China and US need to work together to improve relations, experts say

Both sides should try to increase opportunities and reduce barriers to manage and improve relations between the United States and China, and facilitate bilateral trade, US foreign policy experts said.

Jack Midgley, principal of global consultancy Midgley & Co, said, "There's a long way to go for both sides to continue to put machinery in place so that there is dialogue every day between them, and to focus on small steps that reduce barriers and increase opportunities.

"Those aren't huge policy changes, but this is the business of international trade. It's the business of governments to work together to find opportunities and lower barriers."

The World Economy Outlook published last month by the International Monetary Fund said the baseline forecast is for global growth to slow from 3.5 percent last year to 3 percent this year and 2.9 percent next year.

Midgley said it is very important for the US and China to find every possible opportunity to expand trade bilaterally to increase the speed and volume of the bilateral relationship that will influence growth globally.

"That focus, the bilateral focus, has spin-offs for growth of the global economy. So that's one important point of focus for both countries," he added.

The US sent its highest-level delegation ever to take part in the sixth China International Import Expo in Shanghai this month, which Midgley said was "a good gesture".

"This business is not controversial. It's well-established. Any good meeting, any positive outcome — we should take some joy and some pleasure in that," he said. "The overall trade relationship is improving gradually," added Midgley, because "US-China bilateral trade is still the biggest in the world by far".

However, despite all the positive signs, such as the record-breaking bilateral trade level and improving US investment in China, Midgley said there are still some challenges around dual-use technology and technology for military applications.

"Issues that the Americans refer to as 'de-risking' and so forth are not ever going to be solved. They will only be managed," he said.

Midgley said China is doing very well worldwide in sales of high technology, because the nation has emphasized export growth.

"There are relatively few restrictions on obtaining Chinese telecommunication or transportation technology. The US is much more protective of its technology," Midgley said.

He added that when customers worldwide look at the two countries as potential commercial partners, they find China easier, while the US is more difficult to do business with.

"This issue of protecting American technology by regulation is going to be a long-term problem that has to be worked," Midgley said. "There's no agreement. There's no paper that anybody can sign that makes this problem go away. I think it has to be managed case by case on a permanent long-term basis."

Midgley said he is hoping for a slow and steady development of US-China trade. "And that requires constant dialogue, checking, and trust-building. No easy way, no short way to do that," he said.

"The point is to compete openly and to cooperate whenever it's possible. That's harder, but I think that has to be the future."

Gary Clyde Hufbauer, a nonresident senior fellow at the Peterson Institute for International Economics in Washington, said he thinks the meeting between the two countries' leaders will lead to a quiet period in US-China trade relations.

The US will continue to expand the list of export controls — for example, surveillance equipment and probably semiconductor design — but these will not affect a large volume of current trade, Hufbauer said.

"On the other hand, I don't foresee the removal of existing barriers on a significant scale," he said. "Once the US election campaign is going full swing, there could be an escalation of tensions. Representative Mike Gallagher has a long list of restrictions he wants to place on US-China trade and financial ties. These could get more prominence in the election campaign."