US China agree to restart negotiations on investment treaty

The US and China agreed yesterday to restart stalled negotiations on an investment treaty, with Beijing dropping previous protection efforts in certain sectors of its economy from the start.

The agreement to restart negotiations was welcomed by the US business community as a major advance during the annual Strategic and Economic Dialogue talks in Washington, that had often produced few agreements of substance.

Top officials from both sides tried to project a friendly, businesslike tone in building what China termed a "new model of major country relations" between the world's two biggest economies in the first year of Chinese president Xi Jinping's mandate.

However, China's handling of former spy agency contractor Edward Snowden proved to be a sore point, as he had taken refuge in the Chinese territory of Hong Kong last month and spilled the beans on a secret US surveillance programme before fleeing to Russia.

Hailing the investment treaty commitment US treasury secretary Jack Lew said it was as a sign of positive change in Beijing as China recast its economic growth strategy away from heavy investment and exports toward growth driven by consumption.

Meanwhile the US called yesterday on China to abide by what it called international rules in areas from cyber-hacking to freedom at sea as the world's two largest economies tried to thrash out outstanding issues.

Chinese and US officials were in the process of winding up a two-day meeting aimed at addressing the whole range of issues in their complicated relationship, with both sides looking to expand cooperation at least in small ways.

In a sign of the importance he attached to managing ties with the rising Asian power, president Barack Obama - who generally met only leaders from other nations planned to receive the two main Chinese delegates at the White House.

Obama has invested time in working out a smooth relationship with China's newly installed president Xi Jinping, meeting him for a weekend at a California desert resort last month, but had upped the tone on hacking.

For the second day in a row, the US leveled charges that China had waged a vast hacking campaign to steal US trade and government secrets, costing the economy billions of dollars through the counterfeiting of products.

Deputy secretary of state William Burns told a session that as major powers looking to forge a new model of relations, the two countries had a responsibility to show restraint in their actions and abide by the rules meant to govern international affairs.