A U.S. - China bilateral working group met in Beijing for the first time, with both sides trying to keep economic ties from fraying.
The U.S. Treasury Department released a readout of a meeting between U.S. and Chinese officials on February 5-6. The Economic Working Group Between the United States and the People’s Republic of China (EWG) met for the third time overall since being established in September 2023.
This is the first time the meeting was held in Beijing. It was co-chaired by Vice Minister of Finance Liao Min and Deputy Secretary of the Treasury Jay Shambaugh. After presentations of the latest macroeconomic conditions, the parties entered into in-depth discussions of current issues.
No decoupling of economies
The Americans reiterated that the intention of the U.S. government is to not decouple the two economies. At the same time, they raised issues they saw as important for ’a level playing field’ for American companies and workers. Chinese production overcapacity and industrial practices were mentioned. Human rights concerns, which have been an issue raised by past American administrations, were not mentioned in the readout.
The Chinese readout in turn pointed out that their side discussed U.S. trade restrictions and tariff increases as well as sanctions against Chinese firms.
The two also raised points of mutual concern such as debt in other countries. China and the U.S. agreed to convene the EWG and the Financial Working Group in April 2024.
The importance of working groups
China and the U.S. have used working groups as a standard way of resolving issues. They can be comprised solely of government organs, or, especially in economics, a mixed government-business entity. The practice goes back to 2005 with the founding of a bilateral working group of legislators.
The founding of the EWG and FWG in 2023 marked a turn in bilateral relations and recognition of the serious nature of the times. Geopolitical tensions ran high due to Chinese assertions of sovereignty over Taiwan as well as Beijing’s supplies to Russia after the launch of the full scale invasion of Ukraine in 2022. The latter in particular brought on an economic and financial response from Washington including sanctions against Chinese firms that engage in activities that further the Kremlin’s war effort.
These sanctions and the threat of them targeted entities engaged in material transfers to and the financing of the Russians, and they brought on a harsh response from the Chinese government. At the same time, Chinese companies, especially in the financial sector, have changed their lending and financing practices concerning Russian defence sector firms, with any responses being channeled through the working groups instead o tit-for-tat sanctions from the Chinese government.
