At her confirmation hearing in early 2021, Treasury Secretary Janet L. Yellen took a tough tone on China, calling it America’s most important strategic rival and vowing to confront its “abusive, unfair and illegal practices”, which she said were hurting businesses and workers. in the United States.
Since then, Ms Yellen has emerged as a voice of moderation in the Biden administration, adopting a mantra of economic pragmatism as the world economy faces inflation and sluggish growth. The Treasury Secretary has objected to China’s record on human rights, called for diversity in US supply chains and acknowledged that protecting national security is paramount.
But she has been the administration’s most prominent proponent of maintaining economic ties with China, arguing against tariffs, urging caution on new restrictions on investment in China, and most recently warning that further separating the two economies would be “devastating”.
Ms Yellen, set to arrive in Beijing on Thursday for a four-day visit, will focus on those conflicting interests in real time. The trip, her first as Treasury secretary, represents Yellen’s most challenging test yet of economic diplomacy as she seeks to ease years of mistrust between the United States and China .
The challenge for Ms Yellen will be to convince her Chinese counterparts that US measures blocking access to sensitive technology such as semiconductors in the name of national security are not intended to harm the Chinese economy. It won’t be easy, as both countries will continue to erect new barriers to trade and investment.
The Biden administration is preparing to impose a range of new restrictions on US technology trade with China, including on advanced chips and potential limits on US investment in the country. The upcoming rules are also likely to block Chinese companies’ access to US cloud computing services, according to people familiar with the matter, plugging earlier restrictions on China’s access to advanced chips used for artificial intelligence. is trying to do.
Beijing this week retaliated against the Biden administration’s limits on semiconductors by announcing it would restrict exports of some key minerals used in the production of some chips.
On Monday, ahead of her trip, Ms Yellen met China’s ambassador to the United States in Washington, Xie Feng, and brought up “issues of concern” in what the Treasury Department described as a candid conversation. Mr. Xi outlined China’s objections to America’s trade practices and urged the United States to take steps to resolve them, according to a summary of the talks released by the Chinese embassy.
In their meetings in Beijing, Ms. Yellen is expected to make the point that the Biden administration’s actions to make the US economy less dependent on China and to lure more production of critical materials inside the United States are narrowly focused measures that have The objective is not to provoke a widespread economic war. China still owes nearly US$1 trillion in debt and is America’s third-largest trading partner, making a sudden break in relations potentially disastrous for both countries and the global economy.
“I think she’s going to be a quiet voice to say this is not about prevention,” he said. Tim Adams, President of the Institute of International Finance and former Treasury Under Secretary for International Affairs. “It’s really about setting an environment of cooperation and showing that the United States is interested in engaging with China on trade and investment.”
For the past several decades, the Treasury has consistently been the US government agency that has worked hard to maintain friendly relations with China. Wall Street firms, a key constituency for the department, tried to gain access to the Chinese market in the 1990s through China’s negotiations to join the World Trade Organization. After China joined the WTO in 2002, Wall Street firms and the Treasury Department pressured China to move quickly to actually open its markets.
Beijing finally agreed in November 2017 to allow foreign investors to hold much larger stakes in insurance, banking and securities businesses, as part of a series of concessions made in an unsuccessful attempt to defuse a trade war with the Trump administration.
Although this is her first visit to Beijing as Treasury Secretary, Ms. Yellen is no stranger to China. In her role as President of the Federal Reserve Bank of San Francisco, she had regular contact with Chinese officials, and as Federal Reserve President from 2014 to 2018 she met with officials from China’s central bank at international events .
Ms. Yellen’s credentials as an academic economist have made her a welcome ambassador in Beijing.
“They like her a lot because she looks at the world economically and she’s very comfortable with it,” said Craig Allen, president of the US-China Business Council.
Michael Pillsbury, senior fellow for China strategy at the Heritage Foundation, said Chinese officials view Ms. Yellen as a voice of reason and hope that she will be able to make the case to others in the Biden administration to do what the United States should do. Needed Roll back new investment restrictions and roll back tariffs.
“They want Janet to help,” said Pillsbury, who has been a top China adviser in the Trump administration. “They see him as a friend of China.”
Ms. Yellen does not direct trade policy, but she is President Donald J. She has been critical of Trump’s imposition of tariffs on more than $300 billion of Chinese imports.
“Tariffs are taxes on consumers,” Ms. Yellen told The New York Times in 2021. In many ways we have fundamental problems with China.
Those tariffs are under review by the office of the United States Trade Representative, and Ms. Yellen has acknowledged that they are not likely to be rolled back anytime soon.
Ms Yellen’s ability to forge deeper ties with Beijing may be complicated by the current political moment.
Concerns about China have grown after a spy balloon flew over the United States before being shot down over the Atlantic Ocean. Anti-China rhetoric is also likely to increase in the upcoming presidential election as candidates seek to portray themselves as tougher on China, which is often a winning campaign message. And Republicans have been expressing criticism of America’s overarching reach into China.
Ms. Yellen’s visit last month to Secretary of State Antony J. Taking place after Blinken’s trip. Special Climate Envoy John F. Kerry is expected to visit Beijing soon.
Representative Mike Gallagher, a Wisconsin Republican who heads the House Select Committee on the Chinese Communist Party, blamed the Biden administration for slow-moving export restrictions targeting Chinese telecommunications giant Huawei and human rights violations against Uighurs. Accused of imposing sanctions against Chinese officials. Xinjiang. He argued that China’s behavior has gotten worse while the Biden administration has pursued “zombie engagement” with the Chinese Communist Party.
Mr. Gallagher said, “When Secretary Blinken left Beijing with nothing to show for her trip, doubling down on it by sending additional cabinet-level officials like Secretary Yellen will only perpetuate this vicious cycle.”
With Republican presidential candidates like Nikki Haley warning that China is “preparing for war” with the United States, there is added urgency for Ms. Yellen to find ways to keep the lines of communication open with her Chinese counterparts, Even if his journey is not successful. Any big success.
“The Chinese are very aware of the US election cycle, and I think that’s partly why they’re willing to be a little more open,” said Ishwar Prasad, former head of the International Monetary Fund’s China division. “Both Secretary Yellen and the Chinese would like to return to a place where they view at least some parts of the economic relationship as a positive-sum game rather than a zero-sum game.”
Keith Bradsher Contributed reporting.