US Treasury’s Lew says concern has grown over China’s business climate

The United States and trading partners are blaming China for flooding “low-cost steel into their markets, threatening thousands of jobs”.

The two-day annual Strategic & Economic Dialogue ended with both sides acknowledging they still disagreed on significant issues including human rights.

For its part, Washington promised to boost its savings rate and investment, especially in infrastructure.

The president called on both sides to focus on cooperation, manage their differences properly and promote the healthy and stable development of China-U.S. relations. President Barack Obama’s administration and the Democratic Party thus face pressure to deal harshly with steel-market oversupply, giving the USA performance on Monday and Tuesday an element of political posturing. But that will take time, and the flood of low-priced steel has prompted protests by European steelworkers and was cited by Tata in its decision to sell money-losing British operations that employ 20,000 people. The US has slapped tax hikes of a range of Chinese steel imports.

Lew cited some action from Beijing to address the concerns.

Lew’s comments echo those of other senior officials around the world who have blamed the Chinese supply glut for industry turmoil in Europe and elsewhere. The timing combined with tensions over the South China Sea-where the U.S.is challenging Beijing’s sharp-elbowed assertion of sovereignty over islands, reefs and surrounding waters claimed by other countries-limited prospects for breakthroughs on issues such as trade and investment barriers and China’s currency policy.

Lou said the Chinese government was now “squarely facing up” to the enormous amounts of unwanted industrial output.

State councillor Yang Jiechi, China’s top diplomat, said Beijing was within its rights to safeguard its territory and while he agreed on the need for negotiation, he urged Washington to stay out of any disputes. He predicted continued progress by Beijing to reduce excessive capacity. China would grant the United States a quota of 250 billion yuan (38 billion USA dollars) under the country’s Renminbi Qualified Foreign Institutional Investor program.

China claims almost all of the South China Sea and has built seven artificial islands in the region in the past two years.

“We have taken no position on any of the claims”, Kerry said.

But analysts say the two sides have not bridged the gaps on this issue, with Chinese experts calling the U.S.

With China being an ancient country, Chinese President Xi Jinping quoted a poet from a thousand-year-old Song Dynasty.

The two USA officials agreed the United States and China have extensive cooperation potential, and could solve differences properly.

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

But Beijing’s top diplomat Yang Jiechi said the USA should butt out of disputes that were a long way from its shores, including an global arbitration case brought by the Philippines. China also has conflicting claims with Malaysia, Brunei, Taiwan and Indonesia. He said the two countries had yet to resolve concerns about intellectual property and clarify “the rules of the road”. That would exclude the United States.

“I can think of no better way than to open the door wider to foreign investment so that world-class American firms can bring their expertise and participate more deeply in China’s growth”, Mr Lew said over breakfast. The law puts foreign advocacy groups under direct police supervision, forcing them to state the sources of their funding and explain how budgets are spent. Those deemed to be subverting the state would be banned.