U.S. President Joe Biden and Chinese President Xi Jinping are slated to meet on the sidelines of the Asia-Pacific Economic Cooperation (APEC) summit in San Francisco. The two leaders are expected to talk about a range of topics including nuclear armaments and trade. The talks have been emphasized after Secretary of the Treasury Dept. Janet Yellen made remarks on how the U.S. "does not seek to decouple from China", but should be considerate of its stance on human rights and national security.

China Beige Book Co-Founder and CEO Leland Miller joins Yahoo Finance to discuss U.S.-China relations as well as the challenges the Biden administration has in its policies toward China's economy.

"This is an economy that's going to be growing much, much more slowly. I think the mistake investors have been making for several years now, is they've gotten very bearish cyclically, they were too bearish over the summer, but they're not bearish structurally...," Miller says. "China is going to be slowing down 5%, 4%, 3%, we're going to be seeing much, much slower growth than that growing forward."

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Video Transcript

AKIKO FUJITA: Let's talk specifically about what's been playing out in the Chinese economy. You know, We were just showing what we have seen stall out in terms of growth. In China, there's a number of issues, obviously, within the property sector as well. But high jobless numbers among younger workers, too. I mean, where do you see the policy moving from here, given all the factors at play and the challenges President Xi faces?

LELAND MILLER: Well, I think we're in the middle of a new norm. Markets are always bipolar on China. They either think great things are about to happen, or they think that China is on the verge of collapse. Rarely are either of those true. So if you look at earlier this year, investors were extremely bullish. They thought that coming out of the lockdowns from last year with COVID zero that there was going to be explosive recovery. And there was going to be explosive stock market rally. Neither of those happened. They were not realistic.

But when those expectations were frustrated into the spring and into the summer, you know, markets swung full circle the other way. And they decided that China was on the verge of collapse. That's also not true. You know, you have what is essentially just a very poor recovery right now. You've got sequential growth most months in 2023. Everything except property is better than 2022. It's just not that great overall in terms of the economy. And it should be much better.

So it's really in the middle. Not a lot of good news, but also nothing catastrophic.

AKIKO FUJITA: So what is that new norm look like? Are we talking about 5% growth roughly? And is that sort of something that we have seen Xi Jinping accept that we're not talking about the 8% levels we saw several years ago? 5% is manageable growth, not stimulus at all costs.

LELAND MILLER: Yeah. Well, Beijing will hit 5% this year because the base of comparison is from a year that was a total disaster. But 5% going forward is a total pipe dream. I think we're going to be talking about levels that are much closer to 2% in the future, not necessarily in the next two years.

But this is an economy that's going to be growing much, much more slowly. And I think the mistake that investors have been making for several years now is they've gotten very bearish cyclically. They were too bearish over the summer. But they're not bearish enough structurally.

So they should be more bullish cyclically, but they should be more bearish structurally. China is going to be slowing down 5%, 4%, 3%, we're going to be seeing much, much slower growth than that going forward.

AKIKO FUJITA: What does that mean, ultimately, for US businesses, multinational businesses that have set up operations in China? For many, many years, the potential growth there has been the big lure to China. Does that money continue to flow through even in a 5%, 4% economy?

LELAND MILLER: Yeah, some of it will. But what it really means is you have to know your market. This idea 20 years ago, 10 years ago, even five years ago, that you just put your operations in China and because there was 1.4 billion Chinese, they'll buy a lot of stuff, that didn't work. And it's not going to work going forward.

But you have to understand is the way the economy is working, what does the government look for in terms of favored sectors or disfavored sectors, you know, where are Chinese consumers going to be spending in the future. There's certainly going to want more babies. They certainly have a lot of old people to take care of. So there's a lot of opportunities that are still inside the Chinese marketplace. They're not necessarily the ones that people thought were going to be the big hitters a few years ago.

And the idea of just going into China investing there, and then you see a profit a few years later, that dream is gone.