Many of these topics have been front and center since the SED commenced last year, but SED III is unique for one very important reason: its relative quiet. Absent from the periphery this time are the political theatrics that colored the previous two installments. Congress isn’t menacingly threatening provocative actions if discernible progress isn’t made immediately. And that in itself is a welcome sign of progress. The bilateral relationship appears to be maturing.
The SED was created as a forum for discussing, understanding, and ultimately resolving structural problems affecting the bilateral relationship. It was not envisaged by its founders to be a venue for quick fixes. Yet that is how many members of Congress painted the two previous SEDs, partly to accentuate their get‐tough‐now legislation and partly to perpetuate perceptions that the Bush administration’s approach to China was failing.
The SED’s detractors argue that longstanding gripes remain unresolved: the Chinese yuan is still undervalued; the bilateral deficit continues to grow; opaque market barriers persist; intellectual property piracy continues; industries still receive government subsidies. All of those assertions have merit, but to a lesser degree with each successive SED. Progress has been made on all of these issues.
The wisdom of preferring dialogue to sanctions was affirmed by the announcement last week of a resolution to the Chinese subsidies dispute, a formal U.S. complaint lodged in the World Trade Organization earlier this year. The Chinese government agreed to terminate certain tax provisions that encouraged consumption of Chinese‐made components and products at the expense of imports, and others tax rebates that subsidized Chinese exports. Had U.S. policy reflected the wishes of those in Congress who disparage the SED and who favor provocative, unilateral sanctions, quick resolution would have been highly unlikely.