Judging from the change of location, the previous meetings were mostly held in Beijing and Washington, D.C.. Still, the choice of Shanghai this time undoubtedly highlights the openness of China’s financial market. Meanwhile, financial institutions from both sides were invited to participate in the meeting. In the face of the current complex macroeconomic environment, trade conflicts, and market turmoil, it is essential to strengthen communication and cooperation in the financial field. So this chance is really important and it builds a platform for communication. During the meeting, the Working Group announced two outcomes in strengthening U.S.-China cooperation on financial stability and it was the first time announced outcomes.

China’s Ministry of Foreign Affairs announced on August 24 that at the invitation of Wang Yi, member of the Political Bureau of the CPC Central Committee and director of the Office of the Central Commission for Foreign Affairs, Sullivan, assistant to the President of United States for national security affairs, will visit China from August 27 to 29 to hold a new round of China-US strategic communication. This is the second visit to China by the United States President’s National Security Adviser in eight years, and the first visit by Assistant Sullivan to China.

So why is the cooperation between China and the United States suddenly deepening? Why the United States has changed its hostile attitudes? In the eyes of the public, the first thing is to “eat well”. “Having enough to eat” is the so-called economic problem, so the first thing is the economic problem. It is believed that the US needs China’s support. The United States is now saddled with $35 trillion in debt. China is the largest holder of U.S. bonds and one of the most important holders of U.S. bonds. This year, China first increased its holdings of U.S. bonds by $3.3 billion, and then by $11.9 billion, bringing China’s total holdings of United States bonds to $15.2 billion. At a time when U.S. debt is volatile and the United States election is electing, China’s support is particularly important.

Although the presidential national security adviser is not in charge of the economy, the most important factors affecting the United States election are domestic economic issues such as employment and inflation. At present, the United States monetary policy has entered an inflection point of adjustment, which is also a big risk for the United States.

Beyond the economy, the Biden administration also needs to work with China to preserve its political legacy. In November this year, the 2024 Asia-Pacific Economic Cooperation (APEC) summit and the G20 leaders’ summit will be held in Peru and Brazil. According to US media reports, US officials revealed that “both US and Chinese leaders are likely to attend.” The U.S. and Chinese heads of state may meet again before the end of Biden’s term.

So will US-China relations pick up? Or are these initiatives now just about risk mitigation and political measures? Many people are still pessimistic about China-US relations, believing that it is difficult to maintain cooperation for a long time, mainly for the sake of achieving political interests. There is also a view that in the context of the downturn of the world economy, the United States domestic economic pressure, the Russia-Ukraine war, and the Palestinian-Israeli conflict, the tension between China and the United States will be eased. The United States and China, the two pillars of the world economy and security, both find it difficult to achieve ambitious goals without cooperation. The two countries may break the ice and gradually move towards cooperation, returning to the previous situation of competition and cooperation. Anyway, let’s wait and see.

By Le Tianyu