Liu He and Dai Qi’s first call to the point of no substantive progress

At a sensitive time when the U.S. president has called for further investigation into the origin of the new coronavirus, including the possibility of a leak from a Chinese laboratory, Chinese Vice Premier Liu He, the Chinese lead of the U.S.-China Comprehensive Economic Dialogue, and U.S. Trade Representative Dyche held a Biden call with Beijing time Thursday morning.

It was the first online discussion between Chinese and U.S. trade officials since Biden took over the White House. It was also the first exchange of this level between Dyche, who was appointed U.S. trade representative in March, and Liu He, Xi’s top economic adviser and chief negotiator on trade wars.

Statement from both sides on point

According to a statement from China’s Ministry of Commerce, the two sides had a frank, pragmatic and constructive exchange in a spirit of equality and mutual respect. Both sides agreed on the importance of developing bilateral trade, exchanged views on issues of mutual concern and agreed to continue to maintain communication.

In a brief statement, the Office of the U.S. Trade Representative said, “Dyche discussed the guiding principles of the Biden-Harris Administration, with a focus on trade policy (……) , while raising concerns. Washington confirmed a “virtual meeting” and a “sincere and pragmatic” exchange. The statement did not specify what issues of concern were addressed in the conference call, except to say that Dyche looked forward to further discussions with Liu He.

Hong Kong media HK01 commented that the brief statement showed that the two sides remain sharply divided, with the Chinese side focusing more on the principles of communication: mutual respect, pragmatism and constructiveness; and the U.S. side focusing on emphasizing that trade policy serves the interests of the middle class, while mentioning U.S. concerns. But even the concerns were on point and not elaborated. Overall, the call was mainly about the two sides getting to know each other and laying the groundwork for the next communication. Because what should be said are some well-known expressions of position. The first call need not pick out the deep-rooted topics of disagreement, opening two-way communication and shattering outside rumors, especially fake news involving the Chinese team, is also one of the objectives.

First phase of trade deal

AFP reports that relations between Beijing and Washington have largely deteriorated during the Trump presidency, marked by a trade dispute between the world’s two largest economic powers. The two countries have signed a trade agreement in January 2020 aimed at ending a two-year trade war that contains provisions on intellectual property protection and technology transfer conditions, which are the main demands of the United States. The agreement also calls for the two sides to hold progress meetings every six months.” The “first phase” of the trade agreement maintains a 25 percent U.S. tariff on a range of $250 billion worth of Chinese goods and industrial components, as well as Chinese retaliatory measures on more than $100 billion of U.S. imports.

But the new Biden administration announced in April that it would review the status of China’s commitments under the agreement. Dyche himself assured at the time that China’s “ability” to keep its commitments to the United States was a “priority. In his White House nomination, his trip to Congress for review, his appearances at hearings, and his media interviews since taking office, Dyche has repeatedly expressed his position on the U.S.-China trade relationship, largely continuing the same strategy as during the Trump administration, which was to temporarily renew and retain tariffs on Chinese goods while the first phase of the trade agreement is evaluated and reviewed. Dyche has said that the tariffs were imposed to “address unbalanced and unfair trade conditions” and that the sudden elimination of these taxes would hurt the U.S. economy. The Biden administration has also frequently defended these tariffs, which Trump continues to impose. Washington said in March that it was not prepared to eliminate the tariffs but pledged it was willing to discuss them with Beijing. But it is also clear that the Chinese position is that the U.S. must first remove the tariffs imposed on China. Or at least adjust its predecessor’s policy and release goodwill to conduct negotiations. This is a prerequisite for both sides to return to the negotiating table.

Dyche said in early May that he expects to engage with Chinese officials in the “near future” to assess their performance in implementing the “first phase” of the U.S.-China trade agreement.

The resumption of the trade dialogue between the U.S. and China has been reported by Chinese official media as sending three messages: on the one hand, the importance of economic and trade cooperation in the U.S.-China relationship remains stable. The second is that at the moment, U.S.-China relations are experiencing serious difficulties unprecedented since the establishment of diplomatic relations between the two countries. The third is that high-level exchanges between China and the U.S. in different fields are thus stalled or even halted, and the economic and trade field is no exception.

Reuters reports that under the first phase of the trade agreement, China has pledged to increase its purchases of U.S. products and services by at least $200 billion in 2020 and 2021. But a study by Boone, a researcher at the Peterson Institute for International Economics (PIIE), based on international trade data published by the two countries, concluded that by the end of the first quarter of 2021, Beijing had achieved only 61-75 percent of the planned purchases for that phase. And data from China’s Ministry of Commerce show that trade between China and the U.S. grew at a high rate in the first quarter of 2021, with China’s exports to the U.S. up 62.7% year-on-year and imports from the U.S. up 57.9%, and imports of energy, agricultural products, and automobiles and parts all growing rapidly. in the month of March, China’s exports to the U.S. rose 41.6% year-on-year and imports from the U.S. rose 61.8%, with imports accelerating further.

The two countries opened dialogue but contradictions abound

Reuters commented that the resumption of trade talks between the U.S. and China is another high-level meeting since President Biden took office, following high-level talks between the U.S. and China in March this year. The atmosphere was not harmonious, and both sides were heated in their rhetoric, although both sides said the dialogue was timely and useful.

According to the HK01 article, the U.S. side also recently broke the news that Defense Secretary Lloyd Austin’s attempts to speak with the Chinese military were “rejected. It appears that the Biden administration is expressing the U.S. position through contacts with China as a way to tell allies that the U.S. is pressuring Beijing and will not give in easily. There may be another layer to this communication, which is that the U.S. military is also hoping to ease tensions and avoid miscalculation and gunfire.

President Joe Biden on Wednesday ordered intelligence agencies to determine the origin of the new crown virus and gave them 90 days to come up with a report on it. Biden said U.S. intelligence agencies have mixed views on the source of the virus, including the possibility of a leak from a Chinese lab. Reuters reported that this is a rare public disclosure by Biden and has not yet formed a conclusion U.S. intelligence assessment, revealing a heated debate within his administration about the origin of the virus.