Treasury Secretary Janet L. Yellen came to China hoping the United States could resume a relationship that had been deteriorating for years and was recently derailed by major points of tension — including the war in Ukraine, a Chinese spy balloon flying over American territory and was shot down by the US military, and the escalating exchange of trade restrictions between the two countries.
After 10 hours of meetings over two days in Beijing, Ms Yellen said at a press conference on Sunday that she believed the United States and China were on a firmer footing despite their “significant differences”.
“We believe the world is big enough for both of our countries to thrive,” Ms Yellen said.
Ms Yellen announced that the two sides would aim for more frequent communication at the highest level, describing improved dialogue as a way to prevent distrust from building and deteriorating a relationship she called “one of the most profound of our time” . Her trip was followed a few weeks later by Secretary of State Antony J. Blinken. And later this month, John Kerry, the presidential special envoy for climate change, will visit China to resume negotiations on global warming.
Still, a meaningful easing of the economic tension may not be likely. Ms. Yellen headed back to Washington on Sunday with no announcements of breakthroughs or agreements to mend the lingering rifts between the two nations. And Ms. Yellen made it clear that the Biden administration is deeply concerned about many of China’s trade practices, including the treatment of foreign companies, and policies that the United States considers attempts at economic coercion.
On her trip, the first by a US Treasury Secretary in four years, Ms. Yellen met four of the most powerful Chinese leaders involved in economic policy-making under President Xi Jinping, who is beginning his third term in office: Premier Li Qiang, China’s No. 2 official; Ms Yellen’s counterpart, Deputy Prime Minister He Lifeng; Finance Minister Liu Kun; and the newly installed party chief of the People’s Bank of China, Pan Gongsheng.
Hours before Ms Yellen’s press conference, China’s official news agency, Xinhua, released a report on her visit that described the talks as constructive but also reiterated what China sees as the main points of contention. The report expressed China’s continuing objections to the Biden administration’s emphasis on preserving U.S. national security through trade restrictions.
“China believes that generalizing national security is not conducive to normal economic and trade exchanges,” Xinhua said. “The Chinese side has expressed concern about US sanctions and restrictive measures against China.”
The relationship between the US and China is very profound. Their economies, the two largest in the world, together account for 40 percent of global production and in many ways remain integral partners. They sell and buy critical products from each other, finance each other’s businesses and make apps and films for audiences in both countries.
Chinese officials expressed their own concerns to Ms. Yellen. The Treasury Secretary said they discussed tariffs the Trump administration imposed on Chinese imports, which have remained in effect. While Ms. Yellen has criticized the tariffs as ineffective, she suggested that the government not make a decision on the charges until an ongoing internal review of them was completed, reiterating the government’s position since President Biden took office.
She also acknowledged Chinese concerns about looming US restrictions on investment in China and said she was trying to explain that such measures would be narrowly targeted to certain sectors and not intended to have broad effects on the Chinese economy. Chinese officials and experts also worry that the government’s efforts to limit China’s access to certain technology could jeopardize their development of promising industries such as artificial intelligence and quantum computing.
China has had its own broader restrictions on outward investment since 2016, as it has encouraged Chinese companies and households to steer clear of foreign real estate speculation and instead forced them to invest abroad in sectors of strategic importance. value, such as aircraft production, heavy manufacturing and cybersecurity. .
Wu Xinbo, the dean of international studies at Fudan University in Shanghai, warned that Ms Yellen’s trip would not result in a substantial improvement in relations unless accompanied by changes in the Biden administration’s policy on China.
“So far we have not seen any sign that Biden will reconsider his economic policy towards China,” he said.
The desire for more dialogue struck some analysts as an important development, with both countries at least talking about their differences after months of silence.
He Weiwen, a former official in China’s Ministry of Commerce and now a senior fellow at the Center for China and Globalization in Beijing, welcomed Ms. Yellen’s comment that both China and the United States could prosper. “China and the US have profound differences, so constant, direct exchanges are not only constructive, but critical,” he said.
Chinese economic policymakers have a long history of working closer with the Treasury Department, which has historically valued China as a significant investor in US bonds and as a potential market for US financial services. The Department of Commerce and the Office of the United States Trade Representative, with their greater emphasis on promoting employment and industrial self-sufficiency, tend to have trickier relationships with their Chinese counterparts.
This was especially true during the Trump administration. Liu He, who was the deputy prime minister overseeing international economic policy until He Lifeng succeeded him four months ago, repeatedly tried to compromise on trade and economic affairs with Steven Mnuchin, who was finance minister under former President Donald J. .Trump. But Mr. Mnuchin failed to convince Mr. Trump, who eventually imposed tariffs on a wide variety of Chinese exports in retaliation for what he called unfair trade practices.
Many US companies associated with China, along with Chinese officials, had hoped for friendly relations under Biden. Instead, tensions between the US and China have deepened over the past two years and turned downright icy after the spy balloon episode in February.
While Ms Yellen’s visit was seen as a positive step, many experts in both China and the United States warned against expecting much to change.
Yellen’s trip is likely to dampen the economic relationship a bit and remind the US and China that they share some commercial interests, even if they are declining, and that they need to talk through thick and thin – perhaps business conditions will change over time. improve over time.” margins,” said Mark Sobel, a former Treasury official.
But given national security concerns in both countries, the perception in China that the US is trying to contain its economic progress and aggressive political language on both sides, he said: “Yellen’s journey will change the underlying dynamics and trajectory of the economic relationship barely change.”
Despite the differences between the US and China, Ms. Yellen was warmly greeted on her first visit to Beijing as Treasury Secretary.
Meeting with Premier Li Qiang, China’s second highest official, he said a rainbow had appeared over her head upon her arrival and suggested it was a symbol of hope that ties between the two countries could be restored .
After Ms Yellen was spotted at a restaurant serving food from Yunnan province on Thursday night, Chinese state media wrote about her impressive use of chopsticks and reported that bookings at the restaurant had spiked after she was seen eating mushroom dishes on social media. media.
Ms. Yellen also met with Chinese climate finance experts and had lunch with a group of Chinese women who are economists and entrepreneurs. She suggested that there are many areas where the United States and China can reach an agreement.
“Our people have many things in common – much more than our differences,” Ms Yellen said over lunch.
Anne Swanson reporting contributed.