China's Economic Stimulus Is Showing Results

China's major economic stimulus spending is not only welcome and necessary to promote Chinese domestic demand but it is already starting to work, a knowledgeable State Department official says. "It appears the Chinese stimulus plan is starting to get some bite," said the official, noting that first-quarter growth in China is estimated at a 6.1 percent annual rate.

The "atmospherics" surrounding China's near-term economic situation, said the official, are "more optimistic."

Despite recent high-level Chinese statements expressing concern over China's dollar-denominated investments in the United States, the official described the interaction of Chinese officials with their American counterparts as "cautious, careful, supportive." The official added, "They can't move out of their position [in U.S. Treasury bills] all that fast."

The official said that global economic recovery and collaboration on climate change are two of the Obama administration's three policy priorities with China. (The other is regional security issues like North Korea and Iran.)

U.S. diplomats are urging China to change its traditional stand against joining a cap-and-trade regime on greenhouse gas emissions—a likely key element in any compromise arrangements to underpin a global climate deal at the Copenhagen global climate meeting in December. "It's hard to imagine a Copenhagen deal that does not have China's support and participation," said the official, who added that Beijing's "public stance" remained that of a developing country that should not have to make a commitment to a cap-and-trade system.

But the official added, "We think we can work them," signaling that U.S. officials are optimistic about progress on the issue.

Separately, a senior Chinese diplomat offered unusually positive comments that appear to bode well for a burgeoning economic and foreign policy relationship. The senior Chinese official said that the Obama administration entered office well prepared to carry Sino-U.S. relations forward. "The Obama administration came to the White House with a clearer understanding of the importance of Sino-U.S. relations, compared to previous administrations," said the official.

The official credited the Obama team as having "the readiness to listen attentively to the other side, to have a real dialogue." The official added that China sees the focus of the Obama administration as finding and advancing on "areas of cooperation" and has been "putting our differences in their proper place."

Ties between Beijing and Washington have arrived at "a historic new starting point" built on "mutual trust," said the official, who added the hope that "we can push forward this very important bilateral relationship to a new high."

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