U.S.-China Strategic and Economic Dialogue

11:00 A.M. ET


ASSISTANT SECRETARY RUSSEL:  Thank you very much, Cynthia.  Thanks to all of you here in Washington and in New York.  I’m glad to be back at the Foreign Press Center, this time with some American domestic press as well as the international press.  I was here just after Secretary Kerry’s recent trip to Asia, so I think you’re up to date.  I haven’t been counting, but Cynthia says if I’m back one more time to brief, I’ll get a free Starbucks.  (Laughter.)

So let me dive right into the topic of today, the annual U.S.-China Strategic & Economic Dialogue, the S&ED.  This is our seventh – yes, count them – seventh S&ED.  It begins next week and will be co-chaired by the Secretary of State John Kerry, and the Secretary of Treasury Jack Lew, with their counterparts from China – State Councilor Yang Jiechi, and the Vice Premier, Wang Yang.

I’ll brief on the three elements of our dialogue next week – the Strategic & Economic Dialogue, the S&ED; the Strategic Security Dialogue, SSD, which is a part of the S&ED – sorry for all the acronyms – that is co-chaired by Deputy Secretary of State Tony Blinken on the U.S. side, and Executive Vice Foreign Minister Zhang Yesui on the Chinese side; and the U.S.-China Consultation on People-to-People Exchange, what we call the CPE, which is co-chaired by Secretary Kerry and Vice Premier Liu Yandong.

My understanding, Cynthia, is that tomorrow someone from Treasury will be here at the Foreign Press Center to brief on —

MODERATOR:  Actually, that’s a separate single hit that they’re doing.  But we will share the transcript of that when it comes out.

ASSISTANT SECRETARY RUSSEL:  Okay.  (Laughter.)  I defer to the experts on that.  But I won’t cover the economic track.

Let me start, though, with a little bit of context.  The strategic rebalancing to the Asia Pacific region that has unfolded and taken shape over the last six and half years has a couple of elements: modernizing our alliances and strengthening our partnerships, participating in and building up their regional institutions, promoting universal values, engaging economically to create jobs here at home and in the region, and working with the emerging powers.  And key among the emerging powers, of course, is China.  The U.S. has worked year after year to help make space for China’s growth.  We’ve welcomed China’s emergence on the world stage and participation in the global system.  The U.S. and China have a very complex, very consequential relationship.  We don’t always see eye to eye.  But the fact is that global challenges require that we cooperate.  They require collaborative solutions.

So the U.S. works to find common ground with China.  We work to expand areas of practical cooperation with China.  We talk through, we work through our differences.  We seek to solve problems and to manage the problems that we can’t seem to solve.  And that’s what the S&ED is all about.

There are, I would say, sort of four attributes of the S&ED that help make it effective.  First, and importantly, it’s a very high-level dialogue.  It’s our flagship in the dialogue mechanisms that we have developed.  And the access that these meetings give us to senior officials helps us to get our messages across, and it helps us to get things done.  For example, it was very valuable last year in preparing for the Obama-Xi summit meeting in Beijing following APEC.  And I know that in a similar vein, it will help us a great deal to prepare for the planned summit meeting in Washington this fall.

Second, it’s a broad-based dialogue.  This year, I think, by my count we’ve got at least nine different U.S. agencies participating just in the strategic track alone, and something like eight cabinet-level officials from the U.S. side who will engage across both tracks.  Related to that, thirdly, the S&ED gives us the opportunity to work across the span of the Chinese interagency.  And that’s essential to ensuring that everybody in their system is similarly on the same page.  The Chinese side is broadly represented by multiple agencies, and very importantly by their military, the PLA.

I’d say the fourth attribute is continuity.  This allows us to build on past progress; it allows us to dig down more deeply on important issues.  I think I’ve been to five of the S&EDs, and they unquestionably serve to advance the agenda.  Last year’s dialogue, just as an example, was instrumental in teeing up progress on the climate deal that President Obama and President Xi were able to announce in November.  This year promises further cooperation on climate.  We’re still the two largest emitters in the world.  We’re trying to position ourselves and lead, frankly, the international community into the Paris conference where we seek to make real progress in December. 

So Secretary Kerry and Secretary Lew will chair a joint session focusing on how the U.S. and China can work to reduce emissions, how we can make energy cleaner.  There will also be a second joint session on how we can work together to preserve and to protect the oceans and the marine environment more broadly.  There will be a third joint session that focuses on how we can collaborate to provide support for developing countries and for those countries that are emerging from crisis.

China has a growing ability to make a positive impact beyond its own borders.  And for example, its work to combat Ebola in West Africa was important and was a milestone.  China’s assistance to Afghanistan has been essential to creating an environment that fosters the smooth transition of that country.  The point is there’s a lot that the U.S. and China can do together in other regions, as well as in the Asia Pacific, to reduce poverty and to promote prosperity. 

In addition to working on the global issues that I just mentioned, and in addition to working on some of the other global issues like terrorism, like proliferation, like wildlife trafficking, the strategic track importantly allows us to also hold deep discussions on important regional issues.  That includes problem areas like North Korea, like Afghanistan.  It relates directly to the work that we’re doing in the P5+1 talks with Iran, talks that are coming to a head this month.  And these are issues where we seek to work together.  They’re issues where, on policy, we’re generally in close alignment.

But it also includes problems like the maritime territorial disputes in the South China Sea where we have very significant differences.  And the strategic track allows us to dig down on these problems.  It also allows us to discuss our concerns about human rights in China, and that’s a topic that is a feature of all of our engagement and every high-level dialogue that we have.  The point is we don’t paper over these differences.  We don’t turn a blind eye to problems.  We discuss them and we seek to tackle them directly. 

So when it comes to human rights, I have no doubt that the issue of the constriction of space for civil society to operate in China; the obstructions that you, journalists, face operating in China; the very problematic NGO law, the draft law that has elicited so much concern and opposition – I have no doubt that these are among the issues that can and will be taken up over the course of the Strategic & Economic Dialogue and the CPE.  I’m also sure that in light of yesterday’s LegCo vote in Hong Kong on universal suffrage that there will be some discussion of the situation there as well.

And maybe that’s a good place to mention the Strategic Security Dialogue, the SSD, in a little more detail.  The SSD, which started, I guess, five years ago, is a sub-dialogue.  It’s a dialogue under the S&ED that is led by Deputy Secretary Tony Blinken on the U.S. side, as I mentioned, and by Zhang Yesui, the former ambassador to Washington, now executive vice foreign minister.  What’s valuable and unique about the SSD is the way in which it brings together both diplomatic officials and military officials from both sides – people from our defense establishment and our uniformed military, along with our top diplomats.  It brings them together in the same room and enables them to tackle an agenda that contains the most difficult, the most sensitive, the most vexing security issues that we face.  And these are the issues that have the potential to drive strategic mistrust in the relationship, which is what we seek to avoid.  That includes issues about how we engage and deal with each other in cyberspace, issues about how we engage and deal with each other in outer space, how we interact on the high seas and in the air.  And the work that’s done in the SSD, which will be held on Monday, feeds directly then into the discussions in the strategic track that Secretary Kerry and State Councilor Yang will have the next day on Tuesday.

And then directly following the S&ED principal sessions on Tuesday will be the CPE, the high-level consultation on people-to-people exchange, which, as I mentioned, is co-chaired by Secretary Kerry on the U.S. side and by Vice Premier Liu Yandong on the Chinese side.  These discussions focus on, as the name suggests, people-to-people exchanges.  Those are a really important element in developing strong bilateral ties as well as in promoting mutual understanding.  We’ve found that the CPE is an extremely valuable tool, and it has promoted an abundance of exchange programs between students in the two countries, between scholars and academics, between athletes; between artists, health experts, businesspeople, local government leaders.  It also drives programs like our important efforts to empower women.  For example, this year, just to cite one example, the National Hockey League and the American College of Sports Medicine are joining in, and we’re going to work on how we can get more people with disabilities – more girls, for example, people who are underrepresented in sports – into the game.

The bottom line is this:  The S&ED and the CPE provide the U.S. and China a really important, regularized platform to strengthen our relationship, to deepen our coordination, to promote cooperation, and to narrow where we can – or at least manage – our differences.  And in that respect, it plays a very important role in facilitating progress in the U.S.-China relationship and U.S.-China cooperation in the region and in dealing with global problems.  So with that, let me turn back to Cynthia and see if you have any questions.

MODERATOR:  (Inaudible) a little bit of housekeeping.  In the interest of time – we do not have a lot of it – and respect for your colleagues here and the assistant secretary, please keep your questions short, to the point, and on point.  We’re here today to talk about the S&ED and the CPE.  New York, if you have questions, approach the podium; we’ll call you in due order.  I will start here with Ching and then we’ll move across the front.

QUESTION:  Thank you very much.  Can you hear me?  Okay.

MODERATOR:  Oh, I’m sorry.  Please identify yourself.

QUESTION:  Okay.  I’m Ching-Yi Chang with Shanghai Media Group.  Thank you very much, Mr. Assistant Secretary and Cynthia.  Regarding the issue of South China Sea, in terms of Strategic Dialogue or SSD, is the United States looking forward to moving on on the agreements that – reached by President Obama and Xi Jinping last year in Beijing to avert military confrontation in Asia? 

And maybe you have some knowledge about the issue about economic track.  Is there – will the renminbi joining the IMF SDR currency basket be discussed this time?  Thank you.

ASSISTANT SECRETARY RUSSEL:  Okay.  Let me take the second question first.  My mother did not raise any children dumb enough to try to answer a question about currency.  (Laughter.)  I’ll leave that to the Secretary of the Treasury.

On the first question, there is an unwavering determination on the part of the United States to avoid military confrontation, including with China.  That serves no one’s interest.  And frankly, that is not the issue that faces us in the South China Sea.  As important as the issue of the South China Sea is in the U.S.-China discussions, it’s not fundamentally an issue between the U.S. and China.  This is an issue between China and the other claimants.  It’s an issue between China and the ASEAN countries.  And frankly, it’s an issue between China and international law.  It’s a . question of China’s future and China’s choices.  If China, as it grows, is committed to act in concert with international law and global norms; if China, as it grows, is determined to maintain strong, healthy, positive relationships with its neighbors, then we would hope its behavior in the tense area of the South China Sea would reflect that.  The recent announcement out of Beijing that the Chinese Government intends to continue and expand the construction of facilities on the reclaimed outposts that it’s been constructing in the South China Sea is troubling not just to us, but to the countries in the region.  Frankly, we’re concerned, and others are concerned. 

The simple fact is that neither that statement nor that behavior contributes to reducing tensions.  And reducing tensions is what we all should want.  Certainly, the prospect of militarizing those outposts runs counter to the goal of reducing tensions.  And that’s why we consistently urge China to cease reclamation, to not construct further facilities, and certainly not to further militarize outposts in the South China Sea.  But we make that same request to all of the claimants – all of the claimants.  It’s a matter of good policy, it’s a matter of good neighborliness, and frankly, it’s a matter of common sense.  It’s an essential ingredient to creating the space that will allow for a peaceful resolution; that will allow for diplomatic settlement of the disputes.

There are a couple of principles here – the principle of good relations.  We want China to have good relations with all of its neighbors as well as with us.  The principle of freedom of navigation and freedom of overflight is indeed at stake here; the unacceptability of coercion or the threat, let alone the use, of force; the importance of not impeding lawful commerce, especially in an important waterway like the South China Sea; the necessity to make one’s claims to territory in ways that are fully consistent with international law, such as the UN Convention on the Law of the Sea; the principle of peaceful resolution of disputes through diplomacy or through arbitration; and fundamentally, the principle of exercising restraint.  And that’s a principle that China and the other claimants committed to in writing in 2002.  It’s a principle that should govern the behavior of all of the claimants.

I was with Secretary Kerry last month in Beijing when he made these points very directly, very eloquently to China’s top leadership.  And for sure, this discussion will continue in the SSD as well as in the S&ED.  That’s where we conduct diplomacy.  What we’re looking for is a region in which disputes are dealt with through – peacefully through diplomacy.  What we’re looking for is a South China Sea in which the smallest fishing boat from the Philippines or Vietnam or Malaysia has the ability to traverse international waters with the same confidence that the largest American warship can demonstrate in the same space.  Thank you.

MODERATOR:  Thank you.  We’ll go here second.

QUESTION:  Thank you so much for doing this.  I’m Hui Wang with CCTV America.


QUESTION:  Yeah.  As we know, President Obama said last week that the U.S. should not let China write the rules of world trade and the U.S. should be the one to do the job.  Since the S&ED is getting underway, so I’m wondering if you agree that there’s a reason for these two world’s biggest economies to maybe join hands and to write those rules together.  Thank you.

ASSISTANT SECRETARY RUSSEL:  Thank you.  First, let me say that the United States has not only welcomed, but has assisted China’s entry into the organizations that write the rules for world trade.  The U.S. assisted China in its entry to the WTO.  The United States welcomed and supported China in the G20.  The United States works very closely with China in APEC.  And because China’s such a huge trading nation and trading partner for the United States, of course on a bilateral basis, we work together very closely.  And there’s no doubt that both countries and the world benefit from cooperation between the U.S. and China on trade and on economics more broadly.  This is always an important topic of discussion in the economic track in the S&ED, but – not so fast – (laughter) – the reason that the U.S. Government and the – particularly the President of the United States – is absolutely determined to complete the Trans-Pacific Partnership agreement and then move on to the Atlantic for the TTIP agreement, the reason that the White House and the leadership in Congress right now are working to put the pieces together to complete the fast-track authority TPA and the TAA agreements, is because these are essential elements to our effort to ensure that the rules that are written are good rules for global trade. 

We are unleashing a race to the top.  We are pursuing and will succeed in putting in place a 21st century trade agreement that creates unprecedented high standards and unprecedented economic opportunities, in the first instance for the 12 partners to the TPP, but ultimately for the entire region and for the world.  And this is hugely important to all of us.

MODERATOR:  I’m going to go into the middle here, then to the back, and we’ll try to get back up to the front.  Sorry.

QUESTION:  Thank you so much for your remark.  I’m Jennifer Shen, reporter with Shenzhen Media Group.  I just wonder, what’s your expectation on the cyberspace discussion this time?  And what’s a possible time for U.S. and China to re-establish a cyber dialogue?  And also, we know Chinese fugitive Yang Xiuzhu is seeking asylum.  As far as you are concerned, what will be the possible response from U.S.?  Thank you so much.

ASSISTANT SECRETARY RUSSEL:  Great.  On the second question, I am sorry, but I can’t speak to an issue of law enforcement. 

Cyberspace is one of the important dimensions in which the U.S. and China interact, and in which the U.S. and China must cooperate.  We are the two biggest consumers of the internet.  Our businesses, our organizations, and our people are vulnerable.  The President said yesterday that the intrusions and attacks against us all aren’t going to stop.  If anything, they’re likely to accelerate.  And that requires that we significantly enhance our capacity to safeguard the information and the interests and the ability of our citizens to utilize cyberspace. 

Many, many major IT companies – U.S. companies in the main – operate extensively in China.  And so protecting cyberspace, protecting internet and communications technology, protecting the integrity of the cyber system is critically important not only to U.S. businesses, but to the Chinese economy.  So we each have an important interest.  That means that there is a need for dialogue.  It means that there is a need for real transparency between us.  And it means that there’s a need for cooperation.  So we’re both vulnerable.

This is an issue that will be discussed, I’m confident, in both the strategic track and the economic track of the S&ED.  It will also be discussed, without a doubt, in the SSD.  The Strategic Security Dialogue really is germane to building a relationship of trust between the U.S. and China.  It’s an important common concern.

And I for one wouldn’t be surprised to see a conversation even in the people-to-people realm that touches on cyber because social media, because access to information, the development of the knowledge economy is really critical to every aspect of our societies and every aspect of our relationship.  So the cyber set of issues clearly will be an important component of the upcoming dialogue.

MODERATOR:  Great.  We only have time for one more question.  I know there’s lots out there.  I’m going to go right back to the second in the – no – sorry, right – second in – yes, right there.  (Inaudible) I’m sorry.  Okay, then.  If you don’t take the microphone, the other guy will.  (Laughter.)  Final question.

QUESTION:  Thank you.  My name is Wada; I’m with Japan’s Mainichi Newspaper.  Secretary, thank you very much for doing this.  My question is about North Korea.  What kind of cooperation do you expect China to make this time around?  I mean, what kind of pressure do you want Chinese to apply to the North Koreans so that they can come back to the nuclear talks?  Thank you.

ASSISTANT SECRETARY RUSSEL:  Well, the good news on North Korea is that there is a very close alignment between the U.S. and China, and obviously the ROK and Japan are very closely aligned with us – I think we could put Russia in the same category – on the goal.  The goal is the verifiable and complete and irreversible denuclearization of the Korean Peninsula, which means for all practical purposes the denuclearization of North Korea.  All of us want to avoid a crisis, and all of us are firmly committed to fully implementing the UN Security Council resolutions that categorically prohibit North Korea from continuing down the track of developing ballistic missile technology and developing nuclear capabilities.  That’s the good news.  So we’re aligned on what the goal is.

The bad news is that North Korea, which itself has committed clearly, directly, authoritatively under the 2005 joint statement to the complete denuclearization of the peninsula and has affirmed that that’s the goal of the Six-Party Talks, is in continued defiance.  Now, North Korea harbors the fantasy that it can have its cake and eat it too.  North Korea is hoping to be able to rescue itself from the economic failure of its system through external aid while simultaneously and brazenly carrying forward on its nuclear and missile program.  That’s just not going to happen.  However, North Korea has the option of tapping into the goodwill of the international community simply by honoring its own commitments, by coming into compliance with the UN Security Council resolutions, and by beginning credible, authentic negotiations on the nuclear issue.

In the upcoming dialogue, we have opportunities both in the SSD and in the strategic track of the S&ED to talk through and think through together where things stand now with North Korea, as well as to ask ourselves how we can further adjust our posture to accelerate the realization on the part of North Korea’s leadership that negotiations to end their nuclear program are the only path available to them that allows for economic growth.  And that’s what we will discuss.

MODERATOR:  And with that, I’m very sorry, we have to close the briefing.  We are now officially off the record.  Thank you.



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