China and US need to trust each other more, says President Xi at start of annual talks

China's President Xi Jinping (right) meets with US Secretary of State John Kerry and US Treasury Secretary Jack Lew (left) during the joint opening ceremony of the 8th round of US-China Strategic and Economic Dialogues in Beijing June 6.
China's President Xi Jinping (right) meets with US Secretary of State John Kerry and US Treasury Secretary Jack Lew (left) during the joint opening ceremony of the 8th round of US-China Strategic and Economic Dialogues in Beijing June 6.PHOTO: REUTERS

BEIJING (Reuters, AFP) - President Xi Jinping said China and the US needed to trust each other more as both sides sought to minimise tensions over the South China Sea at the opening of key annual talks in Beijing on Monday (June 6).

China claims nearly all of the strategically vital sea despite competing claims by several South-east Asian neighbours, and has rapidly built artificial islands suitable for military use.  Washington has responded by sending warships close to Chinese claimed reefs, angering Beijing.

“China and the US need to increase mutual trust,” Xi said at the opening of the two-day strategic dialogue, calling for redoubling of efforts for the two powers to manage conflicts and avoid “strategic misjudgement”.  

“Some disputes may not be resolved for the time being,” he said, but both sides should take a “pragmatic and constructive” attitude towards those issues. “The vast Pacific should be a stage for cooperation, not an area for competition,” he said.  

Speaking for the US, Secretary of State John Kerry called for a “diplomatic solution” to the problem.  

“We are looking for a peaceful resolution to the dispute in the South China Sea and oppose any country resolving claims through unilateral action”, he said, referring to China’s increasingly aggressive expansion in the area.  

The Philippines, Brunei, Malaysia and Vietnam have competing claims in the South China Sea, which encompasses vital global shipping routes and is believed to have significant oil and gas deposits.  

Manila accuses China of taking effective control of the Scarborough Shoal in 2012 and has brought a case against Beijing to the Permanent Court of Arbitration at The Hague. China has shunned the proceedings and says it will not recognise any ruling.  

At the Shangri-La Dialogue last weekend in Singapore,  US Defense Secretary Ashton Carter warned that Chinese construction on the shoal would prompt unspecified “actions” by the United States and other nations.  

The US-China annual meeting, known as the Strategic and Economic Dialogue,  is perhaps the most important meeting between the world’s two largest economic and military powers, giving them a chance to seek agreement and iron out disputes on a range of issues related to security and economics.  

This week's talks is the eighth of its kind and is set to cover a number of key issues beyond the South China Sea, including climate change, cyber-security, terrorism, trade and economic cooperation.  

Among those is the question of how to handle North Korea’s nuclear ambitions, an area where Kerry said it is “imperative to keep the pressure.” 

The North staged its fourth atomic test in January and launched a long-range rocket a month later – widely seen as a ballistic missile test, banned under existing UN resolutions.  

Beijing is Pyongyang’s largest trading partner and has been its key diplomatic protector for decades. It is seen as a critical element in any plan to convince North Korea to change its behaviour.  

China has seemingly lost patience with North Korea’s behaviour, and it played a critical role in pushing a recent round of sanctions through the United Nations

Xi also touched on US-China economic ties at the bilateral dialogue on Monday, saying it was important to conclude a bilateral investment treaty with the United States at an early date, as the two countries began their annual Strategic and Economic Dialogue.

“We must make our best efforts to achieve a mutually beneficial China-US investment agreement at an early date and create new bright spots in bilateral economic and trade cooperation,” Xi said in opening remarks.  

He also said China would continue with its structural reforms and improve its openness to the outside. “We have full confidence that China can achieve its goals of economic and social development,” Xi said. 

US Treasury Secretary Jack Lew meanwhile expressed concern at the meeting about China’s newly passed law governing foreign non-governmental organisations.

“We are very concerned that China’s recently passed Foreign NGO Management Law will weaken that foundation by creating an unwelcome environment for foreign NGOs,” Lew said at the start of the talks.

He also said the United States supports China’s efforts to cut excess industrial capacity and encourages its use of fiscal and lending policies to strengthen consumer demand as part of its economic transition.

“Excess capacity has a distorting and damaging effect on global markets,” Lew said in prepared remarks at the start of high level bilateral talks in Beijing. “Implementing policies to substantially reduce production in a range of sectors suffering from overcapacity, including steel and aluminum, is critical to the function and stability of international markets.”

Lew said the two countries will discuss ways to promote sustainable and balanced growth and improve financial sector function and stability during the two-day talks.