US President Barack Obama, on his first visit to China since 2009, went on a relaxed stroll with President Xi Jinping on Tuesday in Zhongnanhai, the area of Beijing known as the heart of the government.

The stroll after the APEC Economic Leaders’ Meeting was followed by a brief meeting and dinner, and gave rise to expectations that the unusually informal atmosphere would help the two leaders tackle high stakes issues at a formal meeting on Wednesday.

Standing on a traditional Chinese bridge, Xi introduced Obama to the history of Ying Tai, an ancient imperial palace where they later met. Knowing China’s modern history is important for understanding Chinese people’s current aspirations and path forward, Xi told Obama.

Observers said the economy, security, climate change and efforts to fight terrorism will be high on the agenda, and the meetings are likely to offer a blueprint for a new model of ties between major countries.

Niu Xinchun, a senior expert at the China Institutes of Contemporary International Relations, said both countries are expected to manage differences over maritime and territorial issues in Asia, and deal with the relationship between the looming Trans Pacific Partnership agreement and the Free Trade Area of the Asia Pacific.

IT tariff cuts

The two countries reached a breakthrough on Tuesday in Beijing to accelerate the expansion of the World Trade Organization’s Information Technology Agreement (ITA), which could help eliminate $1 trillion in tariffs on high-tech product sales globally.

Obama said it was APEC’s work that led to the ITA, for which an expansion is now being negotiated.

“So it is fitting that we are here with our APEC colleagues to share the news that the United States and China have reached an understanding that we hope will contribute to a rapid conclusion of the broader negotiations in Geneva,” Obama said.

The deal would allow the “swift conclusion” on talks to enlarge the ITA at the WTO meeting in Geneva later this year.

Michael Froman, the US trade representative, said in Beijing that it is encouraging news for US companies that are keen to see global tariffs further cut on products such as medical equipment, GPS devices, video game consoles and next generation semiconductors.

Officials at WTO headquarters in Geneva must work out how quickly the tariffs are phased out, a point that thwarted an agreement last year. “There’s still work to be done, but the end of these important negotiations is coming into focus,” Froman said.

The ITA took effect in 1997. The agreement now covers more than $4 trillion in annual trade.

“As many countries are still struggling to seek economic recovery and new areas for market growth, the new ITA breakthrough will encourage more trade between the world’s largest and second largest economies,” said Zhang Jianping, director of the International Economic Cooperation Institute of the National Development and Reform Commission.

Gary Hufbauer, senior fellow at the Washington-based Peterson Institute of Economics, called the trade tariff agreement “quite spectacular progress”.

“It’s really quite spectacular progress because up until now, there’s been talk about liberalization and going forward, but no real action on the international front. This is real action. China agreed to quite a long list of products, it’s a huge lift-up. The coverage of trade is quite large,” he told China Daily.

“It’s big in and of itself, and I think it will also be the passport for China to be welcomed into the Trade in Services Agreement, which China has wanted to join, which is another really big thing. It’s quite a step forward,” he added.

After the announcement, the US Chamber of Commerce released a statement in support of the agreement, saying that the breakthrough is welcomed.

“With so many new products created since the ITA was concluded two decades ago, expanding the agreement’s coverage is imperative. With trade in tech goods surpassing $4 trillion annually, the commercial significance of these negotiations is obvious,” said Myron Brilliant, executive vice-president and head of international affairs at the Chamber of Commerce, in the statement.

Gao Yuan contributed to this story. Contact the writers at zhaoshengnan@chinadaily.com.cn, zhongnan@chinadaily.com.cn, and amyhe@chinadailyusa.com.