The deep chill between the US and China has eased a bit over the past few days as Treasury Secretary Janet L. Yellen held protracted talks with a new group of leading economic policymakers in Beijing.
Mrs. Yellen used softer language for American economic strategy for China, rejecting a term that has caught the eye in Washington but offended Beijing. However, while more negotiations are the likely outcome of Ms Yellen’s trip to China, neither she nor the Chinese officials have backed down from their policy positions. That leaves the two sides facing the prospect of further conflict over trade, investment and technology.
She has forged ties with China’s economic leaders.
Last fall, Communist Party of China congress clear the way for the president, Xi Jinping, to install a new group of loyalists into the top economic roles. Officials — including Yellen’s counterpart, Deputy Prime Minister He Lifeng — often have less international experience than their predecessors and are less familiar with policymakers in the West. China has also gradually restricted the release of economic information, stopping many reports, making it difficult to know what is really going on with the Chinese economy.
One of Yellen’s top goals is to meet the new Chinese team. She also wanted to understand what was going on in China’s economyhas recovered more slowly than expected this year after China lifted nearly three years of strict pandemic measures.
Given these narrow goals at least, Yellen appears to have achieved some success as she held 10-hour talks with four of China’s top economic policymakers, especially Mr. He. Although the Biden administration has held several rounds of high-level diplomatic talks with China, these are the first such economic talks under this administration.
R. Nicholas Burns, the US ambassador to China, said that reopening the economic talks, “is very beneficial for us, to deliver tough messages directly on the issues that we deal with. disagree and join when our interests align with the world’s second-largest economy.”
She used a new D-word for the supply chain: ‘Diversity’.
Chinese officials who are sensitive to diplomatic language have strongly opposed calls in Washington over the past few years for the US economy to decouple or “decouple” from China. They fear that multinationals will move their vast supply chains and tens of millions of jobs from China to other countries.
The President of the European Commission, Ursula von der Leyen, introduced in March a softer and more neutral term: “eliminate risk.” Chinese officials and state media were initially less opposed to risk reduction, but began condemning it after the US national security adviser, Jake Sullivan, used it in a speech. schedule a month later.
During the trip, Yellen repeatedly sought to assuage China’s concerns that the United States seeks complete decoupling, and she even avoided mentioning risk reduction. Instead, she said that the United States wanted abundant supply chain — which is also China’s long-term public policy goal.
“There is an important distinction between decoupling and diversifying critical supply chains on the one hand or taking targeted national security actions,” she said.
The Biden administration insists that its recent restrictions on high-tech exports to China, especially the most advanced semiconductors, focus solely on US military security. The administration has tried to describe its actions as building a tall fence that encloses only a small technological yard.
But even after Yellen’s visit, many in China remain skeptical. Wu Xinbo, dean of the department of international studies at Fudan University in Shanghai, said that when the US presents policies that are “only for national security, then the question arises as to how large national security can be.” to what extent”.
She introduced no new policy. Neither does China.
Apparently absent from a press conference Ms Yellen held on Sunday, and from a separate statement by China’s official news agency, Xinhua, is any hint that even one of many trade, investment and technological issues between the two countries have been resolved.
China set restrictions Last Monday about the export of two important metals, gallium and germanium, used in computer chips. China produces almost the entire world supply of both materials. The export control measures are widely seen as retaliation for US limits on semiconductor exports to China, although Beijing has not described its measures as retaliation. Yellen, speaking Sunday on CBS’s “Face the Nation,” said the move was “likely” retaliation.
Beijing is also bracing for the long-discussed possibility that the Biden administration could restrict US investment in certain high-tech sectors of the Chinese economy. China imposed its own restrictions on overseas investment in 2015. Beijing has directed its companies and households to avoid speculating on American real estate and football clubs. Europe, instead pushing it to buy foreign businesses in aircraft manufacturing, heavy manufacturing, artificial intelligence, cybersecurity and other areas. strategic industries.
However, Ms Yellen tried to inject optimism into her visit on Sunday, as she sought to dismiss speculation that conflict might be inevitable.
“Navigating the contours of the relationship between the United States and China is no easy task, but we must never forget that, despite the challenges, our path is not predetermined, ” she said.
Alan Rappeport contribution report.
