US-China Trade Relations Enter New Complex Phase

11 Oct, 2023

US-China Trade Relations Enter New Complex Phase

Trade Relations Between the U.S. and China Witness Growing Complexities

In a meeting with U.S. Senate Majority Leader Chuck Schumer (D-N.Y.) in Beijing, China's Commerce Minister, Wang Wentao, expressed specific concerns about American trade and technology restrictions. These discussions, described as "rational and pragmatic," focused on the need for the U.S. To establish precise security boundaries, prevent overgeneralization and politicization of security matters, and abstain from weaponizing commercial and trade interactions with China.

Wang emphasized the importance of fair treatment for Chinese companies investing in the U.S., advocating for competition based on international economic and trade rules that are fair and constructive. China has shown its willingness to collaborate with the U.S. to create a favorable business environment conducive to bolstering bilateral trade.

Schumer expressed Washington's desire to strengthen communication and exchanges with Beijing, highlighting bipartisan support for maintaining and enhancing the bilateral economic and trade relationship. He emphasized that there is no intention of "decoupling" from China.

Prior to the U.S. delegation's arrival in China, the U.S. Commerce Department added 42 more Chinese companies to its export blacklist, accusing them of offering technical support to Russia's invasion of Ukraine, a move that Beijing strongly condemned.

Trade restrictions were also a focal point during the delegation's meeting with Chinese President Xi Jinping. He emphasized that the two countries do not necessarily have to head toward confrontation, highlighting the deep interdependence of their economies. U.S. senators underscored the need for a level playing field and urged China to remove restrictions and open its markets to U.S.Firms, with a notable focus on the semiconductor, financial services, and aerospace sectors. Recent months have seen China imposing restrictions on several U.S. companies over security concerns.

In another development, Chinese property developer Country Garden anticipates being unable to meet its offshore payment obligations, marking its first-ever default. The company has appointed financial and legal advisers to assess its capital structure and liquidity, drawing attention to the broader property debt crisis in China and raising concerns about

The potential ramifications for domestic societal stability.

Amid these challenges, China is contemplating raising its 2023 budget deficit as part of a new stimulus plan aimed at aiding the economy in meeting its official growth targets. Policymakers are considering the issuance of at least 1 trillion yuan (approximately $137 billion) in additional sovereign debt to finance infrastructure projects, such as water conservancy initiatives. This move could potentially push the annual budget deficit beyond the 3% limit set earlier this year, marking a shift in Beijing's approach.

The news has already had an impact on financial markets, with the offshore yuan rebounding and government bond yields rising slightly. An official announcement is eagerly awaited and could come as early as this month.

It's important to note that these plans, led by the Ministry of Finance and the National Development and Reform Commission, still require final approval from the State Council and legislators. Although there is a possibility of the budget deficit increasing, specialists stress that the central government maintains a comparatively low debt ratio and maintains a robust financial position.

In an unexpected move, China's National Bureau of Statistics will conduct a nationwide sample survey in November to better plan population policies as authorities grapple with boosting the country's flagging birth rate.