On behalf of my U.S. colleagues, I would like to thank you, Vice Premier Wang, and your colleagues from ministries and agencies throughout China's government, for welcoming us to Diaoyutai for the Economic Track of the Strategic and Economic Dialogue.
At the beginning of the first meeting of the Strategic and Economic Dialogue in Washington last July, President Obama emphasized the importance of cooperation between our nations. As he said: …[T]he United States and China share mutual interests. If we advance those interests through cooperation, our people will benefit and the world will be better off -- because our ability to partner with each other is a prerequisite for progress on many of the most pressing global challenges.
Over the past year, we have demonstrated a commitment to cooperate and an ability to work closely together on the most important economic challenges facing the world economy.
Because of the actions the United States and China took over the past year, the world economy is much stronger today than it was when we last met. The global recovery continues to strengthen, although we still face significant challenges.
Let me touch briefly on the key challenges that will be the focus of our discussions now and in the coming months and years.
Our common challenge is to make sure that as the global economy recovers from the crisis we are laying the foundation for strong, sustainable, and balanced global growth in the future.
In the United States, the President's comprehensive program of investments, tax incentives and financial measures stabilized the economy and restarted economic growth. The U.S. economy is now expanding, led by private investment. The financial system is stronger. Private savings have increased, and we are borrowing much less from the rest of the world.
And as the economy strengthens, we will bring down our fiscal deficits to sustainable levels. The President has laid out a detailed, comprehensive plan to cut our budget deficit as a share of GDP by more than half over the next few years. The health care reforms adopted earlier this year will produce substantial reductions in health care costs. We have established a bipartisan Presidential Commission to recommend by the end of this year additional measures to achieve further reductions in our long term deficits.
China's stimulus measures have been successful in supporting growth and shifting its composition towards domestic demand. The challenge will be to reinforce this shift to domestic demand as exceptional stimulus measures are withdrawn and as the rest of the world moves back over time to full employment and growth. This will require sustaining and deepening the measures China has already begun to raise household incomes, strengthen the social safety net, expand the range of financial services and products for households, and increase the role of the market in allocating investment capital.
We welcome the fact that China's leaders have recognized that reform of the exchange rate is an important part of their broader reform agenda. Allowing the exchange rate to reflect market forces is important not just to give China the flexibility necessary to sustain economic growth with low inflation, but also to reinforce incentives for China's private sector to shift resources to more productive higher value-added activities that will be important to future growth.
China has benefited enormously from the open and rules-based global system of trade and investment, as have we. Continued, reliable access to the large and growing United States market is an important underpinning of China's prosperity and growth.
One of the most important objectives of this dialogue is to expand economic opportunities through trade and investment.
After joining the WTO, China became more open to imports and to foreign investment. And we want to encourage you to go further and take additional steps to make sure that companies that export to China, that operate in China, and that compete with Chinese companies around the world are competing on a level playing field.
In this context, we will have a chance during these meetings to discuss policies to encourage technological innovation in China and our concerns that those policies, including government procurement preferences, enforcement of intellectual property rights, and proposed new preferences for specific products designated by the Government, not unfairly disadvantage American firms and American technology.
We are asking that China give American firms the same opportunities to compete in China that Chinese firms enjoy in the United States. This is a simple principle of fairness.
We are both engaged in important and comprehensive reforms of our financial systems. Here we face very different challenges, but our common objective is to build more resilient financial systems that can better meet the financial needs of households and businesses and channel capital to the most productive enterprises with the most innovative ideas.
We will provide an update on our reforms and how they will address the very substantial weaknesses in our financial system that produced this crisis.
And we look forward to hearing from the Chinese side an update on your financial reforms to expand saving and borrowing opportunities for your households and open up your financial system further to foreign firms and investment.
And we will further deepen cooperation among our financial regulators and supervisors, to reflect the closer integration of our two financial systems.
And we will continue to work together to build stronger institutions for cooperation on global economic and financial issues. We are working closely in the G-20, which we have now made the principal forum for addressing global economic policy issues. We are committed to further reform of the international financial institutions. We need to make sure these institutions have the right tools and the right governance to address global challenges, from development, to financial instability, and climate change. And important part of this is giving China and other rapidly growing economies a place in these institutions that reflects your greater economic importance in the global economy.
I hope we will take full advantage of this valuable opportunity to reach shared understandings and make concrete progress on the issues most important to each of us, as we continue to approach this relationship with mutual respect for our mutual interests.