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BEIJING — Treasury Secretary Janet L. Yellen Sunday, concluding a key diplomatic mission to China, said her talks with Chinese leaders were a “step forward” in efforts to stabilize ties between the world’s two largest economies.
Yellen acknowledged “significant disagreements” that still divide the two nations. She said she pressured the Chinese government over its treatment of American companies operating here and its use of state power to gain what she called an “unfair” lead in world markets while Chinese officials grappled with US tariffs and Restrictions on High Technology Complained Act.
Yellen, an economist and former central banker, reiterated her call for China to “move to a market-based system” — advice unlikely to move Chinese leader Xi Jinping, who has squandered resources on state-owned companies.
The Treasury Secretary dismissed claims that US plans to reduce its reliance on Chinese suppliers reflect a broader campaign to split the world into rival blocs, using some of its harshest language yet. The Biden administration’s restrictions on sales of advanced computer chips to China — and upcoming restrictions on US investment in Chinese technology development — are “clearly articulated and narrowly targeted” measures designed to protect national security, not to to gain an economic advantage, she said.
“We know that a decoupling of the world’s two largest economies would be catastrophic for both countries and destabilizing for the world. And it would be virtually impossible to do that,” she said. “We want a vibrant and healthy global economy that is open, free and fair – not one that is fragmented or forcing countries to take sides.”
Yellen called her visit proof that the Biden administration’s efforts to forge a working relationship with China after years of growing bitterness and drifting were paying off. However, the chief financial officer said no new diplomatic negotiations or dialogues had been agreed.
“President Biden and I do not see the US-China relationship in the context of a great power conflict. “We believe the world is big enough for both of our countries to thrive,” Yellen told reporters in a news conference that lasted about 30 minutes before departing on her journey home. “Our discussions are part of a broader concerted effort to stabilize the relationship, reduce the risk of misunderstandings and discuss areas of collaboration.”
Her talks with members of Xi’s new economic team — spanning about 10 hours over two days — have been “direct, substantive and productive,” Yellen said.
After arriving in the Chinese capital on Thursday, Yellen plunged into talks with Chinese Premier Li Qiang and other top officials, including Vice Premier He Lifeng, who is in charge of economy and foreign trade.
She also spent time with a group of Chinese economists, climate activists and American businesspeople.
Her visit comes at a time when both governments are trying to stabilize an important trade relationship plagued by a pervasive lack of trust. Yellen wanted to reassure Beijing that while the United States is trying to reduce its reliance on Chinese suppliers for essential commodities like critical materials, electric vehicle batteries and semiconductors, it does not want an economic rupture.
China has been openly skeptical of Yellen’s “de-risking” argument, seeing it as a polite term for full-scale economic decoupling, which they fear would exacerbate their domestic economic woes.
After growing rapidly in the first few months of the year following the easing of coronavirus controls, the Chinese economy has stalled in recent weeks. Consumers are not spending as generously as they would have expected in the post-pandemic era and export orders have been disappointing.
While Yellen began to develop a relationship with He during the approximately six-hour talks, further disputes loomed. The Biden administration is expected to announce new restrictions on US investment in advanced Chinese technology sectors later this month, which Washington said could affect national security.
Chinese officials have complained that such restrictions – which would affect technologies like artificial intelligence and quantum computing – would slow their economic progress.
“I want to allay their fears that we would do something that would have far-reaching implications for the Chinese economy. That’s not the case. That’s not the intention,” Yellen said.
Yellen said her visit succeeded in reviving direct economic dialogue between the two economies. Other Biden cabinet officials — including the president’s special envoy on climate, John F. Kerry — are also expected to visit Beijing soon.
Nevertheless, official interactions remain below the level of previous years. During the George W. Bush administration, the two nations engaged in a strategic economic dialogue that brought together dozens of senior officials twice a year.
The Obama administration later rebranded this effort, but routine high-level talks moved on at a brisk pace.
Yellen said on Sunday that more regular contact was expected from her staff and those of her Chinese colleagues.
“Not a single visit will solve our challenges overnight. But I expect this trip will help build a resilient and productive communication channel with China’s new economic team,” Yellen said. “My hope is that we can get to a stage in our relationship where diplomacy at the highest level is simply seen as a natural element in the management of one of the most consequential bilateral relationships in the world.”
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