The Biden administration is sending a high-level delegation of Treasury officials to Beijing this week for a round of economic talks as the world’s biggest economies look to continue the engagement efforts President Biden and his Chinese counterpart Xi Jinping agreed to continue. , last year. .
A Treasury official, speaking on condition of anonymity because the trip has not been publicly announced, said the two days of meetings would include “frank talks” about China’s use of non-trade economic practices such as state subsidies. US officials also plan to discuss concerns about excess industrial capacity, which could flood international markets with cheap goods.
They will also talk about ways to solve the public debt burdens that burden low-income countries and prevent some of these countries from investing in sustainable development and climate initiatives. China is one of the world’s biggest creditors and has faced international pressure to make concessions that would unlock a global effort to restructure hundreds of billions of dollars in debt owed by poor countries.
More broadly, the two governments will discuss the macroeconomic outlook for their countries, whose economies are critical to the health of the overall global economy. The United States is proving to be the most resilient economy in the world. China, meanwhile, continues to be haunted by a financial industry struggling to contain huge amounts of local government debt, a volatile stock market and a crisis in its real estate sector.
Last week, the International Monetary Fund, in its latest economic outlook, forecast China’s economy to grow at a rate of 4.6 percent in 2024, faster than previous forecasts. But he also urged China to make longer-term structural changes to its economy, such as overhauling its pension program and reforming its state-owned enterprises, to prevent a more dramatic slowdown in output.
“Without these reforms, there is a risk that Chinese growth will fall below 4 percent,” Kristalina Georgieva, managing director of the IMF, told reporters on Thursday.
US and Chinese officials will also discuss mutual efforts to combat climate change and the mechanics of investment control programs that create new economic barriers between the two countries.
The revival of a formal economic dialogue structure is intended to prevent misunderstandings between the United States and China from escalating into economic warfare.
The five-person team from the Treasury Department will be led by Jay Shambaugh, the department’s undersecretary for international affairs. It is the first such meeting in Beijing of the economic working group established last September. In January, a group of finance ministry officials focused on economic issues held talks in Beijing.
The visit could pave the way for a second trip to China by Treasury Secretary Janet L. Yellen, who traveled to Beijing last summer.
The Biden administration is trying to convince Chinese officials that President Biden’s efforts to diversify US supply chains away from China are not intended to hurt Beijing’s economic growth.
The Treasury official would not specify what specific concerns Mr. Shambaugh would bring up with his counterparts during that trip. But Biden administration officials have continued in recent months to complain about China’s subsidies to its domestic industries and discrimination against foreign competitors.
In a speech at the US-China Business Council in December, Ms. Yellen lamented that China continues to use unfair economic practices, restrict access to foreign companies and coerce American companies.
“For too long, American workers and businesses have not been able to compete on a level playing field with those in China,” Ms. Yellen said.
Although increased levels of engagement appear to have eased some of the public displays of tension between the United States and China, it is unclear how much progress has been made in practice.
The Biden administration moved forward last August with plans to launch new rules to limit American investment in certain Chinese sectors that the United States considers national security risks. Two months later, China announced it would limit exports of graphite, an important component of electric vehicle batteries.
However, the two countries say they want to continue looking for areas of cooperation.
“These trips are of significant importance in preventing further escalation of hostilities, especially as US election-year rhetoric intensifies,” said Eswar Prasad, a Cornell University professor and former head of the International Monetary Fund’s China division. “I think both sides are very keen to limit any further escalation of hostilities.”
