US Treasury Secretary Janet Yellen arrived in Beijing on Thursday for a four-day visit to China, aiming to navigate the critical state of US-China relations. While US officials have downplayed expectations for major breakthroughs during Yellen’s visit, Chinese experts view the high-level communication channels as crucial to reversing the downward spiral in bilateral relations and rebuilding mutual trust.
Yellen’s mission in Beijing involves seeking common ground for collaboration between the two countries. She plans to meet with senior Chinese officials to emphasize the responsible management of US-China relations, address areas of concern, and tackle global challenges. The detailed itinerary of her visit has not been disclosed, but it is expected to conclude on Sunday, according to the Wall Street Journal.
US media outlets perceive Yellen’s visit as an effort to alleviate strained relations, marking a “deepening thaw” following the recent visit of US Secretary of State Antony Blinken to Beijing.
Regarded as a moderate voice within the Biden administration, Yellen has advocated for a less confrontational and more pragmatic approach to maintaining economic ties with China. She has opposed additional tariffs and warned against the disastrous consequences of “decoupling” from the world’s second-largest economy.
The discussions during Yellen’s visit will encompass negotiations on macroeconomic and fiscal policies, including the US debt problem. Trade and investment issues, such as US tariffs on Chinese goods, will also be addressed. Lü Xiang, a research fellow at the Chinese Academy of Social Sciences, believes that if the US takes the initiative to reduce or cancel some tariffs, it could signify a positive step in easing tensions and hold significance for the global economy.
Cancellation of additional tariffs, withdrawal of the “301 investigation” into China, and a review of the first phase of the China-US trade agreement are among the key issues on the agenda, according to Zhu Min, former deputy governor of the People’s Bank of China.
Yellen may also address fiscal and financial matters, aiming to persuade China to maintain or increase its holdings of US Treasury bonds to help the US address its own inflation issues.
Yellen’s visit coincided with China’s announcement of export controls on gallium and germanium, essential for chip and high-tech component manufacturing. Although not targeting Yellen directly, these controls are seen as a warning to the US amid the escalating chip war and high-tech crackdown. The US Commerce Department expressed firm opposition to China’s export controls, while China clarified that permits would be issued in accordance with regulations.
Experts view China’s export controls as a response to potential infringements on its interests and a signal that China will retaliate against the US. The situation raises concerns about rare-earth supplies, US debt allocation, and the exchange rate amid the changing US-China rivalry.
While high-level exchanges have resumed in certain areas, questions remain about the possibility of shaping a new framework for bilateral relations or whether the relationship has entered a new normal. Rebuilding mutual trust will take time, as the stability and predictability of the situation between the two countries are yet to be established.