The U.S. and China today launched an Economic Working Group and a Financial Working Group to advance discussions in the two areas amid geopolitical and trade strains between the world’s No. 1 and No. 2 economies.
“The two Working Groups will provide ongoing structured channels for frank and substantive discussions on economic and financial policy matters, as well as an exchange of information on macroeconomic and financial developments,” the U.S. Treasury Department said in a statement today.
The two will meet under the direction of Secretary of the Treasury Janet Yellen and Vice Premier He Lifeng, the statement said.
The formation of these Working Groups builds on the consensus reached between Yellen and He during Yellen’s trip to Beijing in July, and carries out U.S. President Joe Biden’s directive to deepen communication between the two countries following his meeting with Chinese President Xi Jinping in Bali last year, the Treasury Departmet said.
The Economic Working Group will be led by the U.S. Department of the Treasury and China’s Ministry of Finance, according to the statement. The Financial Working Group will be led by the U.S. Department of the Treasury and the People’s Bank of China.
The two groups will meet at the vice minister level on a “regular cadence” and report to Yellen and He.
Relations between the two countries nosedived after a visit last August by then House of Representatives Speaker Nancy Pelosi to democratic, self-ruled Taiwan, over which Beijing claims sovereignty. After apparent improvement following a meeting between Biden and Xi in November, ties plunged again after a suspected Chinese spy balloon flew over the American heartland in February, setting off an uproar in Congress.
Security concerns have more recently fused with trade following U.S. restrictions on the exports of sensitive chip-making equipment to China, a move that has since led to tit-for-tat regulatory steps by Beijing that could limit its exports of minerals used by the semiconductor industry.
Cabinet-level officials have since stepped up meetings, and the U.S. is working toward a goal of Xi’s participation in APEC meetings to be held in San Francisco in November.
Geopolitical strains and slower economic growth are taking their toll on U.S. investments in China and optimism about the business outlook there. According to a survey this week released by the American Chamber of Commerce in Shanghai, the percentage of companies optimistic about the five-year business outlook fell to 52%, the lowest in the survey’s history. (See details here.)
“China is becoming more challenging for foreign investors,” said AmCham Shanghai Chairman Sean Stein in a statement accompanying the survey. “What businesses need above all else is clarity and predictability, yet across many sectors companies report that China’s legal and regulatory environment is becoming less transparent and more uncertain.”
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