On October 11, the U.S. Treasury Secretary Steven Mnuchin had a meeting with Yi Gang, the Governor of the People's Bank of China in Bali, Indonesia. Around the same time, the U.S. Dow Jones stock index plunged 831 points on October 10. Although the Dow's plunge cannot be said to be caused by the U.S.-China trade war, there is no sign of the easing of the trade war, and without a doubt the world market is becoming more vulnerable.

Another reason for the two heads of finance between China and the United States to meet in Indonesia is that some of the U.S. officials have revealed that the U.S. may include China in the list of "currency manipulators". Older Chinese people would remember many years before, to evade and solve this issue, China's business and diplomatic channels had made tremendous efforts; this shows the significant impact of this issue on China.

The People's Bank of China's website only briefly mentioned the meeting between Mnuchin and Yi Gang message on October 11, merely stating that the two were involved in the relevant economy during the IMF-World Bank annual meeting and the two had exchanged financial issues. Yi Gang also met with John Williams, President of the New York Federal Reserve, and exchanged views on the economic and financial situation and monetary policy of the two countries.

Perhaps the good weather in Bali played a role; Yi Gang and Mnuchin's meeting, which was originally not considered to be optimistic, actually achieved extraordinary results. The U.S. Treasury Department soon publicly stated that it would not include China in the list of "currency manipulators." Obviously, this is something that the U.S. Treasury could do after it has withstood the pressure of the Hawks, and certainly got the approval of the "boss". For a time, the U.S.-China trade war, which was deadlocked, has once again seen a new negotiation opportunity.

The U.S.-China trade war is a strange war. Since it is a trade war, there would be fights, and there would be negotiations. The news from the United States shows that the U.S. and China may hold a summit between the two countries during the G20 meeting, opening a decisive door for resolving the trade war between the two countries.

So what kind of agreement can China and the United States reach? From Japan's experience, I believe that there are good chances that the United States and China could reach some agreements; the key points will be in the following six aspects: (1) China needs to expand domestic demand and compress excess capacity, focusing on adopting some radical stimulus policies to expand the scale of the Chinese market; (2) China needs to expand imports, especially from the United States, including agricultural products, which should be relatively large; (3) There is the need to solve the problem of fair trade, including the cancellation or partial cancellation of export tax rebates and the protection of intellectual property rights; (4) China should maintain exchange rate stability; (5) China should open up the market and its conditions, and even giving US-funded enterprises some relative "super-national treatment." (6) China should invest in the United States, especially in the central United States.

Personally, I believe that combining with the economic requirements and political situation of the United States, these six aspects can cover the main requirements of the United States. The rest is the question of "how to talk" and "to talk or not to talk." Based on the experience and history of past negotiations, from the perspective of China, the results of dialogues and consensus are not as reliable and stable as the agreement between countries. Therefore, if China can seek a bilateral agreement on these issues, it would be conducive to the economic future of both China and the United States. What should be seen is that China and the United States have great influence on the world; both countries need stability in their finance and economy, and reaching such an agreement is conducive to achieving such stability. So will such an agreement be reached? There would be gains and losses in the world's commercial negotiations; the key is still to negotiate. The results are still difficult to predict; maybe it will take more than one negotiations to see the results.

What impact will such agreement have on the Chinese economy? My thinking is mainly in two aspects: First, the future of banking system is under relatively huge pressure, and it will be in a state of being squeezed. In order to alleviate the pressure on performance and expand the market, China's banking industry may need to consider loaning operations for the risky business areas. Second, China's manufacturing industry needs to increase equipment investment, improve product grades and levels, and strive to change the track from emphasizing quantity to quality, and improve sales prices. Such equipment investment process is a digestive process; it is also a process of expanding domestic demand and procurement, and a process to deal with labor shortages.

Final analysis conclusion:

We are at a crucial moment now. Tracking research shows that the U.S.-China trade war seems to have returned to a stage of consideration.