The new U.S.-China economic exchange shows how the status quo is outpacing major changes in the relationship, analysts say

According to analysts pointing to a just-concluded U.S.-China economic meeting, Washington and Beijing appear keen to stay the course in their interactions, with warm handshakes and sincerity in dialogue, but they lack the incentive to address deep-rooted differences solve working group.

The use of such tactics in a formal economic dialogue structure, they say, serves the respective goals in both countries and comes at a time when the administration of US President Joe Biden faces a renewed challenge in an election year from predecessors Donald Trump and President Xi Jinping has his hands full reviving China's economy.

“2024 is a year in which both powers have incentives and strong reasons to favor maintaining the status quo – strategic rivalry with guardrails tightly installed to prevent the two parties from drifting into undue escalation,” said Brian Wong, Fellow at the University of Hong Kong's Center for Contemporary China and the World.

Senior Chinese officials raise concerns about US tariffs and investment restrictions

And Shi Yinhong, a professor of international relations at Renmin University, said there was no reason to expect “remarkable results” from such meetings given past experience.

The third meeting of the working group took place on Monday and Tuesday. It was the first time it was assembled in China. The next meeting of this kind is scheduled to take place in April.

“Issues that both sides emphasized have been discussed many times,” Shi added. “Financial and economic matters involve a lot of complicated details, and it is not easy for either side to get all of the other side’s information.”

The two countries intensified negotiations, which were subsequently often described as “open, pragmatic and constructive”. Xi met Biden in San Francisco in November.

Both sides discussed bilateral economic concerns this week, including tariffs, sanctions and investment restrictions. Other topics included cooperation within the Group of 20, industrial policy and debt issues in low-income and emerging economies.

As long as the US is determined to oppose China, the US will find other reasons. Frank Tsai, Emlyon Business School

During his virtual meeting with U.S. Trade Representative Marisa Lago on Tuesday, Chinese Vice Commerce Minister Wang Shouwen also raised concerns about U.S. restrictions on semiconductors and cloud services and curbs on photovoltaic installations, and called for fair treatment of Chinese companies in America.

According to Frank Tsai, an associate professor at Emlyon Business School in Shanghai, despite a shared desire to maintain strong bilateral communication, they find it difficult to see eye to eye on economic issues.

“The US has been criticizing China's model of industrial policy for more than a decade… What was once more of a US attempt to align China with global practices is now perceived by China as a justification for a larger goal of isolating China,” Tsai said. “By this logic, there is little incentive to compromise because it fails to address the root cause.

“As long as the US is determined to oppose China, the US will find other reasons.”

03:33

Xi and Biden discuss Taiwan and Xinjiang in first face-to-face meeting

Xi and Biden discuss Taiwan and Xinjiang in first face-to-face meeting

The world's two largest economies remain embroiled in a range of economic concerns – including the so-called “small yard, high fence” strategy with investment restrictions, a “de-risking” push and reshoring or friendshoring via Mexico and Vietnam – despite being protectionist Tariffs have been in place since the US-China trade war began in 2018.

Doug Barry, a Washington-based consultant who monitors U.S.-China trade, said it was important for “the parties to talk” and that “more meetings are in the works” after relations deteriorated following the launch of a nuclear bomb had worsened alleged Chinese spy balloon over the USA last February.

“We could see real progress in the coming months if policymakers follow the right path,” he added.

But Barry also noted: “It is unlikely that the Biden administration will make election-year concessions that would leave him vulnerable to attacks that he is weak on China.”

Xi and Biden will speak “relatively soon” as issues with Taiwan, Ukraine and the Middle East loom

Following this week's working group meeting, a statement from the U.S. Treasury Department said U.S. delegates also raised concerns about China's industrial policy practices and overcapacity and the resulting impact on American workers and businesses.

US Treasury Secretary Janet Yellen is also looking forward to another trip to China “in due course,” the statement said.

A Goldman Sachs note on Friday said Chinese investors were concerned about the possibility that the U.S. could further increase trade barriers to Chinese exports, particularly if Trump regains the presidency.

While Trump said President Xi is “a very good friend of mine,” he threatened to increase tariffs on Chinese products by more than 60 percent if re-elected in an interview with Fox News on Sunday.

Some analysts say high import tariffs on Chinese goods have been a major cause of inflation and retailers have passed on the additional costs to American consumers.

Lu Xiang, who specializes in U.S.-China relations at the Chinese Academy of Social Sciences, noted that persistent inflation in the U.S. has left many Americans disappointed with the Biden administration.

“It is difficult for the US to decouple from the huge Chinese market and its supply capacity,” he added. “Any restrictions the American government imposes on China are zero-sum games, and it may be difficult to continue.”