Yellen sees ‘progress’ in rocky US relations with China

United States Treasury Secretary Janet Yellen says her 10 hours of bilateral meetings with senior Chinese officials have been “direct” and “productive”, helping stabilise the often rocky relationship as her four-day Beijing trip ends.

Before departing China on Sunday, Yellen said the US and China remained at odds on a number of issues but expressed confidence her visit had advanced efforts to put the relationship on “surer footing”.

“The US and China have significant disagreements,” Yellen told a press conference at the US embassy in Beijing, citing Washington’s concerns about what she called “unfair economic practices” and recent punitive actions against US firms.

“But President (Joe) Biden and I do not see the relationship between the US and China through the frame of great power conflict.

“We believe that the world is big enough for both of our countries to thrive.”

With US-China relations at a low over national security issues, including Taiwan, US export bans on advanced technologies and China’s state-led industrial policies, Washington has been trying to repair ties between the world’s two biggest economies.

The US diplomatic push comes ahead of a possible meeting between Biden and President Xi Jinping at September’s Group of 20 summit in New Delhi or an Asia-Pacific Economic Co-operation gathering scheduled for November in San Francisco.

Yellen said her visit aimed to establish and deepen ties to China’s new economic team, reduce the risk of misunderstanding and pave the way for co-operation in areas such as climate change and debt distress.

“I do think we’ve made some progress and I think we can have a healthy economic relationship that benefits both of us and the world,” she said.

She said Chinese officials raised concerns about an expected executive order restricting outbound investment, but she assured them any such measure would be narrow in scope and enacted in a transparent way through a rule-making process that would allow public input.

Yellen said she told Chinese officials they could raise concerns about US actions so that Washington could explain, and “possibly in some situations, respond to unintended consequences of our actions if they’re not carefully targeted”.

Yellen met with officials including Premier Li Qiang and People’s Bank of China Deputy Governor Pan Gongsheng, who she referred to as the head of the central bank, appearing to confirm his expected promotion.

She also met US companies doing business in China, climate finance experts and women economists.

In her meetings with officials, she urged more co-operation between the sides on economic and climate issues while criticising what she called “punitive actions” against US companies in China.

She reiterated that Washington was not seeking to decouple from China’s economy, as doing so would be “disastrous for both countries and destabilising for the world”.

The US has implemented export controls designed to restrict China’s ability to acquire high-tech microchips that could have military applications and is considering measures to curb US investment in sensitive areas.

Some US representatives want stronger action, with a bipartisan group proposing sweeping powers for the government to block billions in US investment into China.

Yellen said she had emphasised to her Chinese counterparts any investment curbs would be “highly targeted and clearly directed, narrowly, at a few sectors where we have specific national security concerns”.

Asked about plans by Brazil, Russia, India, China and South Africa to create a common trading currency for their BRICS group, Yellen said she expected the dollar to remain the dominant currency in international transactions.

On Russia’s war in Ukraine, she told her Chinese interlocutors it was “essential” Chinese firms avoid providing Moscow with material support for the war or to evade sanctions.