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The US Treasury Department said the groups would report to He and Yellen and “provide ongoing structured channels for frank and substantive discussions on economic and financial policy matters, as well as an exchange of information on macroeconomic and financial developments”.
The deputy secretary of the US Treasury and China’s finance vice-minister will lead the finance group, CCTV said, while Chinese deputy central bank governors will be involved on the economic side.
03:03
US-China relations depend on strong economic ties, says US commerce chief during talks in Beijing
US-China relations depend on strong economic ties, says US commerce chief during talks in Beijing
The new negotiating mechanisms are the latest in a series of efforts to reverse a sharp downward spiral in ties sparked by then-House Speaker Nancy Pelosi’s visit to Taiwan in August 2022, which Beijing saw as a major breach of its sovereignty.
In response the Chinese government cut off multiple communication channels with Washington, including one between the two countries’ militaries.
Relations suffered a further blow after an alleged Chinese surveillance balloon was shot down off the US east coast last winter, prompting Secretary of State Antony Blinken to cancel a scheduled trip to China.
Since then four senior officials, including Blinken and Yellen, have visited China. Both sides have also agreed to continue talks that may pave the way for a possible meeting between Biden and Xi at the Asia-Pacific Economic Cooperation (Apec) summit in the US in November.
Friday’s announcement “reinforces that both sides are committed to building a more stable relationship ahead of the [Apec summit] in November, where Biden is expected to meet with Xi”, political risk consultancy Eurasia Group said in a research note.
“Working groups are a reflection of an effort by the US and China to engineer a near-term thaw at the lowest possible political cost at least through next year,” according to the note, whose authors included Rick Waters, who stepped down in June as head of the US State Department’s Office of China Coordination.
The UN meeting was the latest in a series of high-level US-China engagements that many regard as progress in repairing the bilateral relationship.
“There is a wide scope of matters that could be usefully discussed and acted upon in these two new treasury groups, including improving the business environment in China, macroeconomic coordination, and financial services market access,” said Wendy Cutler, a former acting deputy US trade representative.
“To be credible, these groups will quickly need to distinguish themselves from past ineffective dialogues between the two governments,” said Cutler, who is now managing director of the Asia Society Policy Institute’s Washington office.
“Early outcomes on discrete economic and financial issues will be critical,” she added.
Susan Aaronson, a research professor at George Washington University’s Elliott School of International Affairs, said the two sides must figure out how to keep the exchange of research and innovation intact while they erect barriers meant to protect national security.
“Innovation transcends borders, so the extent that we can cooperate with an innovation nation is always in our interests,” Aaronson said.
“China has lots of highly trained researchers, who very much want to live in the United States and are not inherently opposed to our norms and values,” she added.
“Americans want to work and live safely and cooperate with Chinese companies. We need to get back to that in some way, shape or form.”
Aaronson cautioned that she was “not minimising the threat from an authoritarian regime to use technology to advance its aims”.
She maintained, however, that regular talks about a wide range of issues like climate change, market access, labour standards and “norms of the free flow of information” would be beneficial to both sides.
01:56
Biden to introduce new restrictions on US investments in China, declares tech ‘emergency’
Biden to introduce new restrictions on US investments in China, declares tech ‘emergency’
Still, some analysts are doubtful that the working groups can greatly improve relations.
Wang Yong, a professor at Peking University who studies trade ties between the two countries, said setting up the groups was a sign of pragmatism but issues such as US restrictions on chip exports to China and Beijing’s curbs on rare metals were continuing sources of friction.
“The US sees China as its biggest competitor, one with the strongest intention and biggest capability to challenge its global predominance,” he said.
“In light of this, we cannot expect a dialogue framework to resolve strategic conflict between the US and China in the short term.”
Wang also suggested that the finance working group might focus on exchange rates and the Federal Reserve’s rate hikes, which affect the Chinese and global economies.
Shi Yinhong, an international relations professor at Renmin University, said the platforms might be welcome but warned they might prove to be the “same old trick”.
“Taking into consideration the history and structure of China-US relations, opening more channels or more frequent engagement does not necessarily lead to actual achievements – no way the two sides will communicate financial policies before making decisions,” Shi said.
He also believes that relations between the two are on a downward spiral and opening more channels will not reverse the trend.
“In six months’ time bilateral relations will be worse than they are now,” Shi said.