China-US Economic Working Group Holds Constructive Talks following Yellen Visit

TMTPost -- China and U.S. held high-level talks on economic and financial issues following U.S. Treasury Secretary Janet Yellen’s trip to China last week.

Credit：Xinhua News Agency

The China-U.S. Economic Working group (EWG) held its fourth meeting on Tuesday in Washington D.C., co-chaired by China's Vice Minister of Finance Liao Min and Jay Shambaugh, Under Secretary of the U.S. Department of the Treasury, China's Ministry of Finance (MOF) said Wednesday. Focusing on implementing the important consensus reached by the lead persons, the two sides conducted in-depth, pragmatic and constructive communication on the macroeconomic situations and balanced growth in the two countries and the world, as well as arrangements for future communication, Xinhua News Agency cited the ministry. During the meeting, the Chinese side expressed concern over the U.S. economic and trade restrictions against China, and made further responses on the issue of production capacity. The two sides agreed to maintain communication and exchanges.

Senior officials from the U.S. Treasury and China’s Ministry of Finance continued their conversations on the latest macroeconomic situation in China and the United States, shared global challenges including debt issues, as well as areas with divergent views, according to a readout pubilshed by the U.S. Department of the Treasury (USDT),. It said the teams also engaged in discussions on balanced growth in the domestic and global economies that Yellen and her counterpart Vice Premier He Lifeng announced in Guangzhou last week. Both sides agreed to discuss economic policies that support balanced growth of the domestic and global economies at a regular cadence. The U.S. delegation continued to express concerns about China’s non-market practices and industrial overcapacity. Both sides agreed to further discuss these issues.

Yellen last week said Chinese Vice Premier He and her agreed to launch intensive exchanges on balanced growth in the domestic and global economies, which was one of three progresses the Secretary concluded she made in her six-day visit. Two other progresses were that U.S. and China will expand cooperation in shared work against illicit finance, and continue a series of financial technical exchanges between the two countries.

In the same time, Yellen expressed concern to senior Chinese officials that there are features of the Chinese economy that have growing negative spillovers on the U.S. and the globe, especially China’s macroeconomic imbalances, namely its weak household consumption and business overinvestment, which could impose material risk to foreign workers and businesses. Yellen also raised concern over industrial overcapacity. “China is now simply too large for the rest of the world to absorb this enormous capacity,” Yellen said. “Actions taken by the PRC today can shift world prices. And when the global market is flooded by artificially cheap Chinese products, the viability of American and other foreign firms is put into question.” She said the concerns will not be resolved in short run, but exchanges will provide a dedicated structure for U.S. to raise our concerns about China’s imbalances and overcapacity, and U.S. intends to underscore the need for a shift in policy by China during these talks.

The latest EWG meeting, the first in the United States since its establishment last November, came ahead of US Secretary of State Antony Blinken's reported visit to China. The dialogue showed that both sides attach high importance to bilateral economic ties and sent a positive signal on "steady and phased progress" in stabilizing relations between the world's two largest economies, the state-backed newspaper Global Times quoted observers. However, the recent U.S. attempts, including a launch of Section 301 investigation into China's maritime, logistics and shipbuilding sectors, seem to threaten progress in improving China-U.S. relations. The paper cited analysis that Yellen’s message to Beijing about overcapacity may be a step toward new tariffs on imports from China resulted from the new probe.

Remarks made by Yellen and Katherine Chi Tai, the United States Trade Representative, reflect the sensitivity of tariffs in bilateral relations, which requires the U.S. side to handle prudently, as a wide variety of industries are skeptical about whether additional tariffs will benefit the U.S. economy, commented Song Guoyou, deputy director of the Center for American Studies, Fudan University. The additional tariffs will definitely damage Sino-US economic and trade ties, and even affect bilateral relations, Song said.