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22 October 2004

Treasury Official Highlights Economic Ties with China, Japan

Taylor sees tremendous U.S. opportunities in expanding Asian economy

By Susan Krause
Washington File Staff Writer

Over the last three years, the United States has placed a high priority on expanding economic relations with China and Japan, according to John B. Taylor, under secretary of the treasury for international affairs.

"The Bush Administration views the Japanese and Chinese economies and their increasing integration into the global trade and financial system as a tremendous opportunity for U.S. workers and businesses in producing the goods and services that an expanding Asian economy will demand," Taylor told an audience at the Deer Creek Club in St. Louis, Missouri, on October 21.

The Treasury official laid out several steps that the administration has taken to strengthen economic ties with the two countries, ranked second- and third-largest in the world by purchasing power.

After a lengthy period of stagnant growth in Japan, Taylor said, the United States welcomed new policy initiatives by the government of Japanese Prime Minister Junichiro Koizumi and sought to bolster and build upon them.

In particular, he noted the launching of the U.S.-Japan Economic Partnership at a meeting between Koizumi and President Bush at Camp David in June 2001. The objective of the partnership was to promote sustainable growth in both countries through cooperative efforts on macroeconomic policies, structural and regulatory reform, financial and corporate restructuring, foreign direct investment, and market liberalization.

Taylor also cited the passage of a new bilateral tax treaty, which was signed in November 2003 and will take effect in January 2005. The treaty is expected to facilitate U.S. investment in Japan.

A different set of issues surround U.S. economic relations with China, according to the Treasury official.

"China's emergence as a major economy and trading partner is now so well known that it's hard to remember the autarkic [economically independent] country of a generation ago," Taylor said.

But the burgeoning trade relationship between the United States and China has led to occasional friction, he pointed out. "[M]ore imports from China have led to difficult adjustments and to complaints about Chinese trade practices."

The Bush administration has responded with efforts to engage the Chinese government on several fronts, Taylor reported. It has encouraged the adoption of a flexible exchange rate, called for strengthened protection for intellectual property rights, and promoted market-opening initiatives in areas such as agriculture and services.

"Looking ahead, the Administration will continue to engage with China on banking sector reform, and financial market development, as well as the exchange rate," Taylor said. "We will continue to insist that China live up to its commitments in joining the WTO [World Trade Organization] and in abiding by the rules of the international trading system."

The full text of Taylor's remarks can be found at the following address:

http://www.treasury.gov/press/releases/js2050.htm

(The Washington File is a product of the Bureau of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)