On June 9th, it was reported by The Paper that Foreign Ministry Spokesperson Lin Jian presided over a regular press conference on that day. A Reuters reporter asked, “The first meeting of the China-Us economic and trade consultation mechanism is being held in the UK. Could the Chinese side provide more information and what expectations does it have for the consultation?” Lin Jian responded, “China has released the relevant information of the first meeting of the China-Us economic and trade consultation mechanism. Please keep an eye on the specific situation of the consultation.”
Previously, on June 7th, a spokesperson for the Ministry of Foreign Affairs announced that at the invitation of the British government, He Lifeng, a member of the Political Bureau of the Central Committee of the Communist Party of China and Vice Premier of The State Council, will visit the UK from June 8th to 13th. During this period, the first meeting of the China-Us economic and trade consultation mechanism will be held with the US side. This news has drawn widespread attention worldwide. This meeting is a crucial step in implementing the consensus reached at the Geneva talks in May.
From May 10th to 11th, the leading figures for economic and trade cooperation between China and the United States (Vice Premier He Lifeng of China, US Treasury Secretary Basente and Trade Representative Greer of the United States) reached a “Joint Statement” in Geneva. The core contents include tariff adjustments. The US side promised to cancel 91% of the additional tariffs imposed on China (involving two executive orders in April), suspend 24% of the additional tariffs for 90 days, and retain the benchmark tariff of 10%. China simultaneously abolished 91% of the countermeasures tariffs, suspended 24% of the reciprocal tariffs for 90 days, and retained 10% of the tariffs. Meanwhile, both sides agreed to establish a long-term consultation mechanism and hold high-level talks regularly, and this meeting held in the UK is the first one.
However, after reaching a consensus at the Geneva talks, the US unilaterally raised steel and aluminum tariffs to 50% in early June and tightened restrictions on technology exports to China, such as jet engine technology and chip design software. China criticized this move as violating the consensus and threatened to retaliate. Therefore, the first meeting of the China-Us economic and trade consultation mechanism held in the UK this time has attracted much attention. The market expects that both sides can make progress on key issues and ease bilateral economic and trade tensions. It is expected that the meeting will focus on the specific implementation of the Geneva Consensus, such as checking whether the two sides have implemented the first batch of tariff cuts on goods as planned on June 1st. These cuts cover approximately 230 billion US dollars in trade volume, especially in areas such as consumer goods and agricultural products.
Meanwhile, for the remaining 10% tariff, the mid-term assessment arrangements involving sensitive areas such as rare earths and electric vehicles (originally scheduled to start on August 15th) will also be a key point of discussion. In terms of technical consultations in sensitive areas, in the semiconductor and green energy sectors, the US side may ask China to ease restrictions on rare earth exports, while China is concerned about the relaxation of US export controls on semiconductor equipment, such as 14-nanometer process equipment.
The industrial subsidy rules are also a point of contention. The US side questions China’s subsidy policy for new energy vehicles, while China opposes the discriminatory provisions of the US Chips and Science Act. In addition, the operational rules of the long-term communication mechanism, including determining the frequency of the consultation mechanism (annual ministerial meeting + quarterly departer-level consultation), location (alternating between China and the United States or a third country), and emergency response procedures (48-hour dispute channel), etc., will also be within the scope of discussion at the meeting.
This meeting marks a new stage in China-Us economic and trade relations, shifting from “escalation of confrontation” to “game of rules”. However, there are still uncertainties in the struggle between the two sides over core interests, and the subsequent development deserves continuous attention.
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