Yellen to Visit China in Bid to Steady Economic Ties

Treasury Secretary Janet L. Yellen’s visit to China on Wednesday will be a high-stakes visit to try to stabilize the sour relationship between the world’s two largest economies.

Yellen’s visit to China will be her first as Treasury secretary and follows that of Secretary of State Anthony J. Brinken last month. A Chinese spy balloon crossing the United States was spotted earlier this year, raising tensions between the United States and China following Chinese complaints about the Biden administration’s efforts to block China from accessing certain classified technology. It happened while I was growing.

The visit also coincides with heightened uncertainty in the global economy, with China’s post-pandemic output stagnating and the United States trying to keep inflation in check while avoiding a recession.

Despite hopes of resuming dialogue, the talks are likely to also address sensitive issues that have been plaguing for years.

The Biden administration is taking steps to reduce U.S. reliance on Chinese imports, seeking to limit China’s access to semiconductors, biotech and sensitive technologies that underpin robotics, artificial intelligence capabilities, high-end computing and more. .

At the same time, China has irked the United States, which is reluctant to renegotiate loan terms from poor countries facing default, and has maintained close economic ties with Russia despite its invasion of Ukraine. ing.

A senior Treasury official, who spoke on condition of anonymity about the priorities of the trip, said on Sunday that Ms Yellen would meet with Chinese government officials and U.S. companies doing business in China. The official said Yellen plans to discuss global challenges and areas of common concern with the Chinese side.

The Treasury secretary is expected to challenge China’s recent ban on Micron Technology, the US-based maker of memory chips used in phones, computers and other electronic devices. After the Biden administration recently took steps to ban Chinese chip makers from accessing critical tools needed to make advanced chips, the Chinese government announced in May that companies handling critical information were Micron’s Micron. Forbidden to buy chips. The company’s chips, which are used as memory storage in phones, computers and all sorts of electronic devices, were reviewed by China’s Internet watchdog and deemed to pose a “relatively serious cybersecurity problem.”

Yellen is also expected to express concern about human rights abuses related to China’s treatment of ethnic minorities in the Xinjiang Uighur Autonomous Region, where the Chinese government has been accused of mass detention of Muslims. U.S. officials also want to learn more about the scope of China’s new anti-espionage law, which could pose new challenges for foreign companies.

There will likely be complaints from both sides, but Yellen said US actions to reduce reliance on China and safeguard national security were intended to “detach” the two highly intertwined economies. I’m going to claim it’s nothing.

In recent weeks, Yellen has been soft-spoken about China, saying that US-China relations are important to the whole world. In an interview with MSNBC last week, he suggested that “healthy competition” could benefit workers and businesses in both countries.

“My hope for a visit to China is to re-establish contact,” Yellen said. “We have a new group of leaders. We need to get to know each other.”

He added that the two countries “need to discuss their differences with each other to avoid misunderstandings and misunderstandings of each other’s intentions.”

The Treasury secretary is likely to answer penetrating questions from the Treasury secretary about the intentions of the Biden administration amid concerns within China that US actions do not match its words.

The administration has imposed sweeping restrictions on China’s access to advanced technology, saying Beijing’s ability to use such technology poses a national security threat to the United States.

Blinken said in remarks at the Council on Foreign Relations in New York last Wednesday that it was in the United States’ interest to block China’s access to technology that could be used to harm the United States. rice field.

“What would be in our interest to have access to technology that they could turn to use against us?” The question cites the development of missiles and the “possibility of suppression” of artificial intelligence.

“If they were in our shoes, they would do exactly the same thing,” he said, adding that the U.S. imposed “very targeted, very narrow regulation.”

The White House is also preparing new investment restrictions aimed at reducing the US dollar used to fund the development of advanced technology within China’s borders.

Yellen has also questioned the effectiveness of tariffs on Chinese imports in the past, but the tariffs imposed by the Trump administration are still in place and unlikely to be lifted anytime soon. .

China has also expressed frustration at U.S. efforts to redirect supply chains away from China and toward other countries the U.S. considers allies, a trend Ms Yellen and other Cabinet members have called a “friendship”. It’s called shoring.

Meanwhile, the U.S. continues to be frustrated by China’s unwillingness to allow poor countries facing default to restructure their loan terms, prompting the government to bolster China’s currency to make its exports more competitive in the U.S. I am worried about the price.

In addition to currency tensions, China is suffering from domestic and foreign debt problems. The developing country debt crisis comes at a bad time for China. As the housing crisis unfolds slowly, many banks already face the potential for heavy losses on loans to property developers and municipal lending arms. That is why they are concerned about accepting large losses on foreign loans, even though Western experts predict that developing countries may not be able to recover without massive debt relief. ing.

Contact between U.S. and Chinese officials has been very limited throughout the pandemic, when China has almost completely closed its borders and stopped sending officials to international economic meetings. China has also phased out thousands of batches of economic data over the past few years as part of a national security campaign, so US officials have no idea what is happening in the Chinese economy. is becoming more difficult to do.

In a sign of how seriously Beijing is taking Yellen’s visit, Beijing on Saturday appointed a new Communist Party secretary to head the country’s central bank. Pan Gongsheng is a prominent technocrat who has overseen China’s monetary policy as Chief Executive since 2016. of forex.

Christopher Adams, former senior Treasury senior coordinator for China affairs, said Yellen and her team “will seek to gain more insight into an increasingly uncertain Chinese economy.”

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