China’s Ministry of Commerce Calls for Stability in U.S.-China Trade Relations
An Overview of the Situation
The Ministry of Commerce in China emphasized the importance of restoring stability in U.S.-China trade relations. This approach aims to reduce risks and create a more diversified economic landscape.
The Meaning of “De-Risking”
The term “de-risking” has been used by officials in the United States and the European Union to denote a strategy that moves away from complete separation from China, while mitigating risks associated with over-reliance on the country.
Showcasing Consensus Between China and the U.S.
Shu Jueting, spokesperson for the Ministry of Commerce, stated that the best way to “de-risk” is to return to the consensus agreed upon by Chinese President Xi Jinping and U.S. President Joe Biden during their meeting in Bali, Indonesia. This approach would pave the way for healthy and stable development in China-U.S. trade relations.
The Role of Stability in Economic Trade Relations
Stability in China-U.S. trade relations plays a crucial role in stabilizing business expectations, instilling confidence, and facilitating trade and investment. It acts as a “ballast” in the relationship, allowing both countries to benefit economically.
Current State of Trade and Investment
Despite some pullback from both sides in certain aspects of the commercial relationship, declarations of a complete or partial decoupling between the U.S. and China are inaccurate and premature. U.S. direct investment in China has actually increased by 25.5% in the first seven months of this year compared to the previous year.
The Importance of Maintaining Ties
As long as the two countries are not in open military conflict, it is expected that substantial trade and investment ties between the U.S. and China will continue. This approach acknowledges their status as geostrategic competitors while recognizing the commercial benefits and national security logic of maintaining ties.
The U.S.’s Perspective on Economic Power
Some argue that being involved with another economic power, such as China, provides the U.S. with valuable insight and potential leverage. The Biden administration has taken steps, based on national security concerns, to restrict U.S. investment in high-end Chinese tech. However, generalizing national security risks may harm global supply chains, collaboration, and cooperation.
Recent Developments
During a recent trip to Beijing and Shanghai, U.S. Commerce Secretary Gina Raimondo met with high-level Chinese government officials. Both countries agreed to establish regular communication channels on commerce, export controls, and protecting trade secrets. The U.S. emphasizes the need for predictability, due process, and a level playing field, and aims to derisk and invest in America without attempting to decouple from or limit China’s economy.
The Current State of the Relationship
China’s Ambassador to the U.S. Xie Feng attributed a 14.5% drop in bilateral trade in the first half of the year to U.S. tariffs and export controls. While the relationship remains fundamentally competitive and potentially adversarial, the Biden administration is striving to manage adversity with a strategy that balances targeted escalation and moderated concessions. The upcoming U.S. presidential election may also introduce volatility in the coming months.