Walking the talk way to stabilize relations

A US delegation made up of officials from the Treasury and Federal Reserve Board, led by Treasury Undersecretary for International Affairs Jay Shambaugh, is to meet with Chinese counterparts in Beijing on Thursday and Friday.

Reportedly, during the talks of the Economic Working Group, the US side is expected to lay out its concerns about China’s economic trajectory and industrial “overcapacity”.

“During our trip we will further our discussions on China’s macroeconomic imbalances and industrial policies that risk causing significant harm to workers and firms in the US and around the world,” Shambaugh said.

Beijing insists that the Chinese economy remains fit and resilient, and rejects the overcapacity allegation.

That being said, the discussions carried out under the Economic Working Group mechanism might become another chicken-and-duck talk.

The United States’ long blacklist of Chinese entities, the exorbitant tariffs it has imposed on Chinese exports, as high as 100 percent on electric vehicles, and the great lengths Washington has been going to in a bid to coerce its allies, including Japan, the Netherlands and the Republic of Korea, to form a “chip iron curtain” against China all speak volumes of how narrow the US’ definition of China’s manufacturing and “overcapacity” is.

The “overcapacity” discourse of the US is nothing but an excuse for Washington to justify its politically motivated nonmarket means to stifle China’s high-tech and competitive industries. The prescription Washington proposes is that China serve as an eternal lower-end manufacturing base of consumer products for the US market and open its financial sector to the US, which, if carried out prematurely, will only enable the US to control China’s financial sector.

With the Joe Biden administration’s decision on the Section 301 tariffs on Chinese imports still pending, the US delegation should not regard that as a bargaining chip in its discussions with the Chinese side, as the Chinese economy has adapted to those tariffs over the past about five years. They should also be reminded that US companies and consumers have also borne the brunt of the punitive tariffs from day one.

The challenges confronting the Chinese economy now are mainly caused by some domestic structural issues. For too long, the Chinese economy has relied on the boom of the real estate sector, a low-hanging fruit for all emerging economies in the early stage of their economic development.

If the US really looks forward to helping China address its economic issues, it should put an end to its attempts to sabotage China’s endeavors to strive for a higher position in the global value chain. It should discard its zero-sum Cold War mindset and view China’s development objectively.

Shambaugh rightly said that it is important to have a “resilient channel” for talks, “especially in areas where we disagree”, but until the US side ceases to politicize economic relations with China, the Economic Working Group mechanism will only serve as a venue for the two sides to pay lip service to improving bilateral relations.

That being said, the high hopes that are being pinned on the discussions to stabilize relations between the world’s two largest economies are likely to be nothing more than wishful thinking as the US side has shown no inclination to do more than talk for talk’s sake.

Editorial, China Daily