The completion of the US-China ‘Security and Economic Dialogue,’ (S&ED) marked an important step in the new US Administration’s policy of engagement with the large emerging market countries.  China begins that dialogue, but it will be continued with India in the near future.  While some may see this bilateral meeting as a nascent G2, in fact I suspect it will reflect ultimately more the US policy foundation for an enhanced Gx process.

President Obama chose in his opening remarks to ‘tick off’ the key global governance questions: climate change, sustainable energy use, stability and economic prosperity, the threat of nuclear proliferation, terrorism and international human rights:

 “Today, we look out on the horizon of a new century. And as we launch this dialogue, it is important for us to reflect upon the questions that will shape the 21st century. Will growth be stalled by events like our current crisis, or will we cooperate to create balanced and sustainable growth, lifting more people out of poverty and creating a broader prosperity? Will the need for energy breed competition and climate change, or will we build partnerships to produce clean power and to protect our planet? Will nuclear weapons spread unchecked, or will we forge a new consensus to use this power for only peaceful purposes? Will extremists be able to stir conflict and division, or will we unite on behalf of our shared security? Will nations and peoples define themselves solely by their differences, or can we find the common ground necessary to meet our common challenges, and to respect the dignity of every human being?

We cannot predict with certainty what the future will bring, but we can be certain about the issues that will define our times. And we also know this: the relationship between the United States and China will shape the 21st century (emphasis added), which makes it as important as any bilateral relationship in the world. That reality must underpin our partnership. That is the responsibility we bear.”

There are short term and longer term issues to tackle.  The Joint Press release (Press Release) reveals a meeting long on commitments to collaborate but very short on practical policy achievements at this time.  While this is just the first meeting following the Obama-Hu Jintao bilateral discussions at the sidelines of the London G20 Leaders Summit, it would be fateful for these and other future bilateral encounters to fall to rhetorical diplomatic commitments.  Unfortunately these rhetorical commitments came to mark the Bush and Clinton era meetings.

Nevertheless, a notable commitment that was identified is the agreement to have the two militaries expand exchanges at all levels.  Among those exchanges the Vice Chairman of the Central Military Commission, General Xu Caihou, will visit Washington this year to meet with Secretary of Defense, Robert Gates.  The two sides also declared as positive the results of the recent Ministry of National Defense – Defense Department Consultative Talks (DCT) in Beijing.

Clearly the global financial crisis is an immediate concern to both countries.  Of even greater concern to the Chinese is the continuing solvency of the US economy and concern that soaring deficits will erode the value of the US dollar to the detriment of China which holds such massive dollar reserves.  In fact China remains the largest holder of US Treasuries today.  The concerns expressed by the Chinese leaders echoed a continuing theme – China’s continuing doubts over the US reserve currency status in the global economy:  “As a major reserve currency-issuing country in the world, the US should properly balance and properly handle the impact of the dollar supply on the domestic economy and the world economy as a whole,” said Wang Qishan, China’s Vice Premier, at an event with Treasury Secretary, Tim Geithner at the talks. Wang Qishan later expressed satisfaction over US assurances and in the Press Release the two countries committed to the following:

“First, the United States and China will respectively take measures to promote balanced and sustainable economic growth in our domestic economies to ensure a strong recovery from the international financial crisis; these include measures to increase savings in the United States and the contribution of consumption to GDP growth in China.”

Possibly most disappointing was the progress – of which there was little – in the climate change area.  Though the two countries signed and released the, “US-China Memorandum of Understanding to Enhance Cooperation on Climate Change, Energy and thre Environment (MOU) released July 28, 2009, concrete progress seemed to allude these two major carbon emitters.

Both countries resolve to pursue areas of cooperation where joint expertise, resources, research capacity and combined market size can accelerate progress towards mutual goals. These include, as set out in the NYT, article by Andrew Revkin, but are not limited to:

1) Energy conservation and energy efficiency
2) Renewable energy
3) Cleaner uses of coal, and carbon capture and storage
4) Sustainable transportation, including electric vehicles
5) Modernization of the electrical grid
6) Joint research and development of clean energy technologies
7) Clean air
8 ) Clean water
9) Natural resource conservation, e.g. protection of wetlands and nature reserves
10) Combating climate change and promoting low-carbon economic growth

But Chinese officials continued to insist that major steps must first be taken by the developed countries in order to make climate change progress possible.

So we have a promising dialogue.  However, more engagement is required.