US Treasury Secretary Janet Yellen held a five-hour discussion with Chinese Vice Premier He Lifeng in Beijing, marking a significant step towards dialing back the strains in the relationship between the two nations. This meeting, which took place on Yellen's first visit to China as Treasury chief, aimed to revive engagement between the world's two largest economies and address the deteriorating relationship in recent years. Tensions have surged over various issues, ranging from Taiwan to technology access.
Described as "candid, constructive, and comprehensive" by the Treasury Department, the meeting saw Yellen raising concerns while also discussing the Biden administration's approach to healthy economic competition and a level playing field for American workers and businesses. Yellen emphasized that there is still ample room for trade and investment engagement between the US and China despite recent tensions, and she stressed the importance of direct communication to address specific economic concerns.
Yellen's visit to China is part of the Biden administration's broader effort to mend relations with its main geopolitical rival while also conveying clear messages about US policy. Her trip followed Secretary of State Antony Blinken's visit in June. Yellen and He engaged in a five-hour meeting, during which China expressed its willingness to strengthen communication and cooperation on addressing global challenges. However, He voiced concerns about US sanctions and other restrictive measures against China.
Yellen's objective is to explain the US strategy outlined in April, which aims to defend and secure national security without hindering China's economic growth. At the start of the meeting, she stated that the United States would take targeted actions to protect its national security, while also acknowledging the potential for disagreement and misunderstandings arising from a lack of communication, urging both sides to avoid unnecessary deterioration of their economic and financial relationship.
Although Presidents Biden and Xi Jinping appeared to pave the way for better ties in November, subsequent disputes over Taiwan, spying allegations, technology security, and Russia's invasion of Ukraine have strained the relationship. However, China's He expressed willingness to continue the work initiated by Xi and Biden, emphasizing the importance of dialogue and communication on economic and trade topics.
The next challenge for the US-China relationship may arise soon, as the Biden administration prepares an executive order to curb US outbound investment in China. This order, expected in July, may cover certain investments in sensitive technologies such as semiconductors, artificial intelligence, and quantum computing.
Yellen's core message to Chinese officials is that the two countries should manage their rivalry with a fair set of rules, rather than engaging in a winner-take-all competition. This sentiment was reiterated in her meetings with Chinese Premier Li Qiang and Pan Gongsheng, who is expected to become the governor of the People's Bank of China. The trip is seen as an important step in building communication channels with China's new economic team, although Treasury officials have downplayed expectations of major breakthroughs during the visit.
In addition to discussing economic matters, Yellen also participated in a roundtable on climate finance, urging China and the US to collaborate on addressing climate change. She emphasized the importance of cooperation between the two nations on global challenges, including environmental issues and debt distress in developing countries. Yellen also had lunch with Chinese women economists, showcasing the significance of gender inclusion and empowerment in the economic sphere.
Yellen stated, "Climate change is at the top of the list of global challenges, and the United States and China must work together to address this existential threat," during the roundtable attended by Chinese and international climate experts.