Treasury Secretary Janet L. Yellen will travel to China on Wednesday, a high-stakes visit designed to help stabilize the fraught relationship between the world’s two largest economies.
The trip to China will be Ms Yellen’s first as finance minister and follows Foreign Minister Antony J. Blinken’s visit last month. It comes at a time of tension between the United States and Beijing following the discovery of a Chinese spy balloon crossing America earlier this year and Chinese frustration over the Biden administration’s efforts to deny China access to certain sensitive technologies.
The trip also coincides with a moment of heightened uncertainty for the global economy, with China’s post-pandemic manufacturing weakening and the United States trying to avoid a recession while keeping inflation in check.
Despite hopes of restoring dialogue, the meetings are likely to address sensitive issues that have been festering for years.
The Biden administration has taken steps to reduce America’s dependence on Chinese imports and has sought to limit China’s access to semiconductors, biotechnology and sensitive technology that enable things like robotics, artificial intelligence and advanced computing.
At the same time, China has frustrated the United States with its reluctance to renegotiate the terms of loans owed to it by poor countries facing default, and has maintained close economic ties with Russia despite that country’s invasion of Ukraine.
A senior Treasury Department official, who spoke on condition of anonymity about priorities for the trip, said on Sunday 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 common concerns.
The Treasury Secretary is expected to object to China’s recent ban on Micron Technology, the US-based manufacturer of memory chips used in phones, computers and other electronics. The Chinese government in May banned companies that process critical information from buying microchips from Micron, after the Biden administration recently took steps to ban Chinese chipmakers from accessing critical tools needed to make advanced chips. The company’s chips, which are used for memory storage in all sorts of electronics such as phones and computers, were deemed to have “relatively serious cybersecurity issues” by China’s internet watchdog after an assessment.
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 is accused of mass detention of Muslims. US officials also hope to gain a better understanding of the scope of China’s new counterintelligence law, which could pose new challenges for foreign companies.
While the grievances are likely to be voiced by both sides, Ms. Yellen intends to demonstrate that US actions to reduce reliance on China and protect national security are not intended to harm the two economies, which are deeply intertwined. , to “disconnect”.
Ms Yellen has softened his tone towards China in recent weeks, describing the relationship between Washington and Beijing as important for the whole world. In an interview with MSNBC last week, she suggested that “healthy competition” could benefit workers and businesses in both countries.
“My hope by traveling to China is to re-establish contact,” Ms Yellen said. “There is a new group of leaders, we need to get to know each other.”
She added that the two nations should “discuss our differences with each other so that we don’t have misunderstandings, don’t misunderstand each other’s intentions.”
The secretary of the treasury is likely to answer sharp questions from her counterparts about the intentions of the Biden administration amid concerns in China that America’s actions do not match his words.
The government has imposed sweeping restrictions on China’s access to advanced technology, saying Beijing’s ability to use such technology poses a threat to the national security of the United States.
In remarks at the Council on Foreign Relations in New York last Wednesday, Mr Blinken said it was in America’s interest to prevent Beijing from accessing technology that could be used to harm the United States.
“How is it in our interest to let them get technology that they can turn around and use against us?” he asked, citing China’s growing nuclear weapons program, development of hypersonic missiles and the use of artificial intelligence “possibly for repressive purposes”.
“If they were in our shoes, they would do the exact same thing,” he said, adding that the US “imposed very targeted, very narrowly defined controls.”
The White House has also prepared new investment restrictions to curb the US dollars used to finance the development of advanced technologies within China’s 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 reversed any time soon.
China has also expressed frustration with America’s efforts to refocus its supply chain away from China and toward other countries that the United States considers allies — a trend Ms. Yellen and other cabinet officials have dubbed “friendshoring.”
The United States, for its part, remains frustrated with China’s unwillingness to allow defaulting poor countries to restructure the terms of their loans, and is concerned about China’s weakening currency, which is hurting exports in the United States. becomes more competitive.
In addition to the currency tensions, China is struggling with domestic and international debt problems. The debt crisis in developing countries comes at a bad time for China. With a housing crisis moving in slow motion, many banks are already facing the potential for heavy losses on their loans to real estate developers and to local government financing units. That makes them hesitant to accept heavy losses on foreign loans, even though Western experts predict that developing countries may not be able to recover without significant debt relief.
U.S. officials had very limited contact with Chinese officials during the pandemic, as China almost completely closed its borders and stopped sending its officials to international economic meetings. China has also phased out the release of thousands of economic data sets in recent years as part of a national security campaign, making it even more difficult for US officials to understand what is happening in the Chinese economy.
In a sign of how seriously Beijing is taking Ms Yellen’s visit, China on Saturday appointed a new Communist Party secretary to head the country’s central bank: Pan Gongsheng, a prominent technocrat who has overseen China’s currency policy since 2016 as Director of State Administration. of foreign exchange.
Ms. Yellen and her team “will likely seek to gain more insight into China’s economy as it becomes more opaque,” said Christopher Adams, a former senior coordinator for Chinese affairs at the Treasury Department.