Investment treaty to top China-US S&ED agenda, doable under Obama administration

The BIT is also very important for moving forward China-US economic relations as "it is only the documentary agreement dealing with international economic issues between the US and China in the foreseeable future," added Huang, a former World Bank 's country director for China.

David Dollar, a senior fellow at the Brookings Institution, said there will be a lot of discussions to move the BIT negotiations more quickly at the upcoming S&ED meetings.

"The important question is would there be any what we call ' early harvest'," said Dollar, referring to China's willingness to open some sectors for foreign investment soon before a treaty is agreed upon.

If China opens up some sectors soon and improves market access for US and other foreign investment, that will "create a much stronger foundation in the United States for moving ahead with the bilateral investment treaty," said Dollar, a former US Department of Treasury's economic and financial emissary to China.

Dollar believed it's in China's interest to open more sectors for foreign investment as China could gain a lot of efficiency from increased market competition.

While negotiations on the investment treaty will not be easy, experts are optimistic that the US and China could finish the BIT talks under Obama administration. "There is more room for agreement than people realized," Posen said. "I certainly think ( it's) doable before President Obama leaves office."

"We try very hard to conclude negotiations" of the investment treaty next year based on "reality and hard work of both negotiation teams," Zhu said in April, noting that the BIT talks are considered the most important issue in the two nation's economic relationship.

Once the investment treaty is struck, it would require a two- thirds vote in the US Senate for approval. "My feeling is the ratification will have to wait until after the next presidential election," said Huang.

"We often have a situation where a trade agreement is negotiated under one president, and then approved under the next one, and even if the party switches," echoed Dollar, citing the North American Free Trade Agreement (NAFTA), covering Canada, Mexico and the US, as an example to illustrate his point of view. NAFTA was first negotiated under former Republican President George H.W. Bush, and then approved under the following Democratic President Bill Clinton.

"I think basically they would vote yes because they would be hearing from, particularly from American business community. This is very important for the development of the US economy," Dollar said of the Senate's support for BIT.

Posen was confident that the BIT would be finally approved by the Senate, though the US and China have had tensions over issues such as the South China Sea dispute, cyber security.

"The US has successfully in the past segregated economic issues from political issues," Posen said, "We have areas of difference. We have areas of common interests. The BIT is in both countries' interests."

"The Senate tends to be more mature in dealing with these issues than the House," Posen said, adding that's why the US Constitution stipulates foreign treaties should be approved by the Senate instead of the House.

Talks on the investment treaty began in 2008 as both countries sought to increase mutual investment, which only accounted for a tiny share of their respective overseas investment.

The US and China have less than a 5 percent share of investment in each other's markets, according to the US-China Business Council. "Since these are the two largest economies in the world, that means there is significant room for growth," the business association said.

The investment treaty is expected to continue to expand two-way trade and investment and cement the foundation of China-US economic ties.

"Naturally the negotiation will take time, but it has already sent a very clear message to both countries and the wider international community that China-US business ties will get even closer and put the overall China-US relationship on a more solid footing," Chinese Premier Li Keqiang said of the BIT talks at a press conference in March.