5-7-2023 (WAHSINGTON) US Treasury Secretary Janet Yellen is set to undertake her first visit to China, aiming to recalibrate the relationship between the world’s two largest economies. The trip comes as military communications remain frozen and Beijing’s recent export restrictions on certain metals intensify tensions between the nations.
US officials anticipate candid discussions during Yellen’s visit from July 6 to July 9, following Beijing’s unexpected announcement on Monday imposing controls on exports of gallium and germanium products. These materials are widely utilized in semiconductor production, and the move is viewed as potentially detrimental to US firms. Additionally, a new counterespionage law introduced by China further heightens concerns.
While no major breakthroughs are expected, Yellen will prioritize establishing new channels of communication and coordination on economic matters. She will also emphasize the repercussions of providing lethal aid to Russia, urging China to consider the consequences. US officials assert that China’s economy is recovering more slowly than anticipated from COVID-19 lockdowns, with a challenging job market.
Yellen’s highly anticipated visit follows Secretary of State Antony Blinken’s recent trip to Beijing, during which he and Chinese President Xi Jinping agreed to prevent their rivalry from escalating into conflict. However, military communication between the two nations remains frozen, adding to the complexities of the situation.
“One senior administration official stressed the importance of diplomacy, stating, ‘A phone call is just not the same.'”
Chinese officials express concerns over the Biden administration’s intentions to limit US companies’ investments in China and what they perceive as efforts to decouple the two economies. China’s hope for Yellen’s visit is to improve the atmosphere for future discussions with Commerce Secretary Gina Raimondo on matters such as tariffs and sanctions imposed on Chinese tech companies.
Nonetheless, critics argue that these meetings are evading crucial issues. Derek Scissors, a senior fellow at the American Enterprise Institute, suggests that Yellen’s trip may be futile due to China’s refusal to address potentially dangerous military concerns. He remarks, “They look like supplicants. On the security side, the Chinese won’t talk to us, so it looks like the economic side is being used as a substitute… It’s not unimportant, but it’s unpleasant and odd.”
While Yellen is expected to primarily focus on economic matters, she will also remind her Chinese counterparts that providing lethal aid to Russia, in violation of sanctions related to the Ukrainian conflict, could result in sanctions against Chinese entities. The US will closely monitor China’s adherence to its assurances against delivering lethal assistance.
The US believes that China is apprehensive following the recent rebellion by Russia’s Wagner mercenary group and the perceived weakness of the Russian military. However, China relies on a stable Russia for essential resources such as food and fuel.
Yellen’s and Blinken’s visits play a critical role in improving communication between the two nations, particularly after the US military intercepted a Chinese spy balloon over US territory. Additionally, they lay the groundwork for a potential meeting between President Joe Biden and President Xi at the Asia-Pacific Economic Cooperation meeting in San Francisco scheduled for November.
Scott Kennedy from the Center for Strategic and International Studies emphasizes the significance of Yellen’s trip, stating, “Secretary Yellen’s trip is more than a step toward preparation for a potential Biden-Xi meeting at APEC. The top economic officials of the world’s two largest economies have barely spoken to each other in over three years, and that is dangerous for the global economy.”
While the trip may help establish a “new normal” and stabilize the bilateral relationship, it is unlikely to lead to the removal of the $360 billion in tariffs imposed during former President Donald Trump’s administration or the scaling back of export controls that have continued under President Biden.
Despite the cooling relations, trade between the US and China has grown for the third consecutive year in 2022, according to data from the US Commerce Department. Jake Colvin, President of the National Foreign Trade Council, asserts that opportunities still exist for American businesses, farmers, and workers in China. He emphasizes the need to consider the bilateral relationship beyond mere risk reduction.
During her visit, Yellen will underscore the importance of collaborating with China on climate change, pandemic preparedness, and addressing debt distress. Simultaneously, Washington will continue taking targeted actions concerning human rights and security concerns. Yellen will stress that the US does not seek to decouple the two economies, which jointly contribute 40% of global economic output. However, she will assert the right to protect human rights and US national security interests through specific actions.
Yellen is scheduled to meet China’s new Vice Premier, He Lifeng, for the first time, succeeding his predecessor Liu He. Anticipating a different dynamic with He, who is a Xi loyalist from a planning background rather than finance and economics, one official predicts a more formal atmosphere during the meeting.
