General

According to the website of the Ministry of Commerce, on May 25, Minister of Commerce Wang Wentao met with Secretary of Commerce Raymond of the United States in Washington during his visit to the APEC Trade Ministers' Meeting in the United States.

In fact, since April, many US officials, including US Secretary of State Antony Blinken, US Treasury Secretary Yellen, White House National Security Advisor Sullivan, and United States Ambassador to China Burns, have expressed their willingness to engage in dialogue and communication with China.

In May, Wang Yi, member of the Political Bureau of the Central Committee of the Communist Party of China and director of the Office of the Central Foreign Affairs Committee, met with Sullivan, assistant to the President of the United States for national security affairs, in Vienna, Austria. State Councilor Qin Gang and Foreign Minister Wang Wentao also met with Burns, the United States Ambassador to China; Meanwhile, on May 23rd local time, the new Chinese Ambassador to the United States, Xie Feng, arrived in the United States to take office, ending the more than four months of vacancy in the Chinese Ambassador to the United States. There has been an increase in high-level interaction between China and the United States.

During this meeting, both sides had a frank, professional, and constructive exchange on Sino US trade relations and economic and trade issues of common concern. China has expressed key concerns regarding the US economic and trade policy towards China, semiconductor policy, export controls, and foreign investment review. Both sides agree to establish communication channels and maintain and strengthen exchanges on specific economic and trade concerns and cooperation matters.

Economic and trade may break the ice

The wording used by the Ministry of Commerce for this exchange is "US economic and trade policy towards China, semiconductor policy, export control, foreign investment review, etc.", which almost covers the hot topics in recent Sino US trade relations.

In recent years, the United States has continuously tightened its economic and trade policies towards China. Since the Trump administration, the overall strategy of the United States towards China has been to suppress and contain. In 2018, the Trump administration in the United States began using the so-called "national security exception clause" to impose tariffs on Chinese imports; Since Biden took office in 2021, his policy towards China has become even stronger, especially in terms of semiconductor policy. Since the United States implemented bans on Huawei and ZTE in 2019, its export controls against China have been continuously escalating. The export control measures introduced by Washington in October 2022 have seriously affected the procurement and production capabilities of Chinese companies such as Changjiang Storage, SMIC International, and Hisense Semiconductor. Moreover, after the US regulatory measures, allies such as Japan and the Netherlands have also implemented technology export bans against China.

This meeting has put semiconductor policy on the table, which is seen by industry insiders as a manifestation of strengthened dialogue between the two sides.

Ma Wei, an assistant researcher at the American Institute of the Chinese Academy of Social Sciences, believes that the reason why the United States has shown a willingness to improve relations and even voluntarily released some goodwill is largely due to the current difficulties facing the domestic economy.

Currently, countries such as the United States and the European Union have generated a lot of inventory due to import growth last year. This year, they have entered a destocking cycle, which not only leads to a decrease in economic growth rate and a contraction in demand, but also further suppresses demand. This has led to a continuous decline in the US PMI index. Whether it is new orders, new export orders, or new domestic orders, they are all in a very sluggish stage, which means that US domestic demand is continuing to decline Professor Wang Xiaosong from the School of Economics at Renmin University of China told reporters.

Not only high inventory, but currently, the inflation rate in the United States remains high, with an inflation rate of 4.9% in April. A survey released by the National Association for Business Economics (NABE) shows that inflation in the United States will remain high in 2023 and 2024. At the same time, the US banking industry is constantly experiencing thunderstorms. From Silicon Valley Bank to Signature Bank, and then to First Republic Bank, three US banks have successively failed, bringing a heavy impact to the US financial industry.

In the face of significant economic uncertainty, the interaction and cooperation between the United States and China can help them overcome difficulties. The meeting between the commerce ministers of the two countries may reopen the door to trade cooperation between China and the United States.

It is worth mentioning that since the beginning of this year, Wang Wentao has met with multiple executives of American companies, including Pfizer Chairman and CEO Eberler, Qualcomm President and CEO Armon, Apple CEO Cook, Intel CEO Kissinger, and others.

China Continuously Expands Its "Circle of Friends"

However, industry insiders believe that China US trade relations cannot be overly optimistic.

Ma Wei believes that from the perspective of economic and trade, China US trade relations have indeed resumed government level contact, but once the United States passes this difficult period, there is still a possibility that the suppression policies against China may double rebound.

Wang Xiaosong stated that last year, the United States surpassed China as the largest trading partner of the European Union, which was precisely what was planned during the Trump administration. He wanted to establish an internal circulation system between developed countries to exclude China. Currently, both from a trade and investment perspective, developed countries have really started to de Sinicize.

From the data, it can be seen that the United States' share of imports from China accounted for 16% in 2017 and 12.9% in 2022. Although the overall trade volume is still growing, it is actually evident that the United States is focusing on reducing its dependence on China's supply chain; In addition, the import share of high-tech products from China in the United States was 34% in 2016 and 23% in 2022.

For China, last year, the United States was China's third largest trading partner, and its import and export increased by 3.7%. Among them, the import volume of the United States is very high, but if you look at the export sector as a single country, the United States still accounts for a large proportion of the market.

Last year, the overall trade surplus was over 420000 billion yuan, with exports to the United States reaching 3.87 trillion yuan and imports from the United States reaching 1.18 trillion yuan. The dependence on trade with the United States is still relatively high. From the perspective of surplus, the largest surplus also came from the United States, with $2.69 trillion, which is significantly higher than those after ranking second. Therefore, in this sense, although trade frictions between China and the United States continue and the United States seeks to decouple from various aspects, trade between China and the United States is still ongoing The connection is still very close, objectively speaking, the dependence on the US market is relatively high Wang Xiaosong said.

In response, China is constantly expanding its "circle of friends".

Before Wang Wentao's trip to the United States, he hosted a symposium in Shanghai and stated that the Ministry of Commerce will continue to provide precise and efficient services for foreign-funded enterprises and projects, protect the rights and interests of foreign investment in accordance with the law, create a market-oriented, legal, and international first-class business environment, and share the dividends of China's huge market and open development with enterprises from various countries.

Foreign Ministry spokesperson Mao Ning also stated that China has always firmly opposed unilateral sanctions related to illegal activities and has expressed its solemn position to the US. The US should immediately lift the sanctions, take practical actions, clear obstacles for dialogue and communication, create an atmosphere, and create favorable conditions.