The Chinese and American sides are continuing to talk. Photo: AFP

Chinese state media says Beijing expects to hold more dialogue with the United States despite the lack of any concrete agreements during a recent video call between Chinese Vice Premier Liu He and US Treasury Secretary Janet Yellen.

Taoran Notes, a Weibo account operated by the People’s Daily, wrote in a widely circulated article on state media that the latest meeting of top Chinese and US economic officials on Tuesday was more pragmatic than previous ones and was helpful in resolving escalating bilateral problems.

While observers were waiting for more information about a possible video conference between Chinese President Xi Jinping and US President Joe Biden by the end of this year, a research report warned that a full decoupling between China and the US and a potential military conflict between China and Taiwan could impact global growth and inflation in 2022.

Since Xi and Biden’s 90-minute phone call on September 10, Chinese and US officials have held three rounds of talks this month. On October 6, Yang Jiechi, a member of the politburo of the Communist Party of China’s Central Committee and director of the Office of the Central Commission for Foreign Affairs, met with US National Security Adviser Jake Sullivan for six hours in Zurich, Switzerland.

They reportedly discussed a possible virtual meeting between Xi and Biden later this year.

On October 9, US Trade Representative Katherine Tai held a virtual meeting with Vice Premier Liu to discuss the US-China trade relationship. Prior to this, Tai announced the Biden administration’s “New Approach to the US-China Trade Relationship” on October 4.

She said the US had serious concerns with China’s state-centered and non-market trade practices that were not addressed in the phase one trade deal signed in January 2020.

US Trade Representative Katherine Tai is seriously concerned about China’s trade practices. Photo: AFP / Bill O’Leary

After the two meetings, Chinese state media published two articles complaining that the US had shown a friendly gesture to try to communicate with China but had not actually changed its confrontational policy. The articles urged the US to take real action to cut tariffs on Chinese goods and remove Chinese firms from its entity and special restrictions lists.

Xinhua said the Liu-Yellen call featured “candid, practical and constructive exchanges in the spirit of equality and mutual respect” and the two sides had “agreed to continue their negotiations.”

“In the spirit of equality and mutual trust, they conducted extensive exchanges on the macroeconomic situation and bilateral and multilateral cooperation, candidly exchanged views on issues of mutual concern and expressed willingness to maintain communication,” Xinhua reported.

Liu and Yellen also discussed macroeconomic and financial developments in the US and China, recognizing that developments in the two economies have important implications for the global economy, according to a statement released by the US Department of the Treasury.

Yellen “frankly raised issues of concern” and noted that she looks forward to future discussions with Liu, the statement said.

The Taoran Notes article, published under the title Two noteworthy changes in the Liu-Yellen talk, hinted at Beijing’s real view of the Liu-Yellen meeting.

“The format of the latest meeting was no different from the Liu-Tai meeting on October 9. But don’t look down on this ‘no difference’,” said the author. “The China-US relations have recently become very complicated. Top leaders reached a consensus on September 9 that both countries should hold more talks, but some people in the US have recently created conflicts in many areas related to the China-US relations.”

The Liu-Yellen talk also showed that Chinese-US economic and trade teams dialogue had so far not been interfered with, said the author.

The second noteworthy change was that Liu and Yellen held “pragmatic, candid, and constructive exchanges” in the latest meeting on Tuesday, but “candid, pragmatic, and constructive exchanges” in the last meeting in June, he said.

“Don’t look down on this change of sequence,” said the author. “Pragmatic is now a key word to understand the communication tone of the China-US trade talks. This change shows that both sides are moving forward to deeper and more concrete communications.”

He wrote it was also noteworthy that Yellen thought it was important for China and the US to increase communications on macro policies.

“The global economic recovery is now in a critical period as the pandemic continues and the problems that disrupt the recovery still exist. Under this situation, the world will benefit if China and the US cooperate and suffer if they fight.”

Trade containers are seen at a port in East China’s Jiangsu province. Photo: AFP

The two sides are still dispensing of fighting words. On Tuesday, US Secretary of State Antony Blinken urged member states of the United Nations to support Taiwan’s participation in the UN system.

“Taiwan has become a democratic success story. Its model supports transparency, respect for human rights, and the rule of law – values that align with those of the UN. Taiwan is critical to the global high-tech economy and a hub of travel, culture, and education,” Blinken said.

“Recently, however, Taiwan has not been permitted to contribute to UN efforts.”

Blinken said Taiwan’s exclusion undermined the important work of the UN and its related bodies, all of which stand to benefit greatly from its contributions.

On Wednesday, Ma Xiaoguang, a spokesperson for the Taiwan Affairs Office of China’s State Council, reiterated that Taiwan, as a part of China, was certainly covered by China’s representation at the UN.

She said resolution 2758, adopted by the UN General Assembly in 1971 with an overwhelming majority, had solved once and for all the issue of China’s representation in the UN in political, legal and procedural terms.

“The recent warming in US-Taiwan relations has prompted China to make regular incursions into Taiwan’s air defense identification zone (ADIZ). These maneuvers have raised the risk of a military miscalculation, such as an accidental collision between Chinese and Taiwanese fighter jets,” said a research report published by the Economist Intelligence (EIU) under the title 10 scenarios that could impact global growth and inflation.

It said such a conflict would wipe out Taiwan’s economy, including its semiconductor industry, on which global supply chains rely and it would also risk drawing in the participation of the US, Australia and Japan, which could set the stage for a global conflict, with catastrophic economic consequences.

Another scenario posed in the EIU report is that worsening US-China ties could force a full decoupling in the global economy. Biden was trying to convince other Western countries to collaboratively put pressure on China by imposing trade, technology, finance and investment restrictions and sanctions, and forcing some markets to choose sides.

In an extreme scenario, the EIU report said, this could lead to a neutral stance becoming economically prohibitive for third countries, dividing China-supporting and US-supporting economies. Other EIU report risk scenarios for 2022 include “a property crash in China leads to a sharp economic slowdown” and “new Covid-19 variants emerge that prove resistant to vaccines.”

The EU and US Trade and Technology Council held its first meeting in Pittsburgh on September 29.

On the decoupling scenario, US and the European Union officials held a first meeting of the EU-US Trade and Technology Council in Pittsburgh in September.

The council set up 10 working groups on different topics, including the misuse of technology threatening security and human rights, export controls and investment screening, aiming to protect EU-US businesses, consumers and workers from unfair trade practices.

In that punitive direction, on Tuesday, the US Federal Communications Commission (FCC) voted to revoke authorization for China Telecom’s US subsidiary to operate in the US, citing national security concerns. China Telecom’s America spokesperson said the FCC’s decision was disappointing, but the Chinese company would seek to continue to serve its customers.

Read: China seeks action, not words, on US trade reset