The US is planning to announce a new forum for economic dialogue with China, in a throwback to the strategy of engagement with Beijing pursued by previous administrations in Washington. According to people familiar with the matter, the effort would likely be led by Steven Mnuchin, the US Treasury secretary, and Liu He, Chinese vice-premier — and would be separate from the more specific trade negotiations between the two countries. The talks — to be held on a semi-annual basis — essentially revive the structure of economic dialogue with Beijing preferred by top officials under presidents George W Bush and Barack Obama, and ditched in favour of tariff wars and blustery threats by Donald Trump.
According to The Wall Street Journal, which first reported the development, the new regime for economic discussions will be unveiled next week when Mr Liu visits Washington to sign the truce in the trade war between the world’s two largest economies, which was agreed in December. The “phase one” trade deal between US and China has put on hold any future tariff escalations, and rolled back some existing levies, as Beijing agreed to make big agricultural and other purchases of American goods.
China also made some additional commitments on intellectual property, currency and market access, but did not budge on some of the biggest sources of tension in the trading relationship between the countries, such as Beijing’s industrial subsidies.
US officials have said these would be tackled in “phase two” talks, but it is unclear how quickly these will begin, and how fruitful they will be.
“In a time of considerably heightened tensions between the US and China, it’s critical that the two sides remain in touch at high levels as much as possible to try to solve their many problems. This should not replace the trade talks themselves, but is important regardless of what happens in phase two,” said Clete Willems, a partner at Akin Gump, a Washington law firm, and a former Trump administration trade official.
The White House declined to comment and the US Treasury department did not respond to a request for information on the new dialogue.
Mary Lovely, a professor of economics at Syracuse University, said the “revival of a structured dialogue” might force the Trump administration to refocus its strategy with respect to China.
“Threats and tariffs did not force China to meet American demands for ill-defined and sometimes contradictory demands,” Ms Lovely said. “One hopes the talk’s structure and sustained engagement requires the US to define clear incentives for Chinese reform as well as clear penalties for continued market barriers.”
Mr Mnuchin and Mr Liu will face big challenges in making a success of the initiative, since it is unclear how well their channel of formal discussions will coexist with both Mr Trump’s unpredictability and brash policymaking, and the hawkish attitudes towards Sino-American relations in Washington, including in national security circles. But the effort does suggest that there is a genuine desire within the Trump administration to ensure that the truce in trade tensions will be enduring, to carry the president through the 2020 election in November, and even beyond.
It also represents a tacit acknowledgment by the Trump administration that structured talks can be a vehicle for dealing with China, after the US president frequently lambasted this approach for leading to an unbalanced trading relationship and emboldening unfair economic practices in Beijing. “Trump TRASHED Bush/Obama trade policy toward China. He scrapped their engagement approaches . . . in favour of trade war. Now? Oops!!! We need those very same Bush/Obama approaches after all,” wrote Chad Bown, a senior fellow at the Peterson Institute for International Economics, on Twitter. The “phase one” trade deal is expected to have an enforcement mechanism to ensure that both sides comply with the deal, involving regular meetings between top officials to resolve any disputes.