Treasury Secretary Janet L. Yellen is embarking on a four-day visit to China, her first trip to the country since taking office. Yellen’s visit comes as she navigates the challenging task of easing tensions and building trust between the United States and China, two major global economic powers. Yellen has been both critical of China’s practices and an advocate for maintaining economic ties.
During her visit, Yellen will meet with various Chinese officials, including former vice premier Liu He and former central bank governor Zhou Xiaochuan. She will also participate in a round-table discussion with officials from the American Chamber of Commerce in China to understand the challenges faced by US companies operating in China.
One of the key objectives for Yellen is to convince her Chinese counterparts that the US measures aimed at safeguarding national security and reducing reliance on China are not intended to harm the Chinese economy. The Biden administration is preparing new restrictions on US technology trade with China, and Beijing has retaliated with restrictions on the export of critical minerals used in chip production. Yellen aims to emphasize that the US actions are narrowly focused and not part of a broader economic war.
Maintaining economic cooperation and avoiding a complete breakdown of ties between the two countries is crucial, as China holds nearly $1 trillion of US debt and is America’s third-largest trading partner. A severing of ties would have severe consequences for both countries and the global economy. Yellen seeks to convey that the US remains interested in engaging with China on trade and investment.
Yellen has a history of engaging with China through her role as president of the Federal Reserve Bank of San Francisco and chair of the Federal Reserve. Chinese officials view her as a voice of reason and hope that she can make the case for reducing investment restrictions and rolling back tariffs. Yellen, however, does not have direct control over trade policy, and the review of tariffs imposed by the Trump administration is still ongoing.
Yellen’s visit comes at a complicated political moment, with concerns about China on the rise and the upcoming presidential election likely to escalate anti-China rhetoric. Republicans have also criticized the Biden administration for its outreach to China. Despite these challenges, Yellen’s objective is to keep communication lines open and find ways to build deeper ties with Beijing.
While her visit may not result in major breakthroughs, Yellen’s ability to maintain dialogue and work towards cooperation is critical. With increasing concerns about China’s actions and the possibility of a future conflict, it is crucial for both countries to find ways to address their differences and promote economic stability and growth.