At her approval hearing in early 2021, Treasury Secretary Janet L. He promised to stand up to China’s “abusive, unfair and illegal practices”. in the United States.
Since then, Yellen has emerged as a voice for moderates in the Biden administration, carrying the mantle of economic realism as the global economy grapples with inflation and slow growth. The Treasury secretary challenged China’s record on human rights, called for diversification of U.S. supply chains, and acknowledged the paramount importance of protecting national security.
But she is also the administration’s most prominent supporter of maintaining economic ties with China, opposing tariffs, calling for caution on new investment restrictions in China, and most recently decoupling the two economies. He warned of “disastrous consequences”.
Yellen, who is scheduled to arrive in Beijing on Thursday for a four-day visit, will resolve these conflicting interests in real time. The trip, his first as Treasury secretary, will be the toughest test of economic diplomacy so far for Yellen as he seeks to defuse years of simmering mistrust between the United States and China.
The challenge for Ms. Yellen is to ensure that the series of U.S. measures to block access to sensitive technology, such as semiconductors, in the name of national security is not aimed at harming the Chinese economy. will convince you. It will not be easy as the two countries continue to create new barriers to trade and investment.
The Biden administration is preparing several new restrictions on US technology trade with China, including potential restrictions on advanced chips and US investment in China. The upcoming rule will also allow Chinese companies access to U.S. cloud computing services in a bid to close loopholes in previous restrictions on China’s access to advanced chips used in artificial intelligence, according to people familiar with the matter. It seems likely that they will be cracked down.
This week, the Chinese government said it would retaliate against the Biden administration’s semiconductor restrictions by restricting exports of certain key minerals used to make some chips.
The trip comes on Monday when Yellen met in Washington with Xie Feng, the Chinese ambassador to the United States, in what the Treasury Department described as a candid conversation, laying out “issues of concern.” Xie explained China’s objections to US trade practices and urged the US to take steps to resolve them, according to a summary of the conversation released by the Chinese embassy.
At a meeting in Beijing, Yellen said the Biden administration’s actions to reduce the U.S. economy’s reliance on China and boost domestic production of critical commodities were targeted and not intended. It seems to argue that no Instigate a wider economic war. China continues to hold nearly $1 trillion in U.S. debt and is the U.S.’s third largest trading partner, so a sudden severance could be catastrophic for both countries and the global economy.
“I think she’s going to say, as a sober voice of reason, that this is not a containment issue,” he said. Tim Adams, President of the Institute of International Finance and former Undersecretary of Finance for International Affairs. “It’s just about setting the tone for cooperation and showing that the United States remains interested in engaging with China on trade and investment.”
Over the past several decades, the Treasury Department has consistently been the U.S. government agency that has made the most efforts to maintain friendly relations with China. Throughout the 1990s, Wall Street firms, the department’s primary constituency, attempted to gain access to the Chinese market through negotiations for China’s accession to the World Trade Organization. When China joined the WTO in 2002, Wall Street firms and the Treasury Department called for China to act more quickly to actually open up its markets.
In November 2017, the Chinese government warned foreign investors to take larger stakes in insurance, banking and securities businesses as part of a series of failed concessions to avoid a trade war with the Trump administration. finally agreed to allow
Yellen’s first trip to Beijing as Treasury secretary is no stranger to China. In her role as President of the Federal Reserve Bank of San Francisco, she has been in regular contact with Chinese officials and from 2014 to 2018 she served as Chairman of the Board of Governors of the Federal Reserve System at international meetings with Chinese central bank officials. I was meeting with people.
Yellen’s qualification as an academic economist makes her a welcome emissary in Beijing.
Craig Allen, president of the U.S.-China Business Council, said: “They like her very much because she sees the world from an economic perspective, and they’re very happy about that.” .
Michael Pillsbury, Senior Fellow of China Strategy at the Heritage Foundation, said Chinese officials see Ms Yellen as an advocate for reason, allowing her to advocate to others in the Biden administration what the United States should do. Said I hope. He will withdraw from new investment restrictions and withdraw tariffs.
“They want Janet to work with them,” said Pillsbury, who served as Trump’s top China adviser. “They see her as her Chinese friend.”
Yellen doesn’t dictate trade policy, but she is critical of President Donald J. Trump’s tariffs on more than $300 billion worth of Chinese imports.
“Tariffs are taxes on consumers,” Yellen told The New York Times in 2021. “In some cases, what we did seemed to hurt the American consumer, and the kind of agreements negotiated by the previous administration were not really addressed.” It represents the fundamental problem we have with China. “
Those tariffs are still under review by the Office of the US Trade Representative, and Yellen conceded that they are unlikely to be lifted anytime soon.
Yellen’s ability to forge deeper ties with the Chinese government could be complicated by the current political moment.
Concerns about China have grown after a reconnaissance balloon crossed the United States and was shot down over the Atlantic. In addition, anti-China remarks are likely to escalate in the next presidential election, as candidates are trying to appeal to China as a winning message for the election campaign. And Republicans have voiced their criticism of US expansion into China.
Yellen’s visit follows that of Secretary of State Anthony J. Brinken last month. Special Climate Envoy John F. Kerry will visit Beijing soon.
Rep. Mike Gallagher (Wisconsin Republican), who heads the House Select Committee on the Communist Party of China, blames the Biden administration for slow export controls on Chinese telecom giant Huawei and human rights abuses against Uyghurs. He condemned the sanctions against Chinese officials. Xinjiang. He argued that China’s behavior worsened while the Biden administration pursued “zombie engagement” with the Chinese Communist Party.
Gallagher said, “After Blinken leaves Beijing without showing anything on this visit, doubling down, including sending additional ministerial-level officials like Secretary Yellen, will only perpetuate this vicious cycle.” Stated.
With Republican presidential candidates like Nikki Haley warning that China is “preparing for war” with the United States, for Yellen, even if the trip is non-negotiable, it’s a long-term relationship with China. It is even more urgent to find ways to keep the lines of communication open. if there is any significant progress.
Former head of the International Monetary Fund’s China division, Eswar Prasad, said: “The Chinese are very familiar with the US election cycle and I think this is part of the reason they are trying to be a little more open. ‘ said. “Both Secretary Yellen and the Chinese side would like to return to the position of viewing at least some of the economic relationship as a positive-sum game rather than a zero-sum game.”
Keith Bradshire contributed to the report.
