The Biden administration is making a final effort to reinforce communication channels established between the United States and China ahead of potential challenges following President-elect Donald J. Trump's upcoming term. A team of senior Treasury Department officials is set to travel to Nanjing, China, for the concluding meeting of the U.S.-China financial working group.
In addition, another group of Treasury officials will meet with their Chinese counterparts at a Group of 20 gathering in South Africa this week, focusing on the bilateral economic working group. These working groups were initiated in 2023 to mitigate tensions between the two nations and prevent economic conflicts.
The discussions will cover several ongoing issues related to the economic dialogue structure established last year. The U.S. is likely to express concerns regarding China's overproduction of green energy technology, which is impacting global markets. Additionally, U.S. officials are expected to address China's recent restrictions on critical mineral exports and the support provided by Chinese companies to Russia amid its conflict with Ukraine.
Jay Shambaugh, the Treasury Department's under secretary for international affairs, emphasized the significance of direct communication between the two largest economies, stating that open dialogue is essential for discussing both agreements and disagreements.
Despite improved bilateral relations, U.S. warnings about China’s market practices regarding solar panels and electric vehicles have largely been ignored. Furthermore, Chinese firms have continued to assist Russia in acquiring military technology, while both nations have implemented increasing protectionist measures.
The Biden administration has chosen to maintain tariffs imposed during the Trump administration on numerous Chinese imports and has introduced new tariffs on products such as electric vehicles, solar cells, semiconductors, and advanced batteries.
Recently, the U.S. enacted broader restrictions on advanced technology exports to China to hinder its development of military-grade chips and artificial intelligence capabilities. In response, China imposed its own restrictions, banning the export of various rare minerals essential for producing advanced products.
The situation raises questions about the efficacy of the established communication channels; however, advocates for dialogue assert that these discussions are crucial to preventing misunderstandings and worsening relations.
Mark Sobel, a former Treasury official, remarked on the necessity of communication despite the strained relationship. He highlighted the importance of ongoing dialogues as the new administration transitions into power.
Economic tensions between the U.S. and China are anticipated to escalate under Trump, who previously imposed tariffs on over $300 billion of Chinese goods and labeled China a currency manipulator. Trump has indicated plans to introduce an additional 10 percent tariff on all Chinese products and may seek to revoke permanent normal trading relations with China, which would significantly raise tariffs.
The Biden administration aims to use the established communication structure to stabilize relations amidst potential volatility, as the two economies represent over 40 percent of global GDP and collaborate on various policy issues, including financial stability and international governance.
Nonetheless, Trump's approach to economic diplomacy diverges from this strategy. During his first term, he abandoned the existing dialogue format in favor of imposing tariffs and direct negotiations, culminating in a trade agreement signed in 2020 that has not been honored.
Michael Pillsbury, a former adviser to Trump on China, expressed skepticism regarding the effectiveness of meetings among mid-level officials, suggesting that Trump would likely prefer direct engagement with Chinese President Xi Jinping for resolving major issues.
Pillsbury criticized the previous approach of simply holding meetings, arguing that Trump would revert to a more centralized communication strategy focused on high-level discussions.