China’s Commerce Minister, Wang Wentao, voiced specific concerns regarding American restrictions on trade and technology during a meeting with visiting U.S. Senate Majority Leader Chuck Schumer (D-N.Y.) in Beijing, according to a statement by China’s Ministry of Commerce.
The discussions, described as “rational and pragmatic,” centered on the need for the U.S. to precisely define security boundaries, avoid overgeneralizing and politicizing security issues, and refrain from weaponizing commerce and trade activities with China.
Wang emphasized the importance of fair treatment for Chinese companies investing in the U.S., stating that competition should be based on international economic and trade rules and should be fair and constructive. He expressed China’s willingness to collaborate with the U.S. to create a favorable business environment that could boost bilateral trade.
Schumer expressed Washington’s desire to strengthen communication and exchanges with Beijing. He highlighted bipartisan support for maintaining and enhancing the bilateral economic and trade relationship, emphasizing that there is no intention of “decoupling” from China.
Before the U.S. delegation’s departure for China, the U.S. Commerce Department added 42 more Chinese companies to its export blacklist, accusing them of offering technical support to Russia’s invasion of Ukraine, a move that was strongly condemned by Beijing.
Concerns about trade restrictions were also discussed during the delegation’s meeting with Chinese President Xi Jinping, who emphasized that the two countries do not necessarily have to head toward confrontation, highlighting the deep interdependence of their economies. The U.S. senators emphasized the need for a level playing field and urged China to remove restrictions and open its markets to U.S. companies, particularly in the semiconductor, financial services, and aerospace industries. In recent months, China has imposed restrictions on several U.S. companies over security concerns.
Chinese property developer Country Garden announced it anticipates being unable to meet its offshore payment obligations, marking its first-ever default. The company has taken the step of appointing financial and legal advisers to assess its capital structure and liquidity. Country Garden’s financial struggles have garnered significant attention, serving as a symbol of the broader property debt crisis in China. This crisis has raised concerns about its potential impact on social stability within the country.
China mulls raising 2023 budget deficit to bolster economy amid growth concerns. China is contemplating an increase in its 2023 budget deficit as part of a new stimulus plan aimed at aiding the economy in meeting its official growth targets, Bloomberg reports (link). Policymakers are reportedly considering the issuance of at least 1 trillion yuan (approximately $137 billion) in additional sovereign debt to finance infrastructure projects, such as water conservancy initiatives. This move could potentially push the annual budget deficit beyond the 3% limit set earlier this year. This potential stimulus marks a shift in Beijing’s approach, as it has thus far avoided broader fiscal measures despite a deepening property crisis and rising deflationary pressures that threaten the targeted growth rate of around 5% for the year.
The news had immediate financial market reactions, with the offshore yuan rebounding and government bond yields rising slightly. Market participants are watching closely for the official announcement, which could come as early as this month.
Timeline: The plans, spearheaded by the Ministry of Finance and the National Development and Reform Commission, still require final approval from the State Council and legislators. Despite the potential increase in the budget deficit, experts emphasize that the central government’s debt ratio remains relatively low, and its balance sheet remains healthy.
Of note: China’s National Bureau of Statistics will conduct a nationwide sample survey in November to help better plan population policies, in an unexpected poll as authorities struggle to boost the country’s flagging birth rate.
