WHITE HOUSE PRESS BRIEFING ON U.S.-CHINA ECONOMIC RELATIONS

FROM:  THE WHITE HOUSE
Press Briefing by Senior Administration Officials on the Fact Sheet on Strengthening U.S.-China Economic Relations
Aboard Air Force Two
En Route Seoul, South Korea

6:33 P.M. (Local)

SENIOR ADMINISTRATION OFFICIAL:  This is SAOs, so everyone knows -- SAOs.

SENIOR ADMINISTRATION OFFICIAL:  Okay.  Well, I mean, I think you heard the Vice President talk about the importance of the relationship on a whole variety of dimensions.  We’ve been talking a lot about the security dimensions during his visit, but of course a very important piece of the agenda is on economic and trade issues.  And maybe you’ve heard the Vice President talk about how we have a stake in each other’s success, about the need for practical cooperation that helps demonstrate to the American people and also to the Chinese people that this relationship is working, that this kind of a visit is generating and advancing the kind of cooperation that we’re trying to do across the board, but especially in the economic and trade space.

And in the course of this visit and during the Vice President’s meetings, we’re working on a number of issues on energy, on climate, on food and drug safety.  Coming out of these discussions, coming out of some discussions on the sidelines of the visit, we reached agreement on a number of things that my colleague will be able to outline in detail both what they are and the significance of them as you see in the fact sheet.

But I guess the sort of broader point or just the sort of context-setting point is that we’ve been talking a lot on this visit about the ADIZ issue, about some of the security issues in the relationship, but I just sort of want to make the broader point that this is -- that this set of issues is actually a very big piece of business here.  And we are constantly trying to use visits like this to advance our agenda on a whole number of aspects.  And the economic and trade one is the way that we used part of the Vice President’s time, but also in some of the discussions leading up to this visit.

And this will continue past the visit.  We have our Joint Commission on Commerce and Trade, which is where we have our top economic and trade negotiators getting together in just a week or so.  So they’re going to continue that.  And the Vice President talked about some things with his Chinese counterparts that they’re going to be able to continue to work on over the course of the coming days and weeks.

So why don’t I turn to my colleague to talk a little bit about what we are announcing today.

SENIOR ADMINISTRATION OFFICIAL:  Hi.  So just to start off on the climate side obviously is the two largest emitters -- we have a special responsibility and opportunity working together.  And today, we reaffirmed the agreements on the HFCs that the two presidents had reached in Sunnylands originally, and expanded in St. Petersburg.  We also reached agreement that China would work with us to design and then implement much more aggressive emissions controls and standards for vehicles -- low-sulfur fuel and vehicle emissions, known as the China VI standards, which is the first time that they’ve committed to that.

We also reached agreement that there would be effort and resources devoted on both sides to the work of the energy -- the climate -- sorry, the climate working group that was set up, as my colleague mentioned, at the S&ED.  And there were five areas in that to be looked at by that working group.  And it was agreed today that we would make significant progress, concrete progress by the next S&ED, which is in the summer of 2014.  So it’s really giving a push forward to that work.

We also agreed to work together in the UNFCCC negotiations and to work in close cooperation and leader-level discussions.  And we’re, as you know, moving towards the 2015 COP in Paris of the UNFCCC, so this is going to be a very important period going forward in the multilateral -- in those multilateral negotiations.

On energy transparency, China agreed today to make important steps towards greater transparency by providing more complete and more frequent data releases on their energy situation -- production, consumption and stocks -- and to have stronger cooperation with this process called JODI, J-O-D-I, which is the Joint Organizations Data Initiative.

Secondly, we reached agreement to information -- to cooperate basically on the management of strategic petroleum reserves with annual meetings and information exchanges.  We also -- China agreed to participate in a peer review of fossil-fuel subsidies, which is the next step in the implementation of the G20 commitment to phase out, and they reaffirmed the commitment to phase out inefficient fossil-fuel subsidies.  This is all consistent with their move towards better pricing of energy.

And finally, on energy, they agreed -- China agreed to  -- we agreed to work with them to open up their shale gas to investment and development.

And then on the food and drug safety and innovation, we import a lot of food from China now and it’s important for both parties that this should be safe, and we have some FDA inspectors on the ground in China, but not enough.  And China today agreed to increase the number -- increase the visas supplied for these inspectors, and we’ll reach agreement in January 2014 on how that will be operationalized.  But I know that the FDA will be very pleased.

We also reached an important agreement on things called APIs, which are these bulk chemicals that can be used in drug manufacture.  And China agreed to begin to develop a framework for -- a regulatory framework for these chemical compounds.  And there will be more work on that, but it’s an important step forward in drug safety.

And then finally, on innovation, is this issue about patents for pharmaceuticals, that as technologies change, manufacturers want to add elements to patents.  And there was -- China affirmed that this kind of development of patents would be possible now, which supports drug innovation and will be an important win for our industry.

So that’s the main items in those buckets.

Q    Could I ask a very general question about TPP that just sort of interests me.  Did you get any sense from your conversations that the Chinese are viewing TPP less as a competing regional trade pact than as something that they might find attractive down the road?  In other words, has their sentiment toward TPP evolved?  Is there any evidence of that?

SENIOR ADMINISTRATION OFFICIAL:  We didn’t cover that in our discussions here.  There have been statements beforehand, in the recent past, about -- and I think you see in the region more interest, more openness to TPP, obviously with Korea’s announcement of interest and some other countries.  So I think that there’s some prospect that there’s more growing acceptance that TPP will be an open architecture agreement that will provide rules and standards for the whole region.

Q    Did you guys get into any of the issues, kind of escalating concerns about WTO disputes that both had with each other on trade enforcement?  That would be one.  And second, since this was a pretty large portfolio being laid out, did you guys consider the sort of old model of what Ron Brown or Al Gore used to do of bringing either business leaders on the trip or NGO leaders?  This is a very sizable portfolio, but the constituencies that often were part of these sorts of delegations weren’t on this trip.  Had that been part of any calculation?

SENIOR ADMINISTRATION OFFICIAL:  Well, let me just say a couple of things about that.  I mean, first of all, the Vice President spoke to a large --

Q    (Inaudible.)

SENIOR ADMINISTRATION OFFICIAL:  -- the AM Cham, the U.S.-China Business Council, two of the main business groups --

Q    But you didn’t have, like, the CEO of GE or the CEO of Mylan, or who all are going to benefit from a lot of these -- I mean, I’m not critiquing, I’m just wondering if it had  -- it’s not that important, but --

SENIOR ADMINISTRATION OFFICIAL:  Yes, I guess I would just say that, I mean, we didn’t -- you’ve seen the delegation that we had on this trip.  The focus of these three areas that we’re sort of working on really are sort of focused on regulatory and policy issues with China, and between China and the United States, that will obviously have an impact on our companies trying to do business in China, trying to improve this as --

Q    How about the WTO disputes?

SENIOR ADMINISTRATION OFFICIAL:  On that, I would say in the discussions that the Vice President had during this trip, he raised a whole range of economic concerns that we have, as well as talked about opportunities for economic cooperation.  So the kinds of issues we just made -- we reached agreement on, are the kinds of things that were talked about in the meetings.  He also raised a number of other issues and concerns that we have across a range of issues, many of which he talked about in his speech, so I won’t really repeat those.  But he talked about interest-rate liberalization, he talked about concerns we have around the WTO and some of the specific cases that we have concerns about.  He talked about some of the third plenum reforms that are suggesting things may be going in a positive direction, but the need to speed up implementations.

So that was a kind of type of issues that he was talking about in the economic area across the meetings over the last couple of days.

Q    Just on that point, because it interested me in the briefing last night, it sounded like Xi laid out this very ambitious agenda, but said a lot of this won’t really be feasible for 10 or 20 years, and the Vice President said, well, we need things that happen in the here and now.  Is that a question of selecting reforms that can be done immediately, or is he just simply saying to the President, you have to move faster, you can’t expect us to wait 10 or 20 years?

SENIOR ADMINISTRATION OFFICIAL:  Well, I think there are a number of different areas that they talked about in terms of -- in the context of the third plenum reforms, both what Xi indicated he’s focused on, but also some of the longstanding concerns that we have that the Vice President raised and discussed in his meetings with Xi and other Chinese leaders about some of the areas of reform, the concerns that we have and what we’d like to see going forward.

In terms of the pace, obviously some of the issues on the agenda are large, structural changes that they’re trying to make in terms of rebalancing their economy that are pretty fundamental issues that are going to obviously take a long time to develop.  But I guess I’ll turn to my colleagues as well on this.

What we’ve laid out here is an example of the kinds of here-and-now issues that not only address specific concerns that we’re trying to resolve today, but also connect to the larger structural issues that they were discussing in these meetings.  So there’s kind of a linkage between the kinds of issues we’re raising, the kinds of issues we’re trying to resolve, the type of cooperation we’re seeking, and the larger reform agenda that the two leaders were discussing in their meetings.

SENIOR ADMINISTRATION OFFICIAL:  I agree with that.  And I think that I mentioned in the area of energy and climate, and the fossil-fuel subsidy review, and the vehicle-emission standards, part of that is support for the kind of shift in their economy that they’ve laid out and that they want to do, and there are areas where we can work together on that.

Q    To dovetail on Mark’s question, the Vice President talked in this trip about the third plenum reforms really being things that the United States would like to see.  At the same time, we’re not seeing the kind of commitment by China to make political reforms that the United States perhaps would like to see.  Does this administration think that the economic reforms can be carried out without political reforms happening at the same time?

SENIOR ADMINISTRATION OFFICIAL:  Well, on that I would just point you to the Vice President’s speech today, where I think he actually spoke directly to that connection and that issue.  So I don’t want to go beyond what he said today, because I think he actually laid it out quite well.  He talked about the reform agenda, he talked about the kinds of things that have been laid out in the third plenum.

Q    But he didn’t talk about whether one can be done without the other.

SENIOR ADMINISTRATION OFFICIAL:  Well, I don’t know.  I mean, I would go to what he said, because he actually -- I thought he spoke pretty directly.

Q    Another question is, during the debt ceiling debate, Chinese government and central bank authorities began to sort of publicly criticize U.S. policy and responsibilities over the reserve currency status of the dollar.  Did that kind of thing come up?  Or was that a momentary impulse during the debt ceiling debate, and given the spate of things that you guys work on, that Chinese economic authorities didn’t continue that complaint about the dollar and sort of responsible management of it?

SENIOR ADMINISTRATION OFFICIAL:  It didn’t come up.  I mean, there was general agreement that both economies were doing well, and there was notice that -- the Chinese noticed that our economy was growing, and unemployment was coming down, although of course we have more work to do.  So the other issue did not --

Q    (Inaudible) tone --

SENIOR ADMINISTRATION OFFICIAL:  Absolutely not.  Absolutely not.

Q    That’s interesting.  Thank you.

SENIOR ADMINISTRATION OFFICIAL:  Great.  Thanks.