US-China Summit Approaches: Economic Scholars Propose "Three Guardrails" to Prevent Miscalculation and Escalation of Confrontation

Economists at the Peterson Institute for International Economics have proposed three policy guardrails for the upcoming US-China summit, recommending increased policy transparency, clear retaliation rules, and defined boundaries between national security and the economy to prevent the escalation of US-China confrontation. Meanwhile, scholars warned of the risks of reliance on critical minerals and unfair competition that could be brought by Chinese automobiles entering the US market.

Video Link:

Full Text:

Tark Yelin, non-resident senior fellow at the Peterson Institute for International Economics, has proposed three policy guardrails for the upcoming US-China summit to prevent US-China relations from sliding into endless confrontation.

He stated that, first, both sides should enhance policy transparency to reduce mutual suspicion and miscalculation. Second, they should clarify retaliation rules, establishing preconditions and decision-making processes for economic retaliation to prevent things from getting out of hand. Third, they should draw clear boundaries between national security and the economy, ensuring that normal economic and trade activities as well as critical supplies can still flow safely during times of crisis.

He pointed out that the supply chains of the two countries are intertwined, and the greatest risk of US-economic confrontation is an escalation neither side anticipated. This intertwined supply chain relationship also brings another layer of risk posed by Chinese investment.

Chad Bown, senior fellow at the Peterson Institute for International Economics, used graphite as an example to point out that reliance on critical mineral supplies is a risk. He also warned that if Chinese automobiles are allowed into the US market, government subsidies behind Chinese enterprises could lead to unfair competition.

How to strike a balance between national security competition and economic interdependence while establishing predictable communication mechanisms will be an important indicator to watch at this summit. Reported by Voice of America journalist Wang Yuhe from Washington.