U.S. presses China on steel dumping, South China Sea

U.S. Secretary of State John Kerry pressed Monday for a diplomatic solution to tensions in the South China Sea while Treasury Secretary Jack Lew urged China to stop flooding global markets with excess steel at the U.S.-China Strategic and Economic Dialogue in Beijing.

The high-level annual meeting focuses on regional and global security and economics. Major issues this year include China’s escalating disputes in the South China Sea, cybersecurity, North Korea, environmental issues and trade concerns.

"The United States will make it clear that we are looking for a peaceful resolution to ...  the disputes of the South China Sea," Kerry said in opening remarks. "Let’s not resolve this by unilateral action; let’s resolve this through rule of law, through diplomacy, through negotiation.

"And we urge all nations to find a diplomatic solution, rooted in international standards and rule of law."

China has been on a campaign to assert sovereignty over the busy waterway, building artificial islands on reefs and establishing military bases. China's reach has extended into areas claimed by Vietnam, Taiwain, Brunei, Malaysia and the Philippines. The latter nation has an international court case pending against China over its South China Sea claims.

Threat from Russian and Chinese warplanes mounts

Last month, two Chinese fighter jets flew dangerously close to a U.S. Navy patrol plane over the South China Sea. Kerry previously said the U.S. would consider Chinese establishment of an air defense zone over the sea a "provocative and destabilizing act."

The Chinese foreign ministry over the weekend defended its actions, suggesting its pilots acted within the framework of international law and chastising countries not directly involved in South China Sea sovereignty for meddling.

Lew targeted cheap Chinese steel, which has drawn anti-dumping tariffs from the U.S. Department of Commerce.

"Excess capacity has a distorting and damaging effect on global markets," Lew said. "Implementing policies to substantially reduce production in a range of sectors suffering from overcapacity – including steel and aluminum – is critical to the function and stability of international markets."

Chinese Finance Minister Lou Jiwei dismissed Lew's concerns, which echo previous complaints from around the world. Lou said some of the same leaders had applauded China's investment binge during the global economic downturn less than a decade ago, a spending spree that Lou said helped fuel China's current glut.

The U.S.-China Strategic and Economic Dialogue, established in April 2009 by President Obama and former Chinese president Hu Jintao, alternates location between Beijing and Washington.