Will Economic and Trade Dialogue Break the Deadlock in US-China Relations?

June 4, 2021 Updated: June 6, 2021


On June 1, U.S. Treasury Secretary Janet Yellen and the Chinese Communist Party (CCP) Vice Premier Liu He held an introductory virtual meeting. After the two parties issued brief statements, the Chinese state-run media claimed that China-U.S. economic and trade relations would accelerate. The CCP mouthpiece claims that the U.S. government is unlikely to continue to confront the CCP in the economic and trade field, but can only cooperate. This is probably the CCP’s wishful thinking or rhetoric from the CCP’s top leaders who are eager to shake off their current internal and external difficulties.

The US Is Testing and Weighing

The Treasury Department readout stated: “Secretary Yellen discussed the Biden-Harris Administration’s plans to support a continued strong economic recovery and the importance of cooperating on areas that are in U.S. interests, while at the same time frankly tackling issues of concern.”

The CCP Ministry of Commerce also issued a brief press release through its mouthpiece, Xinhua News, stating, “The two sides believe the China-U.S. economic relations are very important. In the spirit of equality and mutual trust, they conducted extensive exchanges on the macroeconomic situation and bilateral and multilateral cooperation, candidly exchanged views on issues of mutual concern, and expressed willingness to maintain communication.”

Similar to the first dialogue between U.S. Trade Representative Katherine Tai and Liu He on May 26, this was a tentative contact that shouldn’t have involved much in details. The new U.S. government still needs time to evaluate past policies. These two communications should be considered part of the evaluation. Lacking a systematic strategy against the CCP, the Biden team has been forced to conduct in-depth discussions and analyses, especially after the CCP’s frequent display of aggressive stances in recent months.

The initiative is always vested in the United States regarding how to break the deadlock in the U.S.-China relations, and where the bilateral relations will go. In 2020, U.S.-China diplomatic relations were very much in a state of radio silence: Each closed one consulate, and no one was appointed after the U.S. ambassador to China left. The frequent sanctions against the CCP had become the main theme in the U.S.-China relations—the CCP feared Trump and wouldn’t dare to confront him.

After Biden took office, the CCP’s top officials made a series of misjudgments, trying to force the Biden administration to soften its strategy and make concessions. These attempts to force Biden’s hand backfired and U.S.-China relations fell into a deadlock once again. The CCP’s international confrontations only pushed the United States, the Indo-Pacific, and European allies to further unite against the regime.

Joe Biden Yoshihide Suga
President Joe Biden meets with Japanese Prime Minister Yoshihide Suga in the State Dining Room of the White House in Washington on April 16, 2021. (Andrew Harnik/AP Photo)

To this day, high-level CCP officials have not given up on their slogan of fighting against the United States for hegemony. On May 31, when Xi Jinping presided over the CCP Politburo Collective Study Sessions (educating top echelon on diverse subject matters), he said it clearly, “We are approaching the center of the world stage; we have the ability and responsibility to play a greater role in global affairs.”

The new U.S. administration has become more and more aware of the severity of the CCP’s open challenge, but the statement still focuses on “competition” and hopes to avoid conflict. However, on May 26, Kurt Campbell, the coordinator of Indo-Pacific affairs on the National Security Council, stated that the era of “engagement” between the United States and China is over.

The U.S. government should still be weighing whether or not there is a clear and systematic strategy for the future direction of U.S.-China relations, and the CCP should also be aware that U.S.-China relations of the past will not return.

The Helplessness of the Party Mouthpiece Propaganda

Along with Xinhua’s statement on the dialogue between Yellen and Liu were two other articles side by side. One was titled “The Same Tone of the Two Calls: A Pragmatic Solution to the Problem Is Most Important.” It explained that “the once silent China-U.S. economic and trade exchanges have restarted.” The article even quoted the original English text of the U.S. Treasury Department’s Readout, which is very rare.

It is hard to quantify how important dialogue with the CCP is to the United States but as a matter of fact, after the four-party talks between the United States, Japan, India, and Australia, the heads of the United States and Japan met again, followed by the G-7+4 Foreign Ministers’ Meeting and the United States-South Korea Summit, which discussed in-depth economic and trade cooperation. The U.S.-Europe tariff negotiations entered the technical level while the EU–China Comprehensive Agreement on Investment was frozen. After these events had roughly ended, the United States began its first economic and trade dialogue with the CCP. Therefore, it is self-evident which talks were more important to the United States.

However, the two virtual conversations were a timely relief to the CCP’s high-level officials, so they were greatly exaggerated by the CCP media. Another CCP article, titled: “The Second Session Within 6 days—What Are the Signals?” characterized the meetings as the restarting of China-U.S. economic and trade negotiations and predicted that in the Biden era, the China-U.S. economic and trade relations will accelerate.

These two dialogues should be regarded as routine affairs of the U.S. government, but they were a treasure to the CCP top officials. The article further stated: “China-U.S. relations are obviously not yet calm. Aside from these complexities and even confrontation and conflicts, economic and trade relations have increasingly become a rare factor of stability, and it is also one of the few areas where the two countries maintain complete communication.”

The high tone of the CCP actually revealed its helplessness in passivity. The article concluded that “the U.S. economic situation also makes cooperation rather than confrontation more reasonable.” It claimed that the pattern of competition—the trade disputes between the two powerful countries for more than three years—is unlikely to be resolved in the short term. According to the article, the new U.S. government is unlikely to immediately abolish the tariffs imposed on China, but could possibly exert additional pressure by using other non-economic means.

Apparently, the CCP knows what it is going to face, but the article still touted, “No matter how hard the bones are, bit by bit, we can always bite them down.” This attitude suggests that the CCP isn’t capable of breaking through the deadlock.

The CCP’s High Officials Have Lost Their Confidence

The CCP is facing international isolation, but will not admit it, and only covers up its mistakes. The party mouthpiece Xinhua released a number of articles touting the CCP’s diplomatic efforts, trying hard to prove that it’s not isolated and has its own circle of friends in the international arena. For example, on June 1, Foreign Minister Wang Yi had a virtual meeting with the foreign ministers of the BRIC (Brazil, Russia, India, and China) countries. Thereafter, on June 2, the following articles were published: “In May, the Chinese Leader’s Diplomacy Adds ‘Power’ to the World” and “Xi Jinping’s Calls to the Presidents of Kazakhstan, Azerbaijan, and Dominica.”

Surely, these rhetorical articles are very much targeting readers inside the CCP.

Xinhua’s top headline focused on a report about the CCP’s organizational work regulations. The first article on the general provisions of the regulations partially said, “in order to thoroughly implement Xi Jinping’s thoughts on socialism with Chinese characteristics in the new era …,” which means Xi Jinping’s thoughts dominate the organizational work regulations. Marx, Lenin, Mao, Deng, and any other former leaders of the CCP are no longer regarded.

Xinhua also published an article that explained how to build strong supervisory skills and resolve the difficulties in managing the top leaders and cadres of the same level. The main focus of the article was to “highlight political supervision” and “to supervise the loyalty of the ‘top leaders’ and the leadership to the party.”

The intentions are very obvious. The CCP’s highest levels will not tolerate any internal evaluation of its diplomatic mistakes, let alone questioning the authority of the central power. It is a strict control of the inner party despite the great failure in the international communities.

The first U.S.-China economic and trade dialogue was like the last hope for the CCP, but unfortunately, a confrontation was once again displayed. On June 2, at the press conference of the Ministry of Foreign Affairs, the CCP’s mouthpiece Global Times was instructed to ask about an open letter published in Chinese media “calling on the WHO to organize an investigation of the U.S. Army’s Fort Detrick bio-lab.” The United States had already publicly announced an investigation into the origin of the epidemic, but the CCP once again behaved like a coward, and couldn’t wait to blame the U.S. It is foreseeable that there will be many U.S.-China conflicts over the inquiry into the source of the pandemic.

It also remains to be seen where the economic and trade dialogue will lead—a breakthrough for the U.S.-China relations or just another battlefield for confrontation.

Yang Wei has been closely following China affairs for many years. He has been contributing political commentary on China for the Chinese language Epoch Times since 2019.

Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.

Yang Wei
Yang Wei
Yang Wei has been closely following China affairs for many years. He has been contributing political commentary on China for the Chinese language Epoch Times since 2019.