The United States and China agree on a new format for economic dialogue | ET REALITY

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The United States and China have created a new structure for economic dialogue in an effort to improve communication between the world’s largest economies and stabilize a relationship that has become increasingly strained in recent years.

The Treasury Department said Friday that the United States and China had agreed to create economic and financial working groups that would hold regular meetings to discuss policies and exchange information. The announcement followed visits to Beijing by three members of President Biden’s Cabinet over the summer aimed at easing tensions over economic and geopolitical issues that have been festering for years between the two countries.

The Treasury Department said the new working groups would create “ongoing structured channels for frank and substantive discussions.” Treasury officials will report to Secretary Janet L. Yellen, who traveled to Beijing in July. The representatives of China, its Ministry of Finance and the People’s Bank of China, will report to Vice Premier He Lifeng.

“These working groups will serve as important forums for communicating US interests and concerns; promote healthy economic competition between our two countries with a level playing field for American workers and businesses; and promote cooperation on global challenges,” Yellen said in a statement.

The United States and China still have major economic disagreements over tariffs, technology controls and investment restrictions. The Biden administration has been especially concerned recently about the treatment of American companies operating in China.

The creation of a working group that directly links the Treasury Department with Chinese officials on economic and financial issues represents the revival of a decades-old approach to bilateral relations that was dismantled under President Donald J. Trump.

“These are issues where the United States and China clearly see mutual benefit in mitigating conflict and managing the bilateral relationship constructively,” said Eswar Prasad, former head of the International Monetary Fund’s China division. “These working groups could also help maintain dialogue on these issues even if geopolitical fissures between the two sides continue to deepen.”

He added: “The formation of these working groups is unlikely to lead to a significant reduction in trade and economic tensions, but will at least reduce the risk of further escalation, especially as the political season in the United States intensifies. ”.

Congress stripped authority over trade relations from the Treasury in the 1970s, transferring it to the newly created Office of the United States Trade Representative, which also became a Cabinet agency. Congress acted after complaints from American industries and unions that the Treasury and State Department had been making trade concessions to other countries to gain allies against the Soviet Union in the Cold War.

Under Presidents George W. Bush and Barack Obama, Treasury led interagency negotiating teams in talks with China. Treasury leadership limited the influence of U.S. trade officials, while a succession of Treasury secretaries placed a high priority on coordinating economic policy with China and opening China’s financial markets to Wall Street firms.

Trump dismantled the interagency working group system and said each agency would negotiate separately with China. Vice Premier Liu He, Vice Premier He Lifeng’s predecessor in managing international economic policy, repeatedly attempted to reach trade deals with then-Treasury Secretary Steven T. Mnuchin, bypassing Robert E. Lighthizer, who was the Trump’s trade representative. .

But Trump did not back those deals and instead backed Lighthizer, who ended up negotiating a limited trade deal that was signed by both countries in January 2020 and remains in effect.

In August, Gina M. Raimondo, the secretary of commerce, announced during her trip to Beijing and Shanghai that the United States and China had agreed to hold regular talks on trade issues and restrictions on access to advanced technology.

The Office of the US Trade Representative was aware of the planning of the new working groups and will be consulted when discussions turn to trade issues, but the new format of talks will be led by the Treasury.

A senior Treasury official said a consensus had been reached during Yellen’s trip in July to form the groups, which are intended to allow both sides to express their concerns and look for ways to work together. The economic group will focus on challenges such as debt restructuring for struggling low- and middle-income countries, while the financial group will delve into issues such as financial stability and sustainable finance.

Yellen said Friday that the new structure was an important step forward in the bilateral relationship.

“It’s vital that we talk, especially when we disagree,” he said.

Ana Swansoncontributed with reports.

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