Is the result better than expected?, China US Minister of Commerce Meeting

On the 28th, the Commerce Ministers of China and the United States held talks and announced the establishment of a new communication channel between the two ministries of commerce. Analysts believe that this achievement is better than previous external expectations and meets the expectations of the business communities of both countries. The Ministry of Commerce of China and the United States announces the establishment of a new communication channel

Two ministers meet at least once a year

According to the latest news from the Ministry of Commerce, Chinese Minister of Commerce Wang Wentao and US Minister of Commerce Raymond have had rational, candid, and constructive communication on the implementation of the important consensus of the China US First Bali Meeting, as well as on the economic and trade relations between China and the United States and common economic and trade issues of concern.

A working group has been established between China and the United States, consisting of government officials at the deputy ministerial and bureau levels, with representatives from enterprises participating, to seek solutions to specific business issues. The working group will hold two vice ministerial level meetings annually. The two ministers agreed to have regular communication and meet at least once a year.

Tu Xinquan, Dean of the China WTO Research Institute at the University of International Business and Economics, stated in an interview with China News Agency that since former US President Trump's tenure, the communication channels in the field of business between China and the United States have gradually become blocked.

Tu Xinquan stated that although the United States' erroneous understanding of China and the dilemma in Sino US relations cannot be changed in the short term, there is still close contact between the two sides in the field of economic and trade affairs. Enterprises from both countries still have a strong demand for maintaining good economic and trade relations, and there is still room for discussion on certain specific issues at the technical and legal levels. It is particularly necessary to establish new communication channels.

At present, although the scale of Sino US trade has declined compared to the same period last year, its volume is still large. According to Chinese statistics, the total trade value between China and the United States in the first seven months of this year was 2.64 trillion yuan, accounting for 11.2% of China's total foreign trade value during the same period. Despite the repeated implementation of the "de risk" policy by the United States, many American executives, including Tesla and Intel, still frequently come to China, viewing the Chinese market as a "must choose" option.

Tu Xinquan believes that establishing a working group composed of government officials and attended by business representatives is a more practical and specific way to more quickly and efficiently reflect the demands of both parties, especially businesses, and promote the resolution of specific issues.

In the view of Chen Fengying, a researcher at the Institute of World Economics at the Chinese Academy of Modern International Relations, the announcement of the establishment of a new communication channel by the Ministry of Commerce of China and the United States is an effort to create a favorable policy environment for economic and trade exchanges between the two countries. In the current situation, any attempt to strengthen constructive communication between China and the United States is worthy of recognition.

In addition, both China and the United States have launched an export control information exchange mechanism as a mechanism to explain their respective export control systems and improve communication. Both parties will exchange export control information in accordance with their respective laws.

Tu Xinquan believes that there have always been communication channels between China and the United States regarding export controls, but in the context of the United States repeatedly abusing its export controls on economic China and intensifying its "decoupling and chain breaking" and "small courtyards and high walls," it is necessary to establish clear, specific, and institutionalized communication channels. This is the situation.

We have channels, and then what?

Prior to the meeting between the Chinese and US Commerce Ministers, a US expert bluntly stated that this will be a tricky visit. From the current perspective, the success of the talks ultimately stems from the broad common interests between the two countries in the economic and trade fields, as well as the pressures and challenges faced by each country's macroeconomics.

Recently, Fitch Ratings, one of the world's top three credit rating agencies, downgraded the credit rating of the United States from AAA to AA+and issued a warning about the country's increasingly heavy debt burden and political dysfunction. Fitch Ratings stated that the US economy will enter a mild recession in the fourth quarter.

Goldman Sachs strategist stated in a recent report that US companies are about to hit a "high wall" of debt, which will gradually mature in the coming years. This may trigger a new wave of layoffs, thereby shaking the US economy. Goldman Sachs estimates that the average interest rate on corporate debt may rise from its current level to 4.3% in 2024 and further to 4.5% in 2025.

Mei Xinyu, a researcher at the International Trade and Economic Cooperation Research Institute of the Ministry of Commerce, believes that the US economy has fallen into a state of "drinking poison to quench thirst".

Although the year-on-year growth rate of China's economy in the second quarter increased to 6.3%, it is increasingly under pressure due to factors such as weak external demand, such as imports and exports, and the absorption of foreign investment. In this situation, stabilizing China US economic and trade relations is of great significance to both countries and even the global economy.

Being able to engage in rational, honest, and constructive communication, rebuilding communication channels, is a good start. But communication is only a means, not an end. In the future, China and the United States, especially the US side, should show more sincerity and action to make communication truly effective.