US, China pledge ‘healthy’ economic ties as Yellen visits Beijing

The United States and China are not seeking to weaken their economic ties despite ongoing disputes, US Treasury Secretary Janet Yellen and her Chinese counterpart have said as Yellen held a series of meetings with leaders in Beijing.

Yellen and China’s finance minister made the pledges on Friday, the second day of her four-day visit to the Chinese capital.

The trip is aimed at repairing fractious US-Chinese relations, which have soured amid disputes over security, technology and heightened competition between the world’s first and second largest economies.

Speaking to China-based US business leaders on Friday, Yellen said she had made it “clear that the United States does not seek a wholesale separation of our economies”.

“A decoupling of the world’s two largest economies would be destabilising for the global economy, and it would be virtually impossible to undertake,” she said.

Yellen held talks later in the day with Chinese Premier Li Qiang, and she stressed the need for cooperation. She also raised concerns over Beijing’s treatment of US companies operating in China while defending US policies that seek to curb China’s access to critical technologies.

The Chinese finance ministry called Yellen’s visit a “concrete measure” to advance a November agreement between US President Joe Biden and his Chinese counterpart, Xi Jinping, to improve relations.

However, the ministry mentioned no initiatives in that regard and called on Washington to make the first move.

“There will be no winners in trade wars or ‘decoupling and broken chains’,” it said in a statement. “We hope the United States will take concrete actions to create a favourable environment for the healthy development of economic and trade relations.”

For his part, Li struck an optimistic tone about the possibility of improving relations. Referring to a rainbow that appeared after Yellen’s plane landed on Thursday in rainy weather, he said: “After a round of wind and rain, we will definitely see more rainbows.”

Ongoing disputes

Still, the countries offered little in the way of tangible steps to resolve ongoing disputes.

In her meeting with Li, Yellen defended “targeted actions” taken by the US, an apparent reference to curbs on Chinese access to advanced processor chips and other technology that has increasingly become a sticking point for Beijing.

Yellen said such measures are done solely in the name of national security and not to stifle Chinese advancement.

“You may disagree,” Yellen said. “But we should not allow any disagreement to lead to misunderstandings that needlessly worsen our bilateral economic and financial relationships.”

Yellen also appeared to reference complaints from US companies that say Beijing is stepping up its use of subsidies and market barriers to protect Chinese companies.

US and other foreign companies have become increasingly uneasy about their status in China after raids on consulting firms, the expansion of a national security law in Hong Kong, and calls by Xi and other officials for greater self-sufficiency.

Yellen appealed for “healthy economic competition”.

“A fair set of rules will benefit both of our countries,” Yellen said. “We also face important global challenges where the United States and China have a duty to both countries but also to the world to cooperate.”

Recent data showed the US-China trade relationship is fundamentally solid with two-way trade hitting a record $690bn last year.

More visits planned

Yellen is the second-highest-ranking Biden administration official to visit China after Secretary of State Antony Blinken made the trip in June.

After meeting with Xi, Blinken said the duo had agreed that the countries’ mutual rivalry should not veer into conflict.

Treasury officials had previously said Yellen would not meet with Xi on her visit to Beijing and that no breakthroughs were expected.

But much like Blinken, Yellen appealed for “regular channels of communication” between the two countries during her trip.

On Friday, Yellen also met with the outgoing governor of China’s central bank, Yi Gang, and former Vice Premier Liu He, according to the Treasury Department.

On Saturday, she is to meet with China’s vice premier as well as female economists.

Yellen’s visit proceeded despite a recent diplomatic flare-up between Washington and Beijing that was sparked when Biden referred to Xi as a “dictator” in offhand remarks.

Despite protests from China, Biden stood by the comments, saying they were “just not something I’m going to change very much”.

Blinken had previously been set to visit China in February, but that trip was delayed after a Chinese surveillance balloon drifted over the US and was subsequently shot down.

Biden’s climate envoy, John Kerry, is scheduled to visit China next week.