The theme of the forum — “Change and Progress” — is highly significant. The world is navigating through a period of turmoil and experiencing an accelerating rate of change on a scale unseen in a century. The widespread impact of the global pandemic has been profound, leading to a deceleration in world economic growth. Inflation is stubbornly high, and debt is on the rise. Climate change continues to unfold unpredictably, and regional conflicts are escalating. The ongoing crisis in Ukraine shows no signs of abating, and the conflict between Israel and Palestine has worsened. Despite these challenges, global momentum toward peace, development and cooperation has endured.
The China-U.S. relationship, as the most crucial bilateral relationship in the world, has seen both positive and negative developments. On the positive side, since the Xi-Biden meeting in Bali, Indonesia, in November 2022, there have been signs of stabilization in the relationship. In recent months, Chinese leaders and ministers, such as Han Zheng and Wang Yi, have visited the United States, and American officials including Secretary of State Antony Blinken and influential figures — including a speaker of the House of Representatives, majority leaders in Congress, governors, Henry Kissinger and Bill Gates — have made reciprocal visits to China.
The sub-national and people-to-people ties between China and the U.S. are receiving significant attention, with noticeable increases in personnel exchanges and direct flights, particularly as the meeting between the two heads of state in San Francisco was contemplated.
On the negative side, the U.S. has continued to implement investment restrictions against China, along with additional restrictions on advanced semiconductor processes. More companies have been added to the sanctions list. Recently, the U.S. government also extended its state of emergency concerning Chinese enterprises, hindering bilateral trade and investment. The U.S. Congress has also considered numerous anti-China bills and interventions in China’s internal affairs, and U.S. military vessels and aircraft frequently patrol near Taiwan and in the South China Sea.
In light of these developments, a question arises: How can we enhance the positives and mitigate the negatives to steer China-U.S. relations in a stable, coordinated and sustainable direction and truly achieve mutual respect, peaceful coexistence and mutual benefit? It is imperative to address the issues at hand and strengthen communication and coordination on the macroeconomy, together with trade, industrial and investment policies.
I will share my views, focusing primarily on the communication and coordination of economic policies.
First, regarding the issues of economic and price instability, there must be increased communication and coordination of macroeconomic policies between China and the United States. Development is the key to solving many of the world’s problems.
Unfortunately, the pace of global growth continues to slow in the post-pandemic era. According to the latest IMF data, the world economy’s annual growth rate is projected to be 3 percent this year and 2.9 percent in 2024, lower than last year’s estimate of 3.5 percent and significantly below the 6.3 percent of 2021. The annual growth rate of world trade volume is forecast at only 0.9 percent this year, a fraction of the 10.9 percent in 2021. The global economy still lacks momentum overall, and the specter of high inflation lingers, with the global consumer price index expected to average a rise of 6.9 percent this year.
The world’s two largest economies, the United States and China, play a critical role in ensuring global economic and price stability. In the first three quarters, China’s economy has shown positive signs of recovery, achieving a growth rate of 5.2 percent, with the third quarter alone experiencing a year-on-year growth of 4.9 percent. The U.S. economy also exceeded expectations in the third quarter, with an annualized quarter-on-quarter growth rate of 4.9 percent. Both instances of 4.9 percent growth are indeed encouraging signs. Furthermore, based on its 5.2 percent growth in the first three quarters, China’s economy is expected to achieve an annual growth rate of over 5 percent this year. With a series of comprehensive policies recently implemented, the economic growth rate for next year is also expected to remain robust.
However, it should be noted that the U.S. is currently dealing with relatively high levels of inflation and debt, which somewhat diminish the benefits of economic growth. Whether or not the inflation rate can be reduced to 2 percent next year while maintaining a reasonable growth rate is something that we need to watch closely. Conversely, China’s economy is experiencing low inflation. The CPI for October was reported to have a negative month-on-month growth, which is not conducive to boosting business production and revenues. Therefore, both countries are faced with the challenge of ensuring stable economic growth while also maintaining price stability. This calls for enhanced macroeconomic policy communication and coordination between the two sides.
Before 2017, as Chairman Bi mentioned, there were over 100 coordination mechanisms at the ministerial and bureau levels between China and U.S. departments, including several dozen in the economic sector, such as the dialogue mechanism on economic development and reform between China’s National Development and Reform Commission and the U.S. Department of State. Currently, the financial departments of both countries have only recently resumed dialogues, including economic, financial, commercial and other working groups, as mentioned by the U.S. ambassador to China. The upcoming U.S.-China economic and financial dialogue in the United States presents an opportunity to further expand the scope and depth of bilateral exchanges, communication and coordination. It is hoped that this will help both countries align their macroeconomic policies, foster reasonable economic growth, leverage their roles as global economic leaders and promote the resurgence and prosperity of the world economy.
Second, in response to the decline in imports and exports, it is necessary to enhance communication and the coordination of trade policies between China and the United States. The Sino-American economic and trade relationship is a cornerstone of the overall stability of bilateral relations, serving both as ballast and lubricant.
Over the last 44 years, the annual growth rate of trade in goods between China and the U.S. has averaged about 14 percent. Following the Phase One Trade Agreement reached in January 2020 — for which I had the honor of being part of the negotiation team — trade between China and the U.S. has continued to grow positively for three consecutive years.
According to Chinese statistics, the total trade in goods in 2022 was close to $760 billion, and according to U.S. statistics, it was over $690 billion, setting a historical record. This has brought tangible benefits to the populations of both countries and has demonstrated the complementary nature of the two nations’ economic and industrial structures.
Since the start of this year, amid a global trade slowdown, China-U.S. trade from January to September has experienced a year-on-year decrease of 14 percent. In October, it fell by another 7.6 percent. This downturn is due to a mix of economic factors as well as non-economic ones, including the creation of trade barriers, decoupling and supply chain disruptions, industry reshoring and shifts in outsourcing strategies. The politicization and securitization of trade activities are serious threats.
Nonetheless, China’s global export market share has not decreased but increased this year. According to the World Trade Organization, China’s exports accounted for 13.8 percent and 14.0 percent of the global share in the first and second quarters, respectively, marking increases of 0.29 and 0.53 percentage points. The indirect export of Chinese goods to the United States through other countries also demonstrates progress in diversifying China’s trade markets, indicating substantial untapped potential in direct China-U.S. trade.
We look forward to more U.S. officials and business representatives attending various exhibitions in China’s mainland and Hong Kong, as U.S. Department of Agriculture officials and agricultural association representatives did at the Shanghai Import Expo, to boost sales of U.S. products.
I would like to make a personal appeal on three fronts. First, I urge the U.S. government to cancel the additional tariffs on over $300 billion of Chinese exports, which could lower U.S. inflation by 1.3 percentage points. With U.S. inflation at 3.7 percent in September, a reduction of 1.3 points would bring it to 2.4 percent, nearing the ideal target of 2 percent and easing inflation worries.
Second, I call on the U.S. government to remove more than 1,300 Chinese companies from the Entity List to facilitate the free exchange of goods and business between the two nations.
Third, I advocate for the U.S. government to lift various restrictions, such as the double remedies on Chinese photovoltaic products, which would help the U.S. develop renewable energy more affordably and rapidly.
Third, in terms of economic adjustment and transformation, it’s crucial to enhance Sino-American communication and coordination on industrial and investment policies. As the world advances through a new wave of technological innovation and industrial change led by digital technologies, and as combating climate change and responding to public health crises like the COVID-19 pandemic become global priorities, these shifts will profoundly transform human production and lifestyles, leading to significant economic and industrial restructuring.
China and the U.S. are not only leading digital economies but also major energy producers and consumers, top carbon emitters and front-runners in biotech development. They are currently leading the way in the global economic restructuring and industrial transformation. To drive the digital, green, and bio-based transformation of industries, global resource and production capacity optimization is needed, alongside the mobilization and utilization of tens of trillions or more in investment funds. Only through expanded international collaboration can we achieve substantial progress.
Imposing investment restrictions on China’s advanced chip, artificial intelligence and quantum information sectors is a myopic approach that is detrimental to all parties involved. Similarly, limiting Chinese investments in American information and communication technology and new energy industries is a self-harming policy. The optimal solution lies in both parties sitting down to discuss industrial and investment policies. Prominent U.S. figures have put forth the New Washington Consensus, which calls for a reassessment and application of industrial policy, a notion that is not without merit. Industrial policies built on a market foundation should not be exclusionary. They must be designed to foster fair competition and be functional. And they must avoid embedding poison pill clauses within legislative documents.
China is currently promoting a new industrialization model, while the United States is focused on reindustrialization. It is essential to engage in timely dialogue between the two nations on industrial and investment policies in sectors such as the industrialization of next-generation information technologies, biotechnology, photovoltaics, new-energy vehicles and green finance. We are also informed that discussions will soon take place in the United States regarding industrial subsidies.
Having a dialogue is preferable to silence. In this spirit, I make three appeals: First, I urge the U.S. to lift restrictions on Chinese companies and financial institutions seeking to invest and operate in the United States. Second, I call for the U.S. to remove barriers to American companies and financial institutions investing in certain sectors in China. Third, I encourage American enterprises and financial institutions to continue to grow and develop in China’s mainland, the world’s second-largest and ever-expanding market, and to do the same in Hong Kong.
The global economy remains interconnected. A thriving world economy benefits China, and a thriving Chinese economy benefits the world. Let us strive together for a robust global economy and a harmonious China-U.S. relationship.