The recent visit of Janet Yellen to Beijing has raised hopes that it may pave the way for two rival global nations to come together for economic reasons, as it plays out to be in favour of both.
Last week the U.S. Treasury Secretary Janet Yellen went on a four-day diplomatic trip to China, where she met with top Chinese economic officials, including Premier Li Qiang, former Vice Premier Liu He, and former People’s Bank of China Gov. Zhou Xiaochuan.
This is Yellen’s first visit to Beijing as Washington’s chief financial officer, yet many economists worry the United States’ and China’s competing interests may make the trip fruitless at best – and downright hostile at worst. But that is not how the Chinese government and media, both, have played the visit
In contrast to the earlier visits of U.S. Secretary of State Antony Blinken flowing to China for bilateral talks – months after his February trip was cancelled due to evidence of a Chinese spy balloon over U.S. territory. And U.S. President Joe Biden met Chinese President Xi Jinping in Bali, Indonesia, on the sidelines of the G-20 summit last year, where they discussed international debt relief and economic priorities. Yellen’s visit to China is being played-up rather kindly by the Chinese media.
Yellen is considered a politician with a ‘Dovish’ image in China due to her pragmatic style as an economist, and which has helped her to have working friendly relations with top Chinese officials. The manner in which her visit was referred to by the Chinese Premier Li Qiang also demonstrates that Chinese have high hopes from this visit and wants Yellen to take the message back with her for President Joe Biden that: There will be no winners in trade wars and an economic “decoupling is futile.
The comments, which were made by Premier Li, however have been very uplifting as usually Chinese leadership refrains from making such comments. Li said, “Yesterday, the moment you arrived at our airport and left the plane, we saw a rainbow, I think it can apply to the US-China relationship too: after experiencing a round of winds and rains, we surely can see a rainbow.”
Li further said Chinese enterprises must observe the world economy and look forward and cannot just look at the water under their feet on rainy days. He said this practice could also be applied to the Sino-U.S. relations.
Earlier, in May, G-7 leaders met in Japan and agreed that their members should “de-risk” from China. Beijing said there is no difference between “de-risking” and “de-coupling” as both will lead to the departure of foreign firms from China. In contrast Yellen preferred to describe the United States’ strategy as “diversification.” And hopes to emphasise Economic Cooperation—Not Decoupling with Beijing.
Just last week, China announced new restrictions on the export of gallium and germanium, two key metals necessary to produce vital semiconductor chips. And last week, the Biden administration considered placing additional limits on the sale of high-end chips used to develop artificial intelligence – an emerging industry the two powerhouses have raced to control.
Still, Yellen hopes to strengthen key Biden administration policies while also reassuring Beijing that the United States’ actions aren’t meant to harm the Chinese. That means emphasising cooperation and supply chain diversification instead of economic decoupling, demanding greater transparency from China’s new espionage law, addressing unfair market barriers against U.S. firms, and discouraging Beijing from supplying Russia with lethal aid in its war against Ukraine – something China continues to deny doing. China’s concerns, however, centre more on past U.S. actions. Specifically, top Chinese officials want to counter tough trade tariffs imposed during the Trump administration as well as sanctions against Chinese companies.
Yellen faces a tough challenge, for she has to convince Beijing that the slew of “de-risking” measures Washington, and some of its allies, have been taking are not intended to contain China or decouple the two economies. Her job is all the more difficult all the wrong moves targeting China have been initiated by the United States.
Yellen’s is perhaps the only voice of reason amid the belligerent anti-China din in Washington, currently. She has termed the tariffs that the US has imposed on China, as “taxes on consumers “and warned,” decoupling could be “disastrous”.
During the visit, Yellen also focussed on Climate Change financing. She said that previous cooperation on climate change between the U.S. and China had made possible global breakthroughs such as the 2015 Paris Agreement, adding that both governments wanted to support emerging markets and developing countries as they strive to meet their climate goals. China, surprisingly classified as a developing country by the United Nations, has long said it was the responsibility of developed nations to help poor countries pay to address climate change. But Beijing says it could contribute to “loss and damage” due to climate change on a voluntary basis. Given their scale of economies, cooperation between the U.S. and China is considered vital to international efforts to avert the worst impacts of climate change. Yellen said financing for such initiatives should be coordinated efficiently and effectively, adding that Beijing’s support for existing multilateral climate institutions like the Green Climate Fund (GCF) and the Climate Investment Funds, alongside the Washington and others, could boost their impact.
China is welcome to join the United States in contributing to a round of fund pledging for the GCF in September, a U.S. Treasury official said. For that fund replenishment, President Joe Biden has said the U.S. would provide a further $1 billion. Chinese newspaper China Daily described the visit as coming at a critical time for U.S.-China ties, and therefore technically it is a test of whether she can take the decade-long good working relations she has built with her “old friends” in China forward and allay, if not altogether eliminate, the increasing distrust between the world’s two largest economies.
In reality, both China and the US need to and have the capability to increase economic exchanges and cooperation. Hopefully, Yellen’s visit will help stabilise market expectations and create conditions for the enterprises of the two countries to boost normal economic, trade and investment activities.
Asad Mirza is a Delhi-based senior political and international affairs commentator.