Yellen to visit China to strengthen economic ties

Yellen to visit China to strengthen economic ties

Treasury Secretary Janet L. Yellen will travel to China on Wednesday, a key trip aimed at helping stabilize strained relations between the world’s two largest economies.

Ms. Yellen’s visit to China will be her first as Treasury Secretary, and last month Secretary of State Antony J. Will be followed by a trip to Blinken. It comes at a moment of tension between the United States and Beijing following the discovery of a Chinese spy balloon over the US earlier this year and Chinese frustration with the Biden administration’s efforts to block China from accessing some sensitive technologies.

The visit also coincides with a moment of growing uncertainty for the global economy, with China’s post-pandemic output slumping and the United States trying to avoid recession while controlling inflation.

Despite hopes of re-establishing talks, the meetings are likely to discuss sensitive issues that have dragged on for years.

The Biden administration is taking steps to reduce America’s dependence on Chinese imports and has sought to limit China’s access to semiconductors, biotechnology and sensitive technology that enables things like robotics, artificial intelligence capabilities and high-end computing. Provides strength.

Also, China has frustrated the United States with its reluctance to renegotiate the terms of loans given by poorer countries facing default and has maintained close economic ties with Russia despite that country’s invasion of Ukraine. is kept

A senior Treasury Department official, who spoke on condition of anonymity about the priorities of the trip, said on Sunday that Ms Yellen would meet with top Chinese officials and US companies doing business in China. The official said Ms Yellen would talk to her Chinese counterparts about global challenges and mutual areas of concern.

The Treasury Secretary is expected to raise objections to China’s recent ban on Micron Technology, a US-based maker of memory chips used in phones, computers and other electronics. In May the Chinese government barred companies that handle critical information from buying microchips made by Micron, after the Biden administration recently moved to block Chinese chipmakers from gaining access to critical equipment needed to make advanced chips. were raised The company’s chips, which are used for memory storage in all kinds of electronics such as phones and computers, were deemed to pose “relatively serious cyber security problems” by China’s internet watchdog after a review.

Ms Yellen is also expected to raise concerns about human rights violations related to China’s treatment of ethnic minorities in Xinjiang, where the Chinese government has been accused of mass detention of Muslims. US officials are also hoping to gain a better understanding of the scope of China’s new anti-espionage law, which could present new challenges for foreign companies.

While grievances are likely to be aired by both sides, Ms. Yellen intends to make the case that US actions to become less dependent on China and protect its national security are not intended to “pull apart” the two economies, which are highly interconnected. are connected in

Ms. Yellen has taken a softer approach toward China in recent weeks, calling the relationship between Washington and Beijing important to the world. In an interview with MSNBC last week, he suggested that “healthy competition” could benefit workers and businesses in both countries.

Ms. Yellen said, “My hope in the trip to China is to re-establish contact.” “There’s a new group of leaders, we need to get to know each other.”

He said the two countries “need to discuss their disagreements with each other so that we don’t have misunderstandings, don’t misunderstand each other’s intentions.”

Amid concerns in China that America’s actions are not matching its words, Treasury Secretary May ask her counterparts sharp questions about the intentions of the Biden administration.

The administration has imposed sweeping restrictions on China’s access to advanced technology, saying Beijing’s ability to use such technology poses a national security threat to the United States.

In his remarks to the Council on Foreign Relations in New York last Wednesday, Mr. Blinken said it is in America’s interest to prevent Beijing from gaining access to technology that could be used to harm the United States.

“How is it in our interest to allow them to get technology that they can turn around and use against us?” he asked, citing China’s growing nuclear weapons program, its development of hypersonic missiles and its use of artificial intelligence “potentially for repressive purposes”.

He said, “If they were in our place, they would have done exactly the same thing.” He said the US was imposing “very targeted, very narrowly defined controls”.

The White House is also preparing new investment restrictions aimed at reducing US dollars used to finance the development of advanced technologies within Chinese borders.

And while Ms. Yellen has questioned the effectiveness of tariffs on Chinese imports in the past, the tariffs imposed by the Trump administration remain in place and seem unlikely to be rolled back anytime soon.

China has also expressed dismay at US efforts to divert its supply chain away from China and towards other countries the United States considers allies – a trend Ms Yellen and other cabinet officials have called “friendshoring”.

For its part, the United States is frustrated by China’s reluctance to allow poorer countries facing default to restructure the terms of their loans, and is concerned about China’s weakening currency. , which makes its exports more competitive in the United States.

In addition to currency tensions, China is grappling with debt problems at home and abroad. The debt crisis in developing countries is coming at a bad time for China. As the housing crisis unfolds in slow motion, many banks are already facing the prospect of heavy losses on their loans to real estate developers and financing units of local governments. This makes it difficult for them to accept huge losses on foreign debts, while Western experts predict that developing countries may not be able to recover without significant debt relief.

US officials had very limited contact with Chinese officials during the pandemic, when China almost completely closed its borders and stopped sending its officials to international economic gatherings. China has also gradually stopped releasing thousands of economic data series over the past several years as part of a national security campaign, and this has made it even more difficult for US officials to understand what is happening in the Chinese economy. Is.

In a sign of how seriously Beijing is taking Ms Yellen’s visit, China on Saturday named a new Communist Party secretary to lead the country’s central bank: Pan Gongsheng, a prominent technocrat who has served since 2016. Oversaw China’s currency policy as director of the State Administration. of foreign currency.

Christopher Adams, former senior coordinator for China affairs at the Treasury Department, said Ms. Yellen and her team “will likely try to gain more insight into the Chinese economy as it becomes more opaque.”

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