Amid the escalating trade tensions between the United States and China, the U.S. government announced on Monday (August 12) that officials from the U.S. Treasury Department will travel to Shanghai this week for talks with Chinese officials to explore the possibility of stabilizing the financial relationship between the two countries.
The meeting will take place within the framework of the Financial Working Group (FWG) established in October last year, where the two sides will discuss financial stability, transnational data issues, and combating fentanyl-related problems.
In September last year, the U.S. Treasury Department announced the establishment of two economic and financial dialogue groups with the authorities in Beijing, namely Economic Working Group (EWG) and Financial Working Group (FWG).
The Economic Working Group (EWG) is composed of the U.S. Treasury Department and the Chinese Ministry of Finance, led by U.S. Treasury Secretary Janet Yellen and Chinese Vice Premier of the State Council He Lifeng; the Financial Working Group (FWG) is led by the U.S. Treasury Department and the People’s Bank of China (central bank).
The FWG talks are scheduled to be held on August 15-16. This will be the fifth meeting of the Financial Working Group and the second meeting held in China.
The U.S. delegation led by Deputy Assistant Secretary of the Treasury Brent Neiman for international financial affairs departed for China on Monday (12th). Representatives from the Federal Reserve (FED) and the Securities and Exchange Commission (SEC) will also attend.
Neiman stated, “At this FWG meeting, we intend to discuss financial stability, cross-border data, issues related to lending and payments, efforts by the private sector to drive transformational financing, and specific steps we can take to improve communication in times of financial stress.”
This meeting comes at a time of escalating tensions in U.S.-China trade relations. Washington has long been concerned about China’s excessive state subsidies in strategic industries such as solar panels, electric vehicles, and lithium batteries leading to overcapacity issues.
During U.S. Treasury Secretary Janet Yellen’s visit to China in April, she raised concerns with Chinese officials about U.S. concerns regarding overcapacity in Beijing. She pointed out that this not only affects the industrial development of the U.S. and other countries but also threatens U.S. employment opportunities.
To protect U.S. industries from unfair competition from cheap Chinese goods, the Biden administration announced a significant increase in tariffs on a range of imported products from China in May, including electric vehicles, solar panels, computer chips, and lithium-ion batteries.
The Biden administration has also been seeking to prevent precursor chemicals used to manufacture illicit synthetic opioid drugs like fentanyl from entering the U.S. Fentanyl overdose has become a leading cause of death among Americans aged 18 to 45.
Under pressure from the Biden administration, Chinese President Xi Jinping agreed to take action to halt the production and export of precursor materials for fentanyl within China.