The United States and China have established a new structure for economic dialogue in order to improve communication between the two largest economies in the world. This move aims to stabilize a relationship that has become increasingly strained in recent years.
According to the Treasury Department, the United States and China have agreed to create economic and financial working groups that will hold regular meetings to discuss policy and exchange information. This announcement follows visits to Beijing by three of President Biden’s cabinet members over the summer, which were intended to ease tensions over economic and geopolitical matters between the two countries.
The Treasury Department stated that these new working groups will create “ongoing structured channels for frank and substantive discussions.” Treasury officials will report to Secretary Janet L. Yellen, while China’s representatives will report to Vice Premier He Lifeng.
Janet L. Yellen stated, “These working groups will serve as important forums to communicate America’s interests and concerns; promote a healthy economic competition between our two countries with a level playing field for American workers and businesses; and advance cooperation on global challenges.”
Despite this development, the United States and China still have major economic disagreements on tariffs, technology controls, and investment restrictions. The Biden administration is particularly concerned about the treatment of American companies operating in China.
The creation of these working groups represents the revival of a previously dismantled approach to bilateral relations under President Donald J. Trump. The working groups bridge the gap between the Treasury Department and Chinese officials, ensuring direct communication on economic and financial issues.
Eswar Prasad, a former head of the International Monetary Fund’s China division, believes that these working groups may help in maintaining dialogue between the two countries, even in the face of deepening geopolitical fissures. While they may not lead to a significant de-escalation of trade tensions, they can at least reduce the risk of further escalation.
It is worth noting that Congress took away the Treasury’s authority over trade relations in the 1970s. This authority was transferred to the newly created Office of the United States Trade Representative. However, the Treasury led interagency negotiating teams in talks with China under Presidents George W. Bush and Barack Obama.
Under the Trump administration, the interagency working group system was dismantled, and negotiations with China were conducted separately by each agency. However, this approach did not produce desired results, and limited trade agreements were eventually negotiated and signed by both countries in January 2020.
In August, it was announced that the United States and China had agreed to hold regular conversations about commercial issues and restrictions on access to advanced technology. The Office of the United States Trade Representative will be consulted when discussions on trade matters arise, but the new format for talks will be led by the Treasury.
During Secretary Yellen’s trip to Beijing in July, a consensus was reached on the formation of these working groups. The economic group will focus on challenges such as debt restructuring for low- and middle-income countries in distress, while the financial group will delve into topics like financial stability and sustainable finance.
Secretary Yellen sees the establishment of this new structure as an important step forward in the bilateral relationship between the United States and China. She emphasizes the importance of communication, especially in times of disagreement.
Ana Swansoncontributed reporting.
