Yellen seeks to calm a fraught but close-knit US-China trade relationship

Reuters :
As US Treasury Secretary Janet Yellen tries to steady an increasingly tense relationship with China, the world’s two largest economies remain tightly linked, but are showing some signs of future weakness.
Yellen starts meetings on Friday with senior Chinese officials pledging to seek “healthy competition” with China as confrontation between the economic powers over US technology export controls and planned outbound investment restrictions dominate headlines.
Despite talk of US-China economic de-coupling, recent data show a trade relationship that is fundamentally solid, and rebounded in 2022 from five years of turmoil wrought by a trade war and Covid-19 disruptions.
Two-way trade hit a record $690 billion last year as US demand for Chinese consumer goods rose and Beijing’s demand for US farm products and energy grew. US-China trade had fallen after 2018, when former President Donald Trump imposed tariffs of up to 25% on some $370 billion in Chinese imports, but began to rebound during the Covid recovery of 2021. “I think it is important that people realize that business and politics are separate,” said Michael Hart, president of the American Chamber of Commerce in China. “The current state of US-China trade and investment is the result of 30 to 40 years’ worth of ongoing trade and investment.”
This year is off to a significantly slower pace, however, with the two-way trade flows though May down $52 billion, or 18%, from the first five months of 2022, according to US Census Bureau data.
The decline is due to a 24% reduction in Chinese exports to the US, while US exports to China rose 3.5% through May.
William Reinsch, a trade expert at the Center for Strategic and International Studies in Washington, said the decline may be partly due to slumping goods demand after America’s Covid-era shopping binge, but added that supply chain diversification away from China may also be a factor.
But US businesses know that China’s growing middle class will soon be the world’s largest, said Wang Huiyao, president of the Center for China and Globalization, a Beijing-based think tank. Their spending power will keep China “one of the fastest-growing markets in the world,” he said. Trade between China and the United States has shown some significant shifts in the past several years, with China shunning aircraft and machinery purchases while increasing imports of farm goods, energy, semiconductors and chip manufacturing equipment.