US, China talks end with little achieved

Most international observers believe that the second "strategic economic dialogue" between the US and China failed to break new ground.

Aside Chinese promises to increase flights to the US before 2012 and give US financial organizations a bit more leeway to operate in China, little was accomplished. The question of the yuan's exchange rate was not resolved, and little progress was made on providing US companies with greater access to Chinese markets. Sources in Washington said that discussions ended somewhat acrimoniously on both sides. This atmosphere has led many to believe that the chances of another meeting at the end of the year aren't good.

Nonetheless, there are several aspects of the conference worth considering.

First, the main point of the dialogue was to find ways to resolve US-China trade issues caused by a lack of transparency in China's economic structure. This is why the issues discussed included the yuan's exchange rate and market access. It also provided the US with a platform to raise "structural" issues with China.

Contrast with the economic forum between the Chinese Nationalist Party (KMT) and Chinese Communist Party (CCP), which focused only on one thing -- securing more Taiwanese investment and technology in China. It failed to address structural problems in cross-strait economic and trade interaction, including intellectual property rights, international trademark registration and market transparency.

Despite widely touted agreement on protection for Taiwanese investors, in the end, China's Taiwan Affairs Office used it to manipulate Taiwanese business associations, which were supposed to be independent. Taiwanese investors will not be protected by a full array of laws, but by cozying up to the government. More important, with a fine supporting performance by the KMT, the forum has become a platform for the CCP's unification campaign. In short, it's done nothing to resolve economic issues, but only added to Taiwan's political woes.

Second, US manufacturers have undoubtedly been hurt by China's mercantilist manipulation. Yet despite its size, the US has been unable to pressure China to open up its markets and promote economic transparency. Despite its own failure, the US is pressuring Taiwan to open up to China, saying this would go a long way toward helping Taiwan and US economic relations. The result of the most recent US-China dialogue shows that this argument is not very convincing.

Finally, China's actions at the US conference was hardly surprising. It reflected Beijing's fundamental unwillingness to address these structural problems. Nor are China's international trade disputes limited to the US. Witness its numerous trade conflicts with the EU, or reports that Australia is set to discontinue negotiations on a free-trade agreement with China after two years of frustrating talks.

Looking China's economic and Taiwan policy from a global strategic perspective, the question is not how Taiwan should open up to China. The real issue is how to strengthen Taiwan's economy, as well as cooperation with the international community to urge China to open up its markets and make its economy more transparent. This would promote fair competition that would be beneficial to Taiwan and create a liberal economic environment free of China's political interference.

Resolving structural issues in cross-strait trade is a more important objective than hoping China will buy more Taiwanese products, or that Taiwan will raise its China-bound investment limit.

Lai I-chung is the head of the Democratic Progressive Party's Department of Chinese Affairs.

Translated by Marc Langer