After the agreements, analysts seek action
Vice-Premier Wu Yi called the second Strategic Economic Dialogue (SED) 'a complete success', while US Treasury Secretary Henry Paulson singled out agreements on financial services, energy and the environment, and civil aviation as positive evidence of 'tangible results'.
But the reaction from political analysts and US businesspeople in China yesterday was mixed.
'China has given some concrete economic concessions in an enormous effort to mitigate trade friction. The SED has produced progress, but not enough to substantially reduce domestic protectionist pressures in the US,' said Shi Yinhong, director of the Centre for American Studies, Renmin University, Beijing.
James Zimmerman, chairman of the American Chamber of Commerce in China, said: 'While we welcome the commitments for market access in the financial services, aviation and environmental technology sectors, we look to the negotiators to further define and specify how the commitments will be implemented in practice.'
Beijing agreed to end a year-long block on the entry of foreign securities firms into the market and to increase the Qualified Foreign Institutional Investor (QFII) quota from US$10 billion to US$30 billion. The quota allows authorised foreign banks to invest in the mainland's capital markets. 'What is needed is market access that is effective and user friendly, and not market access burdened with technicalities and bureaucratic red tape lacking in transparency,' Mr Zimmerman said.
According to Fraser Howie, author of Privatising China: 'Only five foreign securities joint ventures have been set up since 1995 - it doesn't look impressive. Even if they do start relicensing foreign securities, the authorities will still be very involved in the approvals process.'
Peter Alexander, Shanghai-based principal of fund industry watcher Z-Ben Advisors, welcomed the move to 'expand' the role of US financial services companies on the mainland, but voiced concern about what the agreement would mean in practice. 'The devil is in the detail. The word 'expansion' is opaque.'
The increase in the QFII quota drew cautious praise from China's biggest foreign-invested fund manager. 'We have a lot of foreign investors that want to invest in the mainland but couldn't find an open door before. If this move is really true, we welcome it,' Harvest Fund Management's Lewis Leung said.
Despite fears of a growing stock market bubble, Mr Leung said the extra flood of liquidity would not affect market fundamentals. The State Administration of Foreign Exchange is expected to raise the quota to the new US$30 billion cap gradually over a number of years.
The bilateral pledge to collaborate more closely on energy security and environmental protection drew praise.
'The environment is a hopeful area for future co-operation. What we need now is more concrete agreements to bring commercial opportunities for American enterprises,' Professor Shi said.
'One of the stumbling blocks has been technology transfer, but there is a need for advanced technology in China. Any reduction in export barriers of high-technology from the US would definitely be welcomed,' said Wang Wanxing , an expert on renewable energy at the Energy Foundation, a non-governmental organisation.