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China's Xi tells US Treasury chief of 'shared interests'

US Treasury Secretary Jacob Lew, (L) chats with Chinese President Xi Jinping  in Beijing on March 19, 2013
US Treasury Secretary Jacob Lew, (L) chats with Chinese President Xi Jinping at the Great Hall of the People in Beijing on March 19, 2013. Beijing and Washington have "enormous shared interests", Xi told Lew in his first major diplomatic encounter since t

Beijing and Washington have "enormous shared interests", China's new President Xi Jinping told the US Treasury chief on Tuesday in his first major diplomatic meeting since taking office.

The world's two largest economies increasingly compete for global political influence as Beijing expands its presence in regions such as Africa, while sometimes acting as a counterweight to Washington in the Middle East.

Tensions have also risen following US allegations that China has engaged in hacking against US companies and institutions.

"In the China-US relationship, we have enormous shared interests but of course, unavoidably, we have some differences," Xi told Treasury Secretary Jacob Lew at the Great Hall of the People, five days after he became head of state.

China's exports to the US consumer market have helped it achieve astounding growth over the past three decades, but it has resulted in huge imbalances in the relationship.

A man walks past a building alleged to be the base of a Chinese military-led hacking group in Shanghai
A man walks past a building alleged, in a report in February by the Internet security firm Mandiant, to be the base of a Chinese military-led hacking group in Shanghai.

Beijing has accumulated $3.31 trillion in foreign exchange reserves, the world's biggest, and is the largest foreign holder of US Treasuries with $1.26 trillion-worth at the end of January.

The US posted a record $315.1 billion trade deficit with China last year and Washington politicians regularly accuse China of unfair business practices.

Lew stressed the importance of the two countries to the global economy, saying they had "a responsibility to maintain strong, stable and sustained growth in the world".

"We look forward to China contributing more and more to global demand," he added.

A US official described Lew as "candid and direct" during the 45 minutes of private talks, which covered the world economy, including the situation in Cyprus which is the subject of a controversial EU bailout.

A Chinese honour guard marches in Beijing on March 6, 2013
A Chinese honour guard marches in Beijing on March 6, 2013.

Lew also brought up North Korea, the dollar-yuan exchange rate -- Washington considers the Chinese currency undervalued -- intellectual property and cybersecurity, the official said, without giving details.

A report last month from US security firm Mandiant said a unit of China's People's Liberation Army had stolen hundreds of terabytes of data from at least 141 companies, government agencies and other organisations, mostly based in the US.

Beijing has steadfastly denied the allegations and says it is itself a regular victim of cyberattacks.

At Tuesday's meeting, Xi said that in three decades of diplomatic ties between Beijing and Washington, "we have indeed traversed an extraordinary course and achieved bountiful fruits".

Both countries would derive mutual benefits if they "approach and handle this relationship from a strategic and long-term perspective", he added.

Chinese President Xi Jinping takes his seat at the National People's Congress in Beijing on March 17, 2013
Chinese President Xi Jinping takes his seat at the National People's Congress in Beijing on March 17, 2013.

In a commentary the state-run Xinhua news agency welcomed Lew's visit but warned of Chinese vulnerability to US policies to shrink its government debt, a question which has polarised US politics.

"After a sweeping global financial crisis, the United States is facing one fiscal crisis after another," Xinhua said, noting that global investors want US lawmakers to reach a deal to avoid a debt default or government shutdown.

"The stakes are high," Xinhua added. "China is the largest overseas holder of US government debt, and the United States' second largest trade partner."

Xi became president on Thursday, ended a once-in-a-decade transfer of power in China that formally began with him taking the reins of the Communist Party in November.

US President Barack Obama telephoned Xi last week to congratulate him, but also mentioned the importance of addressing cybersecurity threats which he said represent "a shared challenge".

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