This week senior U.S. Treasury and State Department officials, and their Chinese counterparts, will participate in the sixth meeting of the U.S.-China Strategic and Economic Dialogue (S&ED) in Beijing. The annual S&ED provides a high-level dialogue for the two nations to discuss a wide range of political, strategic, security, and economic issues.
Representing the United States in Beijing are Treasury Secretary Jack Lew and Secretary of State John Kerry. They will meet with their Chinese counterparts, Vice Premier Wang Yang and State Councilor Yang Jiechi. Given the importance of the U.S.-China relationship to both nations, as well as to the global economy, U.S. officials should continue to push for greater financial sector modernization and market opening reforms in China, in order to level the playing field for U.S. businesses and consumers.
While Chinese leaders have demonstrated willingness to accelerate financial reforms, China has continued to impose restrictions on foreign financial institutions — including U.S. institutions — with regard to market access, licensing, corporate form, branching and permitted products and services. Foreign institutions are also still subject to discriminatory treatment by Chinese regulatory agencies. The Engage China Coalition, a group of 12 U.S. financial services trade associations chaired by the Financial Services Forum, described a number of these barriers in a recent a letter to Secretary Lew. Financial services modernization and market-opening reforms in China will help transform China’s economy into a more services-based, consumer-driven economy, which in turn will greatly contribute to greater economic growth and job creation here in America.
The economic benefits of market-opening reforms and increased trade with China here in America are illustrated in the deck: “The Case for Engagement with China.” China is now America’s third largest export market – and the largest market for U.S. products outside of North America. U.S. exports to China surpassed $120 billion for the first time in 2013, with 42 states now counting China as one of their top three export markets. A U.S.-China Business Council report (U.S. Exports to China by State, 2004-2013) found that 47 states experienced at least triple-digit export growth to China since 2004, and that seven states—Nevada, South Carolina, Utah, Michigan, Nebraska, Alabama and Washington—saw export growth of more than 500%.
As impressive as these numbers are, they’re just the beginning of what expanded access to a growing China can mean for growth and job creation in America. Consider the following:
Last year the United States exported $65 billion worth of American-made goods to Japan, and $121 billion to China. But China is ten times the size of Japan. If China began consuming U.S.-produced goods and services at the rate that the Japanese currently do, the U.S. would export about $650 billion to China. That’s more than five times what America exported to China last year, an amount equivalent to nearly 4 percent of America’s GDP, turning a $300 billion trade deficit into a $210 billion surplus. According to the Commerce Department, every additional $1 billion in U.S. exports creates approximately 5,000 new American jobs. Applying that exports-jobs metric, increasing exports to China to $650 billion would create nearly three million new American jobs. If U.S. exports to China continue to grow at the rate they have since 2001, U.S. exports to China will reach $650 billion annually within 10 years. Simply stated, expanded access to a growing Chinese marketplace amounts to an enormous economic opportunity.
Active and persistent dialogue in a vital forum such as the S&ED helps to build trust, address long-term strategic and economic issues, and manage the expanding bilateral relationship to mutually benefit the people of both nations.