NEW YORK, July 10  -- The China-U.S. bilateral investment treaty (BIT), if concluded successfully, would re-anchor the bilateral economic relationship in the 21st century, said a former senior White House official.

Daniel M. Price, who served as "sherpa" and international economic affairs advisor to former U.S. President George W. Bush, made the remarks in an exclusive interview with Xinhua amid the ongoing sixth round of the China-U.S. Strategic and Economic Dialogue (S&ED) in Beijing.

"While China and the U.S. have over the years been party to many multilateral negotiations, this is the first - and only - negotiation between the two countries aimed at achieving a binding bilateral treaty on economic issues," said Price, who is now the managing director of Rock Creek Global Advisors, an international economic policy advisory firm in Washington.

"The BIT will set rules governing investment in all sectors of the economy and be the first time China and the United States will address comprehensively market access issues for foreign investors," said Price.

He noted that this is essential for development of the as yet underperforming investment relationship, as U.S. investment only accounts for 3 percent of all foreign direct investment (FDI) in China while Chinese investment in the United States only takes 1 percent of the FDI.

If the world's two largest economies can successfully negotiate and complete the BIT, "they will be at the forefront with other leading nations setting investment standards for the 21st century," he said.

Price pointed out that the potential benefits of a BIT far outweigh any potential risks.

On the Chinese side, placing investment relations with the United States on a stable treaty basis would mitigate the uncertainty created by the sometimes shifting political winds on attitudes toward inbound Chinese investment, he said.

In addition, a BIT will create leverage to advance domestic economic reforms that are currently being debated in China, because reform-minded leaders can rightfully argue that their proposals are necessary not only to strengthen the domestic economy but also to secure agreement on a treaty that will protect Chinese investment in the United States, he added.

Finally, by making cross-border capital flows and investments easier, a BIT will help reorient the Chinese economy toward the private sector by increasing the pool of capital available to private companies, which will help them become more innovative, he noted.

"The increase in capital will be especially beneficial for small- and medium-sized enterprises that often have difficulty securing loans and are forced to rely on the informal lending market," he said.

For the United States, a BIT would level the playing field between U.S. investors in China and their competitors from countries whose governments have already negotiated high quality BITs with China, such as the Netherlands and Germany, Price said.

Moreover, a BIT would expand market access for U.S. investors in sectors where ownership is currently restricted, such as energy, autos, and financial services, he added.

The BIT talks, started in 2008, came up with a real breakthrough last summer at the S&ED meeting when China and the United States decided to proceed with a "negative list" approach, meaning that all sectors are open to foreign investment, subject to narrowly tailored and negotiated exceptions, he noted.

Price said he expects that the U.S.-China joint statement at the S&ED meeting this week will include language on the BIT that describes the negotiating process going forward and signals the two governments' continued and deepening commitment to the BIT negotiations.

"The quality of China's negative list offer and subsequent discussions of that list will largely shape the timeline for negotiations. If the two governments remain committed to this negotiation, I believe it can be concluded more quickly than people expect, before the end of President (Barack) Obama's term in office," he said.