17 August 2024 (TDI): Despite disputes over trade, US-China, both countries are still working to stabilize relations between the two largest economies in the world.
This was indicated by the reported meeting of the US-China Financial Working Group, which was widely expected to focus on issues such as capital markets, financial and macroeconomic stability, and IMF governance.
It is expected that expanding financial sector cooperation will improve mutual understanding and trust between China and the US, as seen by the meeting that was reported.
Experts noted that the reported conference is a step in the right direction toward strengthening global financial stability, especially in light of the relatively sluggish growth in the global economy. The US jobs report that was released in August that was lower than anticipated, and the worries of a harsh landing for the US economy that shook the world market.
The US is reportedly intensifying its crackdown on a number of Chinese industries, including semiconductors and electric vehicles (EVs), which might block trade and economic cooperation. This is the context of the reported meeting.
In an effort to guarantee effective communication and collaboration in the domains of commerce and economy, experts recommended the US to take decisive action.
As of the time of writing, neither China nor the US had made information about the meeting of the bilateral Financial Working Group accessible to everyone.
This would be the fifth meeting of the mechanism, which was established in 2023 as part of the two nations’ efforts to improve communication on financial and economic matters.
Gao Lingyun, an expert at the Chinese Academy of Social Sciences, remarked, “It is a good indicator that both nations are putting the exchange and communication systems into place. It demonstrates how the two nations can still work together and communicate to overcome some of their differences, enhancing their shared interests and reducing conflicts.”
Also read: China’s Tech Investment in Manufacturing Soars 10.9%
The meeting’s alleged agenda showed the willingness of US-China to improve cooperation and communication within the financial industry.
As per Wang Peng, an associate research fellow at the Beijing Academy of Social Sciences, in-depth conversations on macroeconomic and financial matters will contribute to strengthening mutual understanding and trust between the two parties.
Wang stated that since US-China have the two biggest economies in the world, communication and collaboration between them are crucial for both bilateral commerce and the upkeep of the international economic system.
Reducing economic hazards
It is especially important for China and the US to coordinate their policies, according to experts. An economic slump is also signaled by the US’s lower-than-expected unemployment rate, which emphasizes how critical it is for Washington and Beijing to work together on financial and economic matters.
In this regard, they stated, US-China cooperation in financial stability is essential for reducing the US’s risk of instability and its knock-on effects on the world market.
Fears that the labor market was failing and that this could make the economy vulnerable to a recession increased when the US unemployment rate surged to almost a three-year high of 4.3 percent in July despite a notable slowdown in hiring.
On the other hand, as more pro-growth policies have taken effect, the Chinese economy has shown resilience, exhibiting greater growth momentum in July and navigating through possible drawbacks.
On Thursday, official figures indicated that retail sales increased by 2.7 percent year over year, while the production of industrial firms over the designated size increased by 5.1 percent.
The National Bureau of Statistics reports that a wide variety of critical indicators showed continuous expansion, with rising production and consumption, stable overall employment, and the emergence of new financial factors.
According to Wang, improving cooperation in financial stability contributes to ensuring the continued development of bilateral trade and economic connections and improves the business climate for the firms of both nations.
Also read: Chinese Industry Group Warns EU Nations Risk Losing Investment
Wang noted that cooperation in monetary policy between the two most significant global economies becomes even more crucial in light of the growing possibility of a rate drop by the Fed. This is to prevent an undue influence and fluctuation in the global financial markets.
US advised to refrain from making economic issues political
Experts noted that although discussions and possible policy cooperation between the two nations are beneficial to both parties and the world economy, the US has been intensifying its campaign against China, which has negatively damaged economic relations between two countries.
Electric vehicles (EVs) were among the several Chinese imports that the Biden administration said would be subject to increased tariffs in May of this year.
Draft regulations to limit US investments in China’s semiconductor, artificial intelligence, and other high-tech industries were released by the US Treasury Department in June.
A strong basis for mutually beneficial economic and commercial relations should be ensured, according to experts, by the US-China working together to identify possible areas of collaboration while appropriately resolving issues.
Wang added that in order to foster economic cooperation with China, the US should end its unfair trade policies, eliminate the additional tariffs, and level the playing field.
The United States should work toward win-win collaboration, avoid politicizing trade and economic issues, and enhance contact with China now that both sides have created discussion mechanisms.
Wang also stated that only in this manner would both nations be able to expand economically steadily, establish mutual confidence, and create the conditions for easy communication and commercial cooperation.
