Tu Haiming：Increased official exchanges point to warming Sino-US relations 
By Tu Haiming
There have been signs that Sino-US tensions have been easing thanks to the recent high-level official exchanges between the two countries. For instance, the two sides launched an economic working group and a financial working group to tackle economic and financial issues.
The creation of these two working groups, together with another working group on commercial issues created during US Commerce Secretary Gina Raimondo’s visit to China in August, signifies a resumption of bilateral economic dialogue, which had been interrupted since 2018.
Any strategic misjudgment between the world’s two largest economies might not only hurt them both but also affect other countries. It is, therefore, very important that they should maintain effective communications.
Bilateral dialogue mechanisms existed in the past. The China-US Strategic Economic Dialogue, established during the George W Bush administration, was a framework under which the two sides discussed economic issues. Five semiannual dialogues were held under this framework between December 2006 and December 2008.
The China-US Strategic and Economic Dialogue framework was launched during the Barack Obama administration, under which a strategic dialogue and an economic dialogue were held simultaneously every year from 2009 to 2016. These two communication frameworks played a vital role in promoting economic and trade cooperation and maintaining sound Sino-US relations.
The Donald Trump administration, however, morphed bilateral dialogues on economic and trade issues into a diplomatic row surrounding Section 301 tariffs imposed on Chinese products. Joe Biden’s administration has carried on with his predecessor’s high-tariff policy toward China and tightened control on high-tech exports to China. Bilateral dialogue was effectively cut off. The establishment of the three new working groups signaled a resumption of bilateral communications.
The Sino-US dialogues held during the Bush and Obama administrations featured the presence of both state leaders as well as a wide scope of coverage. The three new working groups, which are led by equivalent government departments from both sides, will focus on specific economic issues. Given the high degree of economic interdependence between the two countries, there will be many specific issues on the agenda that require thorough communication to smooth out differences.
The significance of these latest developments in Sino-US relations and the opportunities to be created in the process for Hong Kong are worth exploring and examining.
Hong Kong should plan its own industrial structural reform according to what is discussed and agreed in the Sino-US economic dialogues. Hong Kong is one of the economies in the world with the highest proportion of service industry in the GDP. In 2022, the city’s service industry accounted for 93.4 percent of its GDP, while manufacturing accounted for only 1 percent.
This industrial structure is highly vulnerable to external shock waves. Therefore, the Hong Kong Special Administrative Region government has made the right move to promote “new industrialization” in the city. Since Hong Kong has distinct advantages in areas such as food technology, healthcare, green technology, and semiconductor research and development, more efforts should be dedicated to further developing these sectors.
There are four key elements that are crucial to promoting “new industrialization”: Capital, infrastructure, technology, and talent. Infrastructure and talent are what Hong Kong lacks. To address the chronic problem of land scarcity, Hong Kong can speed up construction of the Northern Metropolis and incentivize the use of high-rise buildings for industrial production or activities. To tackle the lack of technical staff required for industrial production, the HKSAR government could incentivize companies to set up headquarters in Hong Kong and build their production lines in Guangdong province to be manned by Chinese mainland staff.
Hong Kong should also respond to any new development coming out of Sino-US dialogues on financial issues in an agile and proactive manner.
China and the US have diametrically opposed views on some major financial issues. As the world’s second-largest economy and largest participant in international trade, China is the largest trading partner of more than 120 countries. The adverse impact of “dollar dominance” on China is apparent. Therefore, China will need to accelerate internationalization of the renminbi. The US, however, is deeply concerned about the expansion of the RMB’s influence. There could be friction between the two countries in this regard.
Hong Kong is the world’s largest offshore RMB business hub, handling 75 percent of global RMB settlement business. This attests to Hong Kong’s crucial role in RMB internationalization. The city should pay close attention to any new developments coming out of China-US dialogue and make further contribution to the country’s financial security and RMB internationalization.
The joint working group on commercial issues, which is led by China’s Ministry of Commerce and the US’ Department of Commerce, is mainly focused on issues such as trade, investment and export control. The result of dialogue on these issues will have major implications for Hong Kong as well.
At present, the trade volume of Hong Kong warrants much concern. The Census and Statistics Department announced that Hong Kong’s overall exports fell by 9.1 percent year-on-year in July, registering a decline for 15 consecutive months; imports fell by 7.9 percent year-on-year, indicating a decline for 13 consecutive months. Among the many factors responsible for the decline in trade, the US trade war against China is a major contributor. The new working group on commercial issues provides a platform to resolve differences between the two countries. Any improvement or normalization of Sino-US trade in the near future will come as a boon to Hong Kong. For now, the city should closely monitor bilateral dialogue on commercial issues for potential progress, make up for the shortcomings of its trade policy, and prepare itself for a potential rebound in trade.
Warming Sino-US relations, as suggested by the establishment of three joint working groups on economic issues, is positive for the world economy. Hong Kong should stay informed about the opportunities to be brought about by these changes, so that we can take the initiative and reap benefits from them.
The author is vice-chairman of the Committee on Liaison with Hong Kong, Macao, Taiwan and Overseas Chinese of the National Committee of the Chinese People’s Political Consultative Conference, and chairman of the Hong Kong New Era Development Thinktank.
The views do not necessarily reflect those of Bauhinia Magazine.
Source: China Daily
https://res.youuu.com/zjres/2023/10/13/hGOjlp6wUxw8KwbCPH4eWyrq8mvaKrlpwC3.jpg
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By Tu Haiming
There have been signs that Sino-US tensions have been easing thanks to the recent high-level official exchanges between the two countries. For instance, the two sides launched an economic working group and a financial working group to tackle economic and financial issues.
The creation of these two working groups, together with another working group on commercial issues created during US Commerce Secretary Gina Raimondo’s visit to China in August, signifies a resumption of bilateral economic dialogue, which had been interrupted since 2018.
Any strategic misjudgment between the world’s two largest economies might not only hurt them both but also affect other countries. It is, therefore, very important that they should maintain effective communications.
Bilateral dialogue mechanisms existed in the past. The China-US Strategic Economic Dialogue, established during the George W Bush administration, was a framework under which the two sides discussed economic issues. Five semiannual dialogues were held under this framework between December 2006 and December 2008.
The China-US Strategic and Economic Dialogue framework was launched during the Barack Obama administration, under which a strategic dialogue and an economic dialogue were held simultaneously every year from 2009 to 2016. These two communication frameworks played a vital role in promoting economic and trade cooperation and maintaining sound Sino-US relations.
The Donald Trump administration, however, morphed bilateral dialogues on economic and trade issues into a diplomatic row surrounding Section 301 tariffs imposed on Chinese products. Joe Biden’s administration has carried on with his predecessor’s high-tariff policy toward China and tightened control on high-tech exports to China. Bilateral dialogue was effectively cut off. The establishment of the three new working groups signaled a resumption of bilateral communications.
The Sino-US dialogues held during the Bush and Obama administrations featured the presence of both state leaders as well as a wide scope of coverage. The three new working groups, which are led by equivalent government departments from both sides, will focus on specific economic issues. Given the high degree of economic interdependence between the two countries, there will be many specific issues on the agenda that require thorough communication to smooth out differences.
The significance of these latest developments in Sino-US relations and the opportunities to be created in the process for Hong Kong are worth exploring and examining.
Hong Kong should plan its own industrial structural reform according to what is discussed and agreed in the Sino-US economic dialogues. Hong Kong is one of the economies in the world with the highest proportion of service industry in the GDP. In 2022, the city’s service industry accounted for 93.4 percent of its GDP, while manufacturing accounted for only 1 percent.
This industrial structure is highly vulnerable to external shock waves. Therefore, the Hong Kong Special Administrative Region government has made the right move to promote “new industrialization” in the city. Since Hong Kong has distinct advantages in areas such as food technology, healthcare, green technology, and semiconductor research and development, more efforts should be dedicated to further developing these sectors.
There are four key elements that are crucial to promoting “new industrialization”: Capital, infrastructure, technology, and talent. Infrastructure and talent are what Hong Kong lacks. To address the chronic problem of land scarcity, Hong Kong can speed up construction of the Northern Metropolis and incentivize the use of high-rise buildings for industrial production or activities. To tackle the lack of technical staff required for industrial production, the HKSAR government could incentivize companies to set up headquarters in Hong Kong and build their production lines in Guangdong province to be manned by Chinese mainland staff.
Hong Kong should also respond to any new development coming out of Sino-US dialogues on financial issues in an agile and proactive manner.
China and the US have diametrically opposed views on some major financial issues. As the world’s second-largest economy and largest participant in international trade, China is the largest trading partner of more than 120 countries. The adverse impact of “dollar dominance” on China is apparent. Therefore, China will need to accelerate internationalization of the renminbi. The US, however, is deeply concerned about the expansion of the RMB’s influence. There could be friction between the two countries in this regard.
Hong Kong is the world’s largest offshore RMB business hub, handling 75 percent of global RMB settlement business. This attests to Hong Kong’s crucial role in RMB internationalization. The city should pay close attention to any new developments coming out of China-US dialogue and make further contribution to the country’s financial security and RMB internationalization.
The joint working group on commercial issues, which is led by China’s Ministry of Commerce and the US’ Department of Commerce, is mainly focused on issues such as trade, investment and export control. The result of dialogue on these issues will have major implications for Hong Kong as well.
At present, the trade volume of Hong Kong warrants much concern. The Census and Statistics Department announced that Hong Kong’s overall exports fell by 9.1 percent year-on-year in July, registering a decline for 15 consecutive months; imports fell by 7.9 percent year-on-year, indicating a decline for 13 consecutive months. Among the many factors responsible for the decline in trade, the US trade war against China is a major contributor. The new working group on commercial issues provides a platform to resolve differences between the two countries. Any improvement or normalization of Sino-US trade in the near future will come as a boon to Hong Kong. For now, the city should closely monitor bilateral dialogue on commercial issues for potential progress, make up for the shortcomings of its trade policy, and prepare itself for a potential rebound in trade.
Warming Sino-US relations, as suggested by the establishment of three joint working groups on economic issues, is positive for the world economy. Hong Kong should stay informed about the opportunities to be brought about by these changes, so that we can take the initiative and reap benefits from them.
The author is vice-chairman of the Committee on Liaison with Hong Kong, Macao, Taiwan and Overseas Chinese of the National Committee of the Chinese People’s Political Consultative Conference, and chairman of the Hong Kong New Era Development Thinktank.
The views do not necessarily reflect those of Bauhinia Magazine.
Source: China Daily
https://res.youuu.com/zjres/2023/10/13/hGOjlp6wUxw8KwbCPH4eWyrq8mvaKrlpwC3.jpg
