BEIJING – China promised to rein in production of steel that is flooding global markets and work with Washington to enforce North Korea nuclear sanctions, as high-level talks between the superpowers ended Tuesday with no announcements of progress on simmering disputes in the South China Sea.
Envoys from the two sides also didn’t agree on what to do about China’s aluminum producers, among the bloated industries Washington and other trading partners complain are dumping exports too cheaply, hurting foreign competitors and threatening jobs.
The two-day annual Strategic & Economic Dialogue concluded with both sides acknowledging disagreements on significant issues including human rights. But the world’s biggest economic powers repeatedly stressed their desire for friendly, productive relations.
“While efforts over the past several days cannot resolve our concerns, they do represent real progress,” U.S. Treasury Secretary Jacob Lew said.
For its part, Washington vowed to boost its savings rate and investment, especially in infrastructure. The American side said it would pursue “fiscal sustainability,” a reference to narrowing its yawning budget deficits.
China’s commitment to persist with reforms to make its economy more balanced included shrinking its vast steel industry and opening its financial sector wider to U.S. companies, Lew told reporters.
Commercial tensions are growing. The U.S. and other countries feel Beijing has responded to a glut of unneeded supply by encouraging low-priced exports.
China’s government announced plans this year to shrink state-owned steel and coal producers at a cost of millions of jobs. But that will take time, and the flood of low-cost steel has prompted protests by European steelworkers and was cited by Tata in its decision to sell money-losing British operations that employ 20,000 people.
Washington has imposed anti-dumping tariffs and is investigating if Chinese mills are using stolen U.S. technology. The European Union has launched its own probe into possible dumping.
Lew cited some action from Beijing to address the concerns. Beijing, he said, promised to avoid policies that might encourage steel production growth and to wind down financially moribund “zombie companies. He said Chinese officials also agreed to cooperate in a possible global steel forum to discuss industry issues.
There was no indication, however, that Beijing would change the pace of its overhaul, highlighting the limited impact of U.S. pressure on basic Chinese policies.
On Monday, the Chinese finance minister, Lou Jiwei, said expectations that Beijing could abruptly transform its industry were unrealistic.
“To some extent, the worst is over,” said Tian Yuan, an economist for the China Institute for Strategy, a Beijing research center. He predicted continued progress by Beijing to reduce excessive capacity.
Beijing also agreed for the first time to allow U.S. banks to join the growing number of institutions outside China that are allowed to clear transactions denominated in the country’s tightly controlled currency, the yuan.
And Chinese officials indicated no push for a sustained weakening of the yuan against the dollar, Lew said, adding that they also indicated they wouldn’t engage in “competitive devaluations” or use the exchange rate to help China’s exporters.
On the strategic side, U.S. Secretary of State John Kerry pointed to scant concrete progress on sensitive issues ranging from maritime security to North Korea.
A joint statement didn’t even mention the South China Sea, where China and its neighbors have conflicting claims to territory and possible oil and gas resources.
“We didn’t agree on everything,” Kerry said. Still, the top American diplomat emphasized the importance of cooperation, saying the U.S. and China had probably “the most consequential bilateral relationship of nations in the world.”
Chinese President Xi Jinping echoed that theme.
“Our common interests outnumber our differences,” Xi told Kerry, Lew and other U.S. officials. “We need to respect each other’s core interest and major concerns, and on that basis try to work together to seek solutions.”
On North Korea, Kerry said U.S. and Chinese experts would study how to enforce U.N. anti-nuclear sanctions approved in response to the North’s development of nuclear weapons and missile technology.
In the South China Sea, Kerry appealed for negotiations and “a peaceful resolution based on the rule of law.” Just last weekend, Beijing said it would ignore an upcoming international arbitration decision in a dispute with the Philippines. China also has conflicting claims with Vietnam, Malaysia, Brunei and Taiwan.
State Councilor Yang Jiechi said Beijing wants to solve disagreements through negotiation among “the countries involved.” That would exclude the United States.
“China has every right to uphold its territorial sovereignty,” Yang said.
Human rights also were a focus.
American officials said significant time was devoted to a new law on nongovernmental organizations, which could severely limit the operations of foreign business chambers and groups helping lawyers and activists in China.
It puts foreign NGOs under direct police supervision and requires them to state where their money comes from and how it is spent. Those deemed to be subverting the state would be banned.
Kerry said he received assurances from Xi that China would remain open for business, and would continue opening itself up to the outside world. “We have to sort of show some patience,” the secretary said.
Yang said the law would protect the “legal rights and interests” of nongovernment groups.
“As long as they abide by Chinese laws, the activity of foreign NGOs in China will not be affected,” he said.
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