Of all the economic fault lines between the United States and China, one is personally felt by American executives, which they describe as the difficult, even hostile, conditions under which they do business in China.
Treasury Secretary Janet L. Yellen exposed those concerns Friday by strongly objecting in Beijing to punitive measures the Chinese government has taken against foreign companies as tensions between the two nations have escalated.
Surrounded by executives from some of America’s most powerful companies, Ms. Yellen criticized the Chinese government’s harsh treatment of foreign-linked companies and its recent decision to impose export restrictions on certain critical minerals. She suggested that such actions justify the Biden administration’s efforts to make American manufacturers less dependent on China.
Ms. Yellen’s comments, addressed to a group of executives from US companies operating in China, underlined the challenges facing the world’s two largest economies as they struggle to reconcile their deep differences.
The strong defense of US industry came on Ms. Yellen’s first day of meetings in Beijing on a high-stakes trip to ease tension between the United States and China. She voiced her concerns to top Chinese officials, including Premier Li Qiang, during what was the first visit by a finance minister to China in four years.
“In meetings with my colleagues, I communicate the concerns I’ve heard from corporate America — including China’s use of non-market tools such as extensive subsidies for its state-owned and domestic companies, as well as barriers to market entry for foreign firms,” Ms. Yellen said at a press conference. event held by the American Chamber of Commerce in China. “I am particularly troubled by the punitive measures taken against American companies in recent months.” Those in attendance included representatives from Boeing, Bank of America and agricultural giant Cargill.
In March, Chinese authorities arrested five Chinese who worked in Beijing for the Mintz Group, an American consulting firm with 18 offices around the world, and closed the branch. The following month, authorities questioned employees in the Shanghai office of Bain & Company, the US management consultancy.
Research on US companies operating in China followed the restrictions imposed by the Biden administration on China’s access to critical semiconductor-making technology and resources.
The Biden administration is preparing additional restrictions on US technology trade with China, including possible limits on advanced chips and US investment in the country. The government is also preparing to limit Chinese companies’ access to US cloud computing services to curb China’s use of advanced artificial intelligence chips.
The tit-for-tat continued this week as Beijing retaliated against the Biden government’s limits on semiconductors, announcing it would restrict exports of certain critical minerals used in the production of some chips. Ms Yellen said on Friday she was “concerned” about China’s export controls and suggested additional responses from the United States could loom.
An official from China’s finance ministry on Friday expressed hope that the meetings with Ms Yellen would improve economic relations and suggested that the United States should take steps to make that happen. The official added that neither country benefits from “decoupling” and disrupting supply chains.
Longtime observers of the US-China relationship have been skeptical about the chances of a quick breakthrough.
Shi Yinhong, a political scientist at Renmin University in Beijing, said Ms Yellen’s visit is not expected to “really substantially reduce the numerous and wide-ranging differences between the two countries”. But given those differences, he said, Chinese officials were unlikely to be surprised by Ms. Yellen’s comments in support of US companies in China.
“I doubt the Chinese side would have much higher expectations,” he said.
US companies have been alarmed by China’s increasingly strict national security laws, including a strict counterintelligence law that went into effect Saturday. The US State Department issued a warning this week, advising Americans to reconsider traveling to China due to the possibility of wrongful detention.
Michael Hart, the speaker of the House, said that American companies are trying to play a constructive role in the economic relationship between the United States and China.
“We have tried, regardless of what happened on the political level, to find a common goal with our Chinese counterparts by hiring, producing, producing, buying, selling, paying our taxes and doing this to do it all in a way that reflects our values,’ said Mr. Hart, who sat next to Mrs. Yellen.
The finance minister planned to raise these issues in a series of meetings with top Chinese officials over the next two days.
As Ms. Yellen laid out the grievances of American companies, Chinese companies felt a shudder of distrust in the United States, which likely put a strain on the Chinese officials who met with Ms. Yellen.
“Unfortunately, these mutually beneficial relationships have now been politicized, securitized and even demonized — treated as if they had an impact on national security,” said Wang Yong, the director of the Center for American Studies at Peking University. “But I personally think that while there is so-called strategic competition between China and the United States, they still have a lot of common interests.”
Chinese companies have been alarmed by recent actions by the US, such as congressional hearings on Chinese-owned social media network TikTok, and by rising US barriers to Chinese investment and business deals, including in once prosaic sectors such as farmland purchases, says Professor Wang added.
Ms Yellen also met with Liu He, China’s former vice premier, and Yi Gang, the outgoing governor of the People’s Bank of China, on Friday. A Treasury Department official said Ms Yellen discussed the outlook for the economy in an informal conversation with her former counterparts that lasted more than an hour.
Later on Friday afternoon, she met Mr. Li in the Great Hall of the People, on the edge of Tiananmen Square.
Prior to her meeting with Mr. Li, China’s No. 2 leader, Ms. Yellen emphasized the importance of “healthy competition” between the two nations and stressed that measures taken by the United States on the basis of national security should not be misinterpreted as attacks against China.
“The United States will have to take targeted actions under certain circumstances to protect its national security,” Ms Yellen said. “And in these cases, we can disagree.”
She added: “However, we must not allow a difference of opinion to lead to misunderstandings that needlessly worsen our bilateral economic and financial relationship.”
Sitting next to Ms. Yellen, Mr. Li commented that the world had high hopes for their meeting.
With a touch of optimism, the Prime Minister noted that when Ms Yellen arrived in Beijing, she was photographed pointing to a rainbow in the sky and suggested it was a sign that relations between China and the United States could be repaired.
“I very much look forward to this opportunity to exchange views with you,” said Mr. Li through an interpreter.
Claire Fu, Keith Bradsher And Christopher Buckley reporting contributed.
