Janet Yellen’s Trip to China: No Breakthroughs But 10 Hours of Talks

Treasury Secretary Janet L. Yellen came to China amid hopes that the United States could restart a relationship that has been deteriorating for years and had gotten off the rails recently over significant points of tension — including the war in Ukraine, a Chinese spy balloon that flew over U.S. territory and was shot down by the American military, and the two countries’ escalating exchange of restrictions on trade.

After 10 hours of meetings over two days in Beijing, Ms. Yellen said at a news conference on Sunday that she believed the United States and China were on a steadier footing despite their “significant disagreements.”

“We believe that the world is big enough for both of our countries to thrive,” Ms. Yellen said.

Ms. Yellen announced that the two sides would pursue more frequent communication at the highest levels, describing improved dialogue as a way to prevent mistrust from building and fraying a relationship that she called “one of the most consequential of our time.” Her trip followed one a few weeks by Secretary of State Antony J. Blinken. And later this month, John Kerry, the special presidential envoy for climate change, will visit China to restart global warming negotiations.

Yet a meaningful easing of the economic tension may not be likely. Ms. Yellen headed back to Washington on Sunday with no announcements of breakthroughs or agreements to mend the persistent fissures between the two nations. And Ms. Yellen made clear that the Biden administration has serious concerns about many of China’s commercial practices, including its treatment of foreign companies, and policies that the United States views as efforts at economic coercion.

On her trip, the first by a U.S. Treasury secretary in four years, Ms. Yellen met with four of the most powerful Chinese leaders involved in economic policymaking under President Xi Jinping, who is at the start of his third term in office: Premier Li Qiang, China’s No. 2 official; Ms. Yellen’s counterpart, Vice Premier He Lifeng; the finance minister, Liu Kun; and the newly installed party chief of the People’s Bank of China, Pan Gongsheng.

Hours before Ms. Yellen’s news conference, China’s official news agency, Xinhua, issued a report on her visit that described the talks as constructive but also reiterated what China sees as key areas of dispute. The report expressed China’s continued objections to the Biden administration’s emphasis on preserving American national security through trade restrictions.

“China believes that generalizing national security is not conducive to normal economic and trade exchanges,” Xinhua said. “The Chinese side expressed concern about U.S. sanctions and restrictive measures against China.”

The U.S.-China relationship is enormously consequential. Their economies, the world’s two largest, together represent 40 percent of global output and remain integral partners in many ways. They sell and buy critical products from each other, finance each other’s businesses, and create apps and movies for audiences in both countries.

Chinese officials raised their own concerns with Ms. Yellen. The Treasury secretary said they discussed the tariffs that the Trump administration imposed on Chinese imports, which have been left in place. While Ms. Yellen has criticized tariffs as ineffective, she suggested that the administration would not make any decision about the levies until an ongoing internal review of them was concluded, reiterating the position of the administration since President Biden took office.

She also acknowledged Chinese concerns about looming U.S. restrictions on investment in China and said that she tried to explain that such measures would be narrowly targeted at certain sectors and would not be intended to have broad effects on China’s economy. Chinese officials and experts also worry that the administration’s efforts to limit China’s access to certain technology could impair their development of high-potential industries like artificial intelligence and quantum computing.

China has had its own broader restrictions on outbound investment since 2016, as it has encouraged Chinese companies and households to steer clear of overseas real estate speculation and has pushed them instead to invest abroad in sectors of strategic value like aircraft production, heavy manufacturing and cybersecurity.

Wu Xinbo, the dean of international studies at Fudan University in Shanghai, cautioned that Ms. Yellen’s trip would not result in a substantive improvement in relations unless it was accompanied by changes in the Biden administration’s policies toward China.

“So far, we haven’t seen any sign that Biden will rethink his economic policy toward China,” he said.

The desire for more dialogue struck some analysts as a significant development, with both countries at least talking about their disagreements after months of silence.

He Weiwen, a former official at China’s Ministry of Commerce who is now a senior fellow at the Center for China and Globalization in Beijing, welcomed Ms. Yellen’s comment that both China and the United States could thrive. “China and the U.S. have profound differences, so constant, direct exchanges are not only constructive but of crucial importance,” he said.

Chinese economic policymakers have a long history of working more closely with the Treasury Department, which has historically valued China as a sizable investor in American bonds and as a potential market for American financial services. The Commerce Department and the Office of the United States Trade Representative, with their greater emphasis on fostering employment and industrial self-reliance, have tended to have more fractious relationships with their Chinese counterparts.

This was particularly true during the Trump administration. Liu He, who was the vice premier overseeing international economic policy until He Lifeng succeeded him four months ago, tried repeatedly to reach compromises on trade and economic matters with Steven Mnuchin, who served as Treasury Secretary under former President Donald J. Trump. But Mr. Mnuchin was unable to persuade Mr. Trump, who ended up imposing tariffs on a wide range of Chinese exports as retaliation for what he said were unfair business practices.

Many U.S. businesses with ties to China, along with Chinese officials, had hoped for friendlier relations under Mr. Biden. Instead, tensions between the U.S. and China have grown deeper over the past two years and became downright frosty after the spy balloon episode in February.

While Ms. Yellen’s visit was seen as a positive step, many experts in both China and the United States cautioned against expecting a lot to change.

“Yellen’s trip will likely turn down the temperature on the economic relationship for a bit and remind the U.S. and China that they share some commercial interests, even if waning, and they need to talk through thick and thin — perhaps business conditions will improve at the margins,” said Mark Sobel, a former longtime Treasury official.

But given national security concerns in both countries, a perception in China that the U.S. seeks to contain its economic advancement and hawkish political language on both sides, he said, “Yellen’s trip will hardly change the underlying dynamic and trajectory of the economic relationship.”

Despite the disagreements between the U.S. and China, Ms. Yellen was greeted warmly during her first visit to Beijing as Treasury secretary.

In a meeting with Premier Li Qiang, China’s second-highest official, he mentioned that a rainbow had appeared overhead upon her arrival and suggested it was a symbol of hope that ties between the two countries could be mended.

After Ms. Yellen was spotted dining on Thursday night at a restaurant that serves cuisine from the province of Yunnan, Chinese state media wrote about her impressive use of chopsticks and reported that bookings at the restaurant were up after she was seen eating mushroom dishes on social media.

Ms. Yellen also met with Chinese experts on climate finance and had lunch with a group of Chinese women who are economists and entrepreneurs. She suggested that there are many areas where the United States and China can find agreement.

“Our people share many things in common — far more than our differences,” Ms. Yellen said at the lunch.

Ana Swanson contributed reporting.

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