The Economics Show What does China want from the US? With Jay Shambaugh
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May 26, 2025 
Jay Shambaugh, former U.S. Treasury Undersecretary for International Affairs, delves into the complexities of U.S.-China relations. He discusses the temporary pause in tariff escalations and what China truly seeks from America. The conversation highlights the contrasting negotiation styles of the Trump and Biden administrations. Shambaugh emphasizes the intertwined nature of trade policy and national security, while advocating for effective communication as key to navigating future economic cooperation.
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Shambaugh’s Role in US-China Talks
- Jay Shambaugh was responsible for the U.S.-China economic relationship under Biden and facilitated dialogue despite initial post-COVID and political tensions.
- He helped maintain channels for cooperation on issues like financial stability and preventing escalation of trade disputes.
US Focus Shift on China Trade Issues
- The Trump administration prioritized reducing the US-China bilateral trade deficit, an approach not widely supported by economists.
- The Biden administration focused on China's non-market industrial policies causing global overproduction and market distortions.
China Admits Overcapacity Pressure
- China initially denies issues like overcapacity and subsidies, claiming a market economy.
- Over time, consistent pressure and global consensus led China to recognize problems and start small reforms, especially in solar.
