China's economic transformation a boon for US

BEIJING -- As China and the United States are seeking to cast a new relationship model, the latter needs to be more prepared for a Chinese economic transformation that could create massive opportunities instead of threats, analysts have said.

Concluding on Friday in Washington, the two-day annual US-China Strategic and Economic Dialogue saw much exploration of new cooperative opportunities for the world's two biggest powers. Delegates pointed out that the two economies are at pivotal junctures, with China slowing to restructure and the United States gradually recovering from a contraction.

Stephen Roach, former chairman of Morgan Stanley Asia, pointed out that as China's new leadership embrace an approach focusing on consumer-led rebalancing, the United States needs to take that scenario into consideration when it frames policies with China.

With the American consumer on ice for more than five years, underscored by average annualized growth of just 0.9 percent in inflation-adjusted consumption expenditures since the first quarter of 2008, China, as America's third largest and most rapidly growing export market, presents an important opportunity for the United States to assess China's over one billion customers, he said.

China will overtake Canada and Mexico to become the largest export market for the United States by 2022, according to a recently-issued report compiled by the China-United States Exchange Foundation, the China Center for International Economic Exchanges, the Ministry of Commerce and the US-based Center for Strategic and International Studies.

The report said US exports to China will at least triple from their current level to reach $530 billion and create a gross domestic product worth $460 billion for the United States, as well as more than 3.34 million jobs, an increase of 2.63 million compared to 2010.

The sector Roach believes will carry the most opportunities for US businesses is the service industry, which accounted for roughly 44.6 percent of China's GDP in 2012. That was the smallest ratio in any major economy in the world.

Under China's 12th Five-Year Plan (2011-2015), the country aims to bring the sector's proportion of GDP to 47 percent by 2015 and to make it a strategic focus for the country's industrial restructuring and upgrading to ease reliance on traditional manufacturing.

"Under reasonable assumptions, the scale of Chinese services could increase by around $12 trillion by 2025," estimated Roach, adding that that could translate into a windfall of up to $6 trillion for foreign services companies.

Over the decades since China's reform and opening up, China has been moving steadily to allow foreign investment in more areas and the world's two largest economies have intensified efforts to boost bilateral trade and investments.

At the concluding session of the S&ED, US Treasury Secretary Jacob Lew hailed real progress in the talks that will create new opportunities for US workers and companies in an expanding Chinese market.

"China is resolved to transform its economy and create a level playing field for foreign businesses, and that direction is also to the benefit of the United States," said Jia Xiudong, a senior research fellow at the China Institute of International Studies, while stressing that this process will take time.

Instead of simply piling pressure on China, the United States should play a more constructive role in facilitating China's economic reforms and transformation, Jia urged.