US Treasury Secretary Yellen's Talks in China Foster Productive Dialogue for US-China Relations

| 09 July 2023

United States Treasury Secretary Janet Yellen concluded her visit to Beijing with a positive outlook, describing her talks with top Chinese officials as "direct" and "productive." The discussions, which lasted approximately 10 hours, aimed to stabilize the relationship between the two largest economies in the world. Yellen acknowledged that significant disagreements persisted between the United States and China, particularly concerning unfair economic practices and Beijing's recent punitive actions against American firms.

Yellen emphasized that President Joe Biden's administration does not view the US-China relationship through the lens of great power conflict but believes that both countries can thrive simultaneously in the world. The Treasury Secretary's visit forms part of the United States' ongoing efforts to repair and improve diplomatic ties with China, which have been strained due to various issues, ranging from Taiwan to technology. These tensions have not only affected bilateral relations but also impacted global trade and involved other nations drawn into the rivalry.

While Yellen's trip did not result in specific breakthroughs, an agreement was reached during her meeting with Vice Premier He Lifeng to "strengthen communication and cooperation on addressing global challenges." Both sides expressed a commitment to continuing exchanges, indicating a willingness to engage in further dialogue.

Yellen's main objective during her visit was to establish and deepen ties with China's new economic team, reduce the risk of misunderstanding, and pave the way for cooperation in areas such as climate change and debt distress. She acknowledged that the challenges at hand cannot be solved overnight but expressed confidence that her trip would contribute to building a resilient and productive channel of communication. Yellen further assured Chinese officials that any expected executive order restricting outbound investment would be narrow in scope and enacted transparently, allowing public input.

Washington reiterated that it was not seeking to decouple from China's economy, as such a move would be disastrous for both countries and destabilizing for the world. However, the United States emphasized the importance of an open, free, and fair economy that does not force nations to choose sides. Yellen clarified that trade curbs imposed by the United States, including restrictions on China's access to advanced technology like semiconductor chips, were motivated by national security concerns rather than an attempt to gain economic advantage.

During her visit, Yellen raised serious concerns over what she called "unfair trade practices" by Beijing, citing barriers to foreign firms entering the Chinese market and issues surrounding the protection of intellectual property. She also highlighted her worries regarding coercive actions against American firms, referencing a recent crackdown on US consulting firms in China. Yellen stressed that healthy economic competition could only be sustained if it benefits both sides.

In addition to economic matters, Yellen discussed Russia's war in Ukraine with her Chinese counterparts, emphasizing the importance of Chinese firms avoiding providing material support to Moscow or evading sanctions.

Both the United States and China downplayed expectations for significant breakthroughs during Yellen's visit, focusing instead on the opportunity for face-to-face diplomacy. Analysts in China expressed a more positive attitude towards Yellen's visit compared to Secretary of State Antony Blinken's trip, considering Yellen to be more professional and rational in her approach to China-US economic and trade relations. Moving forward, concrete agreements and major deliverables are expected to be announced by the two top leaders, President Biden and Chinese President Xi Jinping. The resumption of high-level communications and consultations after a prolonged period of strained relations will be seen as a success in itself.