Treasury Secretary Janet L. Yellen to Visit China in Effort to Ease Tensions between Two Largest Economies
Treasury Secretary Janet L. Yellen is set to travel to China this week in a high-stakes visit aimed at stabilizing the strained relationship between the world’s two largest economies. This visit will mark Yellen’s first trip to China as Treasury secretary, following Secretary of State Antony J. Blinken’s visit last month. The visit comes at a time of growing tension between the United States and Beijing, with recent incidents such as the discovery of a Chinese spy balloon in America and the Biden administration’s efforts to restrict China’s access to sensitive technologies.
Yellen’s visit, which is scheduled to begin on Thursday, coincides with a period of heightened uncertainty for the global economy. China’s post-pandemic growth has been slowing down, while the United States is trying to avoid a recession and contain inflation. Although both sides have expressed their intent to re-establish dialogue, deep divisions persist, and the meetings are expected to cover sensitive issues that have been simmering for years.
The Biden administration has taken steps to reduce America’s reliance on Chinese imports and limit China’s access to critical technologies. On the other hand, China has frustrated the United States with its reluctance to renegotiate loans to poor countries facing default and its close economic ties with Russia despite its invasion of Ukraine.
According to a senior Treasury Department official, Yellen is scheduled to meet with top Chinese officials and American companies doing business in China. The official stated that Yellen intends to discuss global challenges and areas of mutual concern with her Chinese counterparts. One of the key topics of discussion is expected to be China’s recent ban on Micron Technology, a U.S.-based manufacturer of memory chips. Yellen is expected to raise objections to the ban, which came after the Biden administration took steps to restrict Chinese chip makers’ access to key tools for manufacturing advanced chips.
Human rights violations in Xinjiang and concerns about China’s new counterespionage law are also likely to be raised during Yellen’s visit. The United States aims to gain a better understanding of the implications of the law for foreign companies. While grievances are expected to be aired by both sides, Yellen is expected to emphasize that U.S. actions to protect national security and reduce reliance on China are not meant to completely separate the two intertwined economies.
Yellen’s recent statements have struck a softer tone toward China, highlighting the importance of the relationship between the two countries for the entire world. She has emphasized the need for healthy competition that could benefit workers and businesses in both countries. Yellen’s goal for her visit is to re-establish contact and get to know the new group of Chinese leaders.
However, Yellen is likely to face pointed questions from her Chinese counterparts about the Biden administration’s intentions and concerns that U.S. actions do not align with its words. The United States has imposed wide-ranging restrictions on China’s access to advanced technology, citing national security threats. The administration is also preparing new investment restrictions to curb funding for the development of advanced technologies within China.
Despite Yellen’s previous skepticism about tariffs on Chinese imports, the levies imposed by the Trump administration remain in place and are unlikely to be rolled back soon. China has expressed frustration with the United States’ efforts to shift its supply chain away from China towards other allied countries, a trend known as “friendshoring.” The United States, on the other hand, continues to be concerned about China’s reluctance to restructure loans for poor countries facing default and its weakening currency, which makes Chinese exports more competitive in the U.S. market.
China is currently facing its own challenges, including debt troubles both at home and abroad. The country is dealing with a slow-motion housing crisis, which has led to concerns about banks’ potential losses on loans to real estate developers and local government financing units. This has made China cautious about accepting heavy losses on overseas loans, even as developing countries may require significant debt relief.
The COVID-19 pandemic severely limited contact between American and Chinese officials, as China closed its borders and stopped sending officials to international economic gatherings. Moreover, China has gradually stopped releasing thousands of economic data series as part of a national security campaign, making it even more challenging for American officials to understand the state of the Chinese economy.
In a sign of the importance Beijing attaches to Yellen’s visit, China named a new Communist Party secretary to lead the country’s central bank, Pan Gongsheng, just ahead of her arrival. Yellen and her team are expected to seek more insights into the Chinese economy, which has become increasingly opaque in recent years.
The outcome of Yellen’s visit remains uncertain, but it represents a critical opportunity to ease tensions and revive dialogue between the United States and China. As the two largest economies in the world, their relationship has far-reaching implications for the global economy and stability.