Looking at the Prospects of Sino US Trade from Raymond's Visit to China

  US Secretary of Commerce Raymond visited China from August 27th to 30th. She is the fourth American politician to visit China this year, and also the second visit by the US Secretary of Commerce to China after seven years.

  According to the announcement from the Ministry of Commerce, the most important achievement reached by both sides during their visit to China is the establishment of a new communication channel between the two ministries of commerce. Both sides have established a working group composed of government officials at the deputy ministerial and bureau levels, with representatives from enterprises participating, to seek solutions to specific business issues. In addition, both sides have initiated an export control information exchange mechanism as a mechanism to explain their respective export control systems and improve communication. From Antony Blinken to Kerry, then to Yellen and Raymond, Biden government officials have visited China successively, expressing the positive will to stabilize China US relations.

  Although Raymond's visit to China has established new communication channels and set up a working group, based on some of Raymond's comments and analysis, we need to hold a cautious and optimistic attitude towards the recovery of China US trade relations. Firstly, Raymond acknowledges that the United States is seeking to establish a solid business relationship with China. She mentioned having conversations with over a hundred CEOs of American companies before coming to China, and these entrepreneurs are eager to engage in some kind of dialogue. She does not want the two countries to engage in economic decoupling, which is crucial for the US economy and security. However, Raymond attributed the decline in Sino US trade to China in his words, accusing China of causing American entrepreneurs to lose confidence. She mentioned that American companies lack a fair competitive environment in China, such as receiving huge fines for unknown reasons, conducting raids on companies, and amending anti espionage laws, all of which have led to a decrease in US trust in China. At the same time, she mentioned that the Chinese economy is slowing down, China is facing significant challenges in the real estate industry, and the government's regulatory approach has become more arbitrary. Only when China becomes more open, has a greater sense of reform, is more market-oriented in its economy and regulatory system, and reduces arbitrariness in its management and regulatory methods, can it regain the patience and trust of the United States. Finally, Raymond's willingness to uphold American interests and not relax high-tech regulations remains firm. She mentioned that American artificial intelligence products or technologies must not be controlled by the Chinese military, and the United States must first protect its own security and interests. It can be seen that the United States has not deeply reflected on its responsibility in the decline of Sino US trade, nor has it proposed some practical measures to improve bilateral relations from the US side. Instead, it mainly shifts the responsibility to China, which means that the United States needs to see China's future actions to determine its own attitude. From this perspective, this is not a good omen for effective communication between both parties.

Figure 1 Trade volume between China and the United States (in thousands of US dollars) Data source: General Administration of Customs

Figure 2: Data source for trade volume of advanced technology products between China and the United States: US Bureau of Statistics

  Based on the analysis of trade data between China and the United States, in the fourth quarter of 2021, the trade volume between China and the United States reached its peak in nearly three years, with an import and export trade volume of approximately $212.8 billion. Since then, the trade volume between China and the United States has shown a downward trend, especially since the fourth quarter of 2022, until the second quarter of this year, the trade volume between China and the United States has decreased from $178.4 billion to $169.8 billion. At the same time, the trade volume of advanced technology products (ATP) between China and the United States has also shown a similar trend. From the fourth quarter of 2022 to the second quarter of this year, the total ATP trade volume decreased from $45.8 billion to $36.3 billion, and the total US exports to China decreased from $8859 to $8258. This downward trend has had a negative impact on the economic recovery of both China and the United States, reducing the efficiency of global industrial chain operation and increasing the instability and uncertainty of global economic recovery. At present, as two major countries in the world, the relationship between China and the United States is a strategic competition, but this does not mean that both sides will fall into the trap of zero sum game. Now it is necessary for both sides to seek to establish a healthy competitive relationship, fulfill their great power responsibilities, and return to the normal trade order with a more responsible attitude. The focus of the game and competition between the two sides should be more on common issues and challenges that concern all humanity. Behind this, both China and the United States need to make joint efforts and maintain close communication to better adjust the way the two major powers of China and the United States survive and coexist in today's world.

  Surprisingly and happily, on August 29th, the Huawei Mate60 Pro smartphone was launched. In recent years, under the sanctions imposed by the United States and the West, China has embarked on a strategy of independent innovation. The G20 Declaration and the Atlantic Declaration clearly demonstrate the intention of the United States and the West to impose export and investment restrictions on China. Under such a severe situation, the emergence of Huawei Mate60 Pro mobile phone is of great significance, which means that China has taken an important step towards breakthroughs in the high-end chip industry. The global semiconductor industry chain in the 1970s and 1980s was a relatively independent business model. At that time, giants such as Intel and Samsung designed their own chips, produced them in their own wafer factories, and completed chip testing and packaging themselves. With TSMC pioneering the foundry model, the global division of labor in the semiconductor industry chain has become clear and has become a highly vertical industry, leading to the growth of semiconductor giants such as Asma. In recent years, the sanctions imposed by the United States have forced China to develop an independent and innovative strategy in the technology industry, especially in the semiconductor industry. The launch of Huawei Mate60 Pro mobile phones means that China's strategy has achieved tangible results. Regardless of whether complete localization is achieved or not, the successful development of the Kirin 9000s chip demonstrates that China has a practical solution to the "bottleneck" problem, which is beneficial for the independent development of China's chip industry, The development of domestically produced EUV lithography machines and the iterative upgrade of chip design have provided a significant window of opportunity, thereby shaping a favorable external environment for China, compressing the space for US and Western sanctions, and providing certain support for the recovery of Sino US trade.

  In addition, Huawei Mate60; The Pro phone has been strongly sought after by the public since its launch, and the enthusiasm for purchasing this phone fully reflects the current strong support of consumers for companies like Huawei to make technological breakthroughs. It is precisely because of the driving force of the domestic consumer market that Huawei has more funds and motivation to further technological research and development and breakthroughs. Only then can the domestic chip industry develop well under such severe sanctions. The huge domestic market demand in China has provided a huge driving force for the development of China's chip industry, and will also give rise to more chip enterprises. This is the foundation of China's independent technological innovation and the confidence that China's economy should be firmly restored at present.

  Source: China Daily Network