Janet Yellen’s China visit: 3 key takeaways

Janet Yellen's China visit: 3 key takeaways

The tussle between the United States and China eased slightly over the past few days as Treasury Secretary Janet L Yellen held lengthy talks with a new group of top economic policymakers in Beijing.

Ms. Yellen used soft language for America’s economic strategy toward China, rejecting a term that has become popular in Washington but angered Beijing. Although Ms. Yellen’s trip to China is likely to result in more talks, neither she nor Chinese officials have backed down from their policy positions. This left both sides facing the prospect of further conflict over trade, investment and technology.

Last autumn, China’s Communist Party congress cleared the way for the country’s President Xi Jinping to install a new team of loyalists in top economic roles. Officials – including Yellen’s counterpart, Vice Premier He Lifeng – generally have less international experience than their predecessors and are less familiar with policymakers in the West. China has also gradually reduced the release of economic information, discontinuing many reports, making it hard to know what is really happening in the Chinese economy.

One of Ms. Yellen’s top goals was to meet China’s new team. She also wanted to understand what was happening in the Chinese economy, which has recovered more slowly than expected this year after China lifted nearly three years of stringent anti-pandemic measures.

At least on these narrow goals, Ms. Yellen appears to be having some success as she talks with four of China’s top economic policy makers, especially Mr. He, for a total of 10 hours. While the Biden administration has held several rounds of high-level diplomatic talks with China, this was the first such economic dialogue during this administration.

The United States ambassador to China, R. Nicholas Burns, said that reopening economic talks “is in our best interest, to get tough messages straight on issues where we disagree and where our interests align with those of the world’s second-largest economy.” are there to engage.” ,

Chinese officials, highly sensitive to the language of diplomacy, have over the past several years strongly resisted calls in Washington to decouple, or “decouple,” the US economy from China. They fear that multinational companies will move their vast supply chains and hundreds of millions of jobs from China to other countries.

The president of the European Commission, Ursula von der Leyen, put forward a gentler and more neutral term in March: “de-risking.” Chinese officials and state media initially had some objection to the risk reduction, but they began to condemn it after US National Security Adviser Jake Sullivan used it in a speech a month later.

Ms. Yellen during her visit repeatedly tried to allay concerns of China, which the United States wanted to isolate at all, and she avoided even mentioning de-risking. Instead he said that the United States wanted various supply chain – which is also a long-term public policy goal of China.

“There is an important difference between decoupling on the one hand and diversifying critical supply chains or taking targeted national security actions on the other,” he said.

The Biden administration says the limits it recently imposed on high-tech exports to China, especially the most advanced semiconductors, are focused on US military security. The administration has tried to portray its actions as simply building a high fence around a small yard of technologies.

But even after Ms. Yellen’s visit, many in China remain skeptical. As the United States presents policies “only for national security, the question is how big is the yardstick of national security,” said Wu Xinbo, dean of international studies at Fudan University in Shanghai.

Ms Yellen was conspicuously absent from a news conference held on Sunday and a separate statement by China’s official news agency Xinhua suggested there was no resolution to even one of the many trade, investment and technology issues between the two countries. happened.

Last Monday, China banned the export of gallium and germanium, two important metals used in computer chips. China produces almost all of the world’s supply of materials. The export controls were widely seen as retaliation for US limits on semiconductor exports to China, although Beijing did not describe its measure as retaliation. Ms Yellen, speaking on CBS’s “Face the Nation” on Sunday, said the move was “potentially” retaliatory.

Beijing has also been pushing the long-discussed possibility that a Biden administration could limit US investment in certain high-tech sectors of the Chinese economy. China lifted its ban on outbound investment in 2015. Beijing has steered the country’s companies and families away from betting on American real estate and European football clubs and instead encouraged them to buy foreign businesses in aircraft production, heavy manufacturing, artificial intelligence, cyber security and others. strategic area.

Ms Yellen nevertheless tried to give an optimistic twist to her visit on Sunday, as she sought to quash speculation that a conflict could be inevitable.

“Describing the contours of the relationship between the United States and China is no easy task, but we must never forget that despite the challenges, our path is not predetermined,” he said.

allan rappeport Contributed reporting.

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