evaluations of interested underwriters for participation in this market," Treasury said. No implementation timetable was given.
Treasury said China would submit a revised government procurement agreement offer to the World Trade Organization by the end of the year, and begin technical talks with the United States this summer to tackle the remaining obstacles to China's accession to the WTO Government Procurement Agreement.
China's previous four GPA offers, the latest in late 2012, did not pass muster with U.S. and European trade partners eager for access to China's vast public procurement market. The issue has been a major sticking point with trade partners since China joined the WTO in 2001.
China's heavy subsidies to its state-owned firms, which give them advantages over foreign competitors, was another longstanding U.S. complaint that was addressed in the S&ED.
"China for the first time pledged to ensure that enterprises of all forms of ownership have equal access to inputs, such as energy, land, and water, and to develop a market-based mechanism for determining the prices of those inputs," Treasury said.
"This will help level the playing field for domestic and foreign enterprises competing with Chinese SOEs (State-Owned Enterprises) that often pay below market cost for their inputs," the statement added.
The July 10-11 talks were led by Treasury Secretary Jack Lew and Deputy Secretary of State Bill Burns and Chinese co-chairs Deputy Premier Wang Yang and State Councilor Yang Jiechi.
The two countries agreed on Thursday to restart stalled negotiations on a bilateral investment treaty, with Beijing dropping previous efforts to exclude its service sector and other areas from any treaty.
U.S. business groups gave the investment treaty announcement a guarded welcome, saying it was something they had long sought but noting the politically difficult reforms required by China to open so many sectors. Any treaty would also require approval by the U.S. Senate, where many lawmakers have a skeptical view of China's economic policies.