Tax deal heralds better Sino-US ties

China's investment in and trade with Europe are examples of the economic implications of sound inter-governmental relations. The US government should learn from Sino-European governmental relations and use the IGA to build a more tangible and ever-engaging political relationship with China. But for that to happen, the US has to accept that it is no longer the world's sole economic superpower and eschew any resulting fears and anxieties. Besides, it needs to view China's economic rise positively and consider it a major economic opportunity, instead of seeing it as a threat.

China too has an important role to play in developing governmental relations with the US. For instance, the Chinese authorities have to display maximum transparency and effectiveness in the implementation of the Sino-US deal. Both sides need to demonstrate effective implementation and take strict and decisive action as soon as any examples of non-compliance become evident. Any "gap" between policy and implementation could hurt Sino-US governmental relations with the bandying of accusations between the two sides.

Overall, however, optimism reigns with the prospect of further engagement and cooperation between the two biggest economic powers. A key reason for the optimism is the modern, progressive nature of the current Chinese political administration.

Li's visit to the UK and Greece has been hailed as a massive success on the trade and economic fronts. But his visit was far more significant for improving China's political relations with Europe.

By making similar efforts to improve political relations with the US, China has made the IGA a reality, and this approach could lead to more such agreements and strengthening of the Sino-US symbiotic relationship.

The author is a visiting professor at the University of International Business and Economics in Beijing and a senior lecturer in marketing at Southampton Solent University's School of Business.