Critics who argue that the Strategic and Economic Dialogue (S&ED) has failed to sufficiently open up China's financial services market to U.S. banks and other financial institutions overestimate the leverage U.S. and Chinese negotiators have to offer reciprocal concessions, Peterson Institute for International Economics Senior Fellow Nicholas Lardy testified to a House Financial Services Committee. He said that these critics also fail to realize that the U.S. is partially limited because it agreed to weak terms in China's accession to the World Trade Organization, and do not take into account how much less persuasive the arguments for western-style financial opening have become to China since the 2008 global financial crisis. Both U.S. and Chinese negotiators in the S&ED face "severe limits" on their ability to offer reciprocal concessions, Lardy told the House Financial Services subcommittee on international monetary policy and trade on May 16. U.S. negotiators are constrained, for example, from meeting China's "number one request" of relaxed export controls on U.S. high technology sales to China, the Peterson expert said.
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