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The shape of a potential US-China deal

After Presidents Joe Biden and Xi Jinping struck a constructive – if not conciliatory – tone at Monday’s virtual meeting, China’s Vice President Wang Qishan told a Singapore conference by video last week that “China cannot develop in isolation of the world and nor can the world develop without China.”

Wang’s remarks in his keynote address to the Bloomberg New Economy Forum evidently offered a riposte to Western perceptions that China had reverted to a kind of Maoist autarky. On the contrary, “China will not waver in its resolve to deepen reform and expand opening up,” Wang said. “Going forward, China will keep its arms wide open, provide more market investment and growth opportunities to the world.”

Former US Treasury secretary Hank Paulson, who managed the 2008 financial crisis with help from Wang, told the same conference: “Wholesale financial decoupling” between the US and China “is impossible, and partial decoupling is likely to make the US, China and the world more susceptible to financial crises. It is crucial to have a mechanism for the world’s first- and second-largest economies to coordinate, as this is the only way to put out the next big financial and economic fire.”

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