US-China relations: ‘Major differences’ must not get in the way of communication, says WTO official

Supply chains between China and the United States are more closely intertwined than some previously thought, and high-level communications need to be strengthened to mitigate conflicts and give companies more security and freedom, a World Trade Organization official warned on Thursday.

“I sincerely hope that both sides can reach an agreement on the framework of future Sino-US relations through pragmatic discussions,” WTO Deputy Director-General Zhang Xiangchen said during a keynote speech on the opening day of the Caixin Summit in Beijing.

“Both parties should work together to strive for a relatively stable relationship based on acknowledging the existence of major differences while maintaining smooth communication.”

Zhang’s comments come at a time when high-level dialogues between the world’s two largest economies – most recently the vice premier – have intensified He Lifeng’s visit to the USAa five-day trip seen as preparation for a possible meeting between Presidents Xi Jinping and Joe Biden Asia-Pacific Economic Community (Apec) summit in San Francisco.

Ahead of the `EC summit, China expresses its willingness to cooperate with the US “at all levels”.

He, China’s top economic and financial policymaker, is expected to meet with U.S. Treasury Secretary Janet Yellen on Thursday and Friday for two days of meetings.

Nonetheless, widely discussed decoupling fears as well as an outflow of foreign investment this year, largely due to “de-risking” efforts by Western governments, have raised alarm bells for China The attractiveness for foreign investors is being examined.

In July-September, China recorded its first quarterly deficit in direct investment liabilities – a broad measure of foreign direct investment (FDI) that also includes retained earnings of foreign companies in China – with a decline of $11.8 billion preliminary Balance of payments data published by the foreign exchange regulator.

“Companies are hesitant to make many investments, especially long-term investments, due to the instability of policies and environment,” Zhang said. “The pursuit of supply chain security and diversification is now a normal and inevitable trend for companies.

“What the government should do is provide businesses with as much policy predictability and certainty as possible, reduce business risks and give businesses the power to adjust the supply chain.”

He added that the fragmentation of global chains, as evidenced by export controls between China and the US, and in Europe’s anti-subsidy investigation Impact on Chinese exports of electric vehicles could have serious implications for global trade.

And that, he said, warrants high-level discussions.

Ex-Beijing official urges return of foreign investors, welcomes US-China trade

European companies have raised a number of concerns about the deteriorating business environment in China, EU trade chief Valdis Dombrovskis said in a pre-recorded video played during the opening of the Caixin summit.

“Addressing these concerns would help China attract and retain foreign investment and also help achieve its goal of sustainable, high-quality economic development,” he said. “So all in all, I would like to invite China to show reciprocity in our trade relations, which would help restore trust.”

A comment on Yuyuan Tantian, a social media platform affiliated with Communist Party mouthpiece CCTV, said Thursday that the U.S. must address Beijing’s concerns and take action.

These concerns reportedly include U.S. economic policy toward China, supply chain decoupling, semiconductor restrictions, unfair treatment of Chinese investors in the U.S. and limited bilateral cooperation to address global challenges.