US, China to launch economy and finance working groups to stabilise ties

Washington: Washington and Beijing have created two working groups to tackle economic and financial issues, in the latest effort to increase engagement and stabilise the turbulent US-China relationship.

US Treasury secretary Janet Yellen and her Chinese counterpart vice-premier He Lifeng will oversee the groups, which come two months after Yellen visited Beijing for meetings with top Chinese economic officials.

Yellen said that establishing the groups, which built on her visit in July, marked “an important step forward in our bilateral relationship”. She added that the groups would “serve as important forums to communicate America’s interests and concerns” and promote healthy economic competition between the rivals.

The move comes one week after US national security adviser Jake Sullivan held a secret two-day meeting with Chinese foreign minister Wang Yi, in which the two countries agreed to hold consultations in areas ranging from Asia-Pacific policy to maritime issues. One senior US official said the officials also agreed to discuss arms control.

It also followed a trip to China last month by US commerce secretary Gina Raimondo, who set up several new formal channels for dialogue, including an information exchange on export controls and a “commercial issues working group” to address conflicts over trade and technology.

The US Treasury said the economic group would work towards stabilising the bilateral economic relationship and provide a channel for the countries to co-operate on global issues such as restructuring debt for low- and middle-income countries. The financial working group will tackle regulatory and financial stability issues.

The creation of the groups is the latest sign that the countries are working to move past the dispute that erupted in February when a suspected Chinese spy balloon flew over North America before being shot down.

That crisis derailed a previous agreement to reboot relations between US president Joe Biden and Chinese leader Xi Jinping when they met at the G20 summit last year in Bali, Indonesia.

US and Chinese officials are in discussions about a possible second face-to-face meeting if Xi attends the Asia Pacific Economic Cooperation summit in San Francisco in November. Experts are watching closely for signs about Xi’s plans after he skipped the G20 leaders’ summit in India this month.

Beijing has been relatively restrained in its rhetoric against the US in recent months, saying Yellen’s visit had brought “positive expectations for bilateral relations”.

State media also reported that Xi recently replied to a letter from a descendant of Gen Joseph Stilwell, hailing the American officer who commanded US forces in China, Burma and India during the second world war as an “old friend of the Chinese people”.

The countries’ joint fight “for world peace” could inspire them to “help each other succeed and achieve prosperity together”, Xi reportedly said.

The Biden administration is also monitoring signs of recent political turmoil in China. Beijing removed Qin Gang as foreign minister in July, after the diplomat had been absent from public view for a month.

US officials recently told the Financial Times that Beijing was investigating Li Shangfu, the defence minister, who has not appeared in public for more than three weeks.

In July, Xi also fired the two top generals of the People’s Liberation Army Rocket Force, an elite command that controls the country’s rapidly expanding nuclear arsenal.