China US Photo:VCG

The reported meeting of China-US Financial Working Group, which was widely expected to focus on topics such as macroeconomic and financial stability, governance of the IMF and capital markets issues, signaled that despite the trade tensions, both sides are still seeking to stabilize relations between the world's two largest economies.

The reported meeting demonstrated China and the US' willingness and practical need to deepen cooperation in the financial sector, which is expected to enhance understanding and trust in bilateral relations. Also, given the relatively weak global economic growth, weaker-than-expected August jobs report in the US and fears of a hard landing for the US economy which unsettled the global market, the reported meeting is seen as a positive step toward promoting global financial stability, experts said.

However, the reported meeting took place as the US continues to escalate its crackdown on various Chinese industries, including electric vehicles (EVs) and semiconductors, which could hinder economic and trade cooperation. Experts urged the US to take concrete actions to ensure smooth communication and cooperation in the economic and trade fields.

Neither China nor the US has publicly released information on the meeting of the bilateral Financial Working Group as of press time, which would be the fifth meeting of the mechanism established in 2023 as part of efforts by the two countries to strengthen communication on economic and financial issues.

The fact that both countries are implementing the communication and exchange mechanisms is a positive signal. It shows that the two countries can still resolve some of their differences through cooperation and communication, expanding their common interests and minimizing disagreements, Gao Lingyun, an expert at the Chinese Academy of Social Sciences, told the Global Times on Friday.

"Cooperation in the financial sector is important as it can help stabilize the global economy, moving it from recovery to better growth, with immediate effects," Gao said.

The reported agenda of the meeting demonstrated that both China and the US are willing to enhance communication and coordination in the financial sector. In-depth discussions on macroeconomic and financial issues will help deepen mutual understanding and trust between the two sides, Wang Peng, an associate research fellow at the Beijing Academy of Social Sciences, told the Global Times on Friday.

As the world's two largest economies, dialogue and cooperation between China and the US are also of great significance in bilateral trade and in maintaining the global economic order, Wang said. 

Mitigating economic risks

Experts noted that the need for policy coordination between China and the US is particularly highlighted. The US' weaker-than-expected unemployment rate also sounds warning of an economic recession, further underscoring the urgency of Washington to cooperate with Beijing in terms of economic and financial policies.

In this context, cooperation between China and the US in financial stability is crucial for mitigating the risks of instability from the US and the spillover impact on global market, they said.

The US unemployment rate jumped to near a three-year high of 4.3 percent in July amid a significant slowdown in hiring, heightening fears the labor market was deteriorating and potentially making the economy vulnerable to a recession, Reuters reported.

In contrast, the Chinese economy has demonstrated resilience with stronger growth momentum in July, navigating through downside risks as more pro-growth policies have kicked in. The output of industrial enterprises above the designated size went up by 5.1 percent year-on-year, while retail sales rose by 2.7 percent, official data showed Thursday. 

A broad range of key indicators maintained steady expansion, with production and demand on the rise, overall employment remaining stable, and new growth drivers building up, according to the National Bureau of Statistics.

Enhancing cooperation in financial stability helps maintain the stability and development of bilateral economic and trade relations, creating a more favorable business environment for both countries' enterprises, Wang said.

In the context of the rising likelihood of an interest rate cut by the Fed, coordination between the two most important global economies in monetary policy becomes even more critical in order to avoid an excessive impact and fluctuation in the global financial markets, Wang added.

US urged to stop politicizing economic issues 

While talks and potential policy coordination between the two countries are in the interests of both sides as well as the global economy, the US has been escalating its crackdown against China, which has seriously deteriorated China-US trade ties, experts said.

In May this year, the Biden administration announced that it was imposing additional tariffs on a range of Chinese imports, including EVs. In June, the US Treasury Department issued draft rules to restrict certain US investments in semiconductor, AI and other high technology sectors in China.

Experts believed that the US should work with China to seek potential areas of cooperation while handling differences properly to ensure a solid foundation for mutually beneficial economic and trade relations. 

The US should stop its unfair trade practices, remove the additional tariffs, and create a level playing field for economic cooperation with China, Wang said.

Since both sides have established dialogue mechanisms, the US should improve communication with China, avoid politicizing economic and trade issues, and work toward win-win cooperation. Only in this way can both countries achieve sound economic growth, build trust, and pave the way for smooth communication and collaboration in trade, Wang added.