United States And China Agree On Path Forward For Trade

U.S. President Donald Trump and Chinese President Xi Jinping met earlier this month in China and arrived an outline to address key trade priorities. In a fact sheet, the White House said the two leaders “agreed that the United States and China should build a constructive relationship of strategic stability on the basis of fairness and reciprocity.”

As part of this agreement, the countries chartered two new institutions that are meant to optimize the bilateral economic relationship. These institutions are:

• The U.S.-China Board of Trade, which will help the U.S. and Chinese governments manage bilateral trade across non-sensitive goods.
• The U.S.-China Board of Investment, which will provide a government-to-government forum for discussing investment-related issues.

Additionally, Chinese officials agreed to address U.S. concerns regarding supply chain shortages related to rare earths and other critical minerals, including yttrium, scandium, neodymium, and indium and U.S. concerns regarding prohibitions or restrictions on the sale of rare earth production and processing equipment and technologies. President Xi also approved an initial purchase of 200 American-made Boeing aircraft for Chinese airlines. This sale, the Chinese government’s first commitment to purchase American-made Boeing aircraft since 2017, is expected to result in additional high-paying, high-skilled U.S. manufacturing jobs.

Read more about this agreement.

In related news: the Chinese government also has issued a plan to reduce existing steel capacity. As Reuters reported, the plan mandates that the nationwide replacement ratio of iron-making and steel-making production capacity shall not be less than 1.5:1, a figure that means at least ​1.5 metric tons of old steel capacity needs to exit in order to build ⁠every ton of new capacity. Additionally, the plan says:

• Capacity replacement between different companies will ​be gradually eliminated;
• After a ⁠two-year transition period, capacity transfers will only be able to be achieved through substantive mergers and ​reorganizations; and
• Differentiated capacity replacement ratios may be applied to ​cases, including ⁠the construction of low-carbon smelting equipment.