Yellen's China trip yields long meetings, 'cordial' tone, but no
consensus
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[July 10, 2023]
By David Lawder
WASHINGTON (Reuters) - U.S. Treasury Secretary Janet Yellen went to
Beijing with no expectations that meetings with China's new top economic
officials would immediately ease tensions between the world's two
largest economies.
There was no breakthrough. And it's far from clear whether the 10 hours
of meetings, covering issues ranging from U.S. technology export
controls to China's new "anti-espionage" law and other punitive actions
against U.S. firms, will do anything to change the relationship's
trajectory.
But Yellen met her objective of opening communications with her new
Chinese counterpart, Vice Premier He Lifeng, and explaining U.S.
intentions on a broad range of policies.
"The accomplishment of the meeting was the meeting itself, not specific
issues," said Scott Kennedy, a China economics expert at the Center for
Strategic and International Studies in Washington. "We're starting from
a point in which the two sides have barely spoken to each other in three
and a half years and the level of mistrust and cynicism has been layered
on so thick."
But he said it was significant that Yellen, He and other Chinese
officials could hold civil, substantive discussions about policy
differences after years of acrimony over the COVID-19 pandemic, tariffs,
national security, trade restrictions and increasing difficulties for
U.S. firms in China.
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China's state-run Global Times newspaper described the tone of Yellen's
visit as "pragmatic" and "rational," but the "positive" expectations it
generated are like "a candle in the wind, weak and uncertain."
"People are more inclined to believe that Washington's policy direction
toward China is still focused on containment and suppression, and there
has been no change in the securitization of economic and trade issues by
the U.S.," the nationalist tabloid said.
A senior U.S. Treasury official accompanying Yellen on her first trip to
China as secretary described it as "respectful, frank and constructive,"
adding: "She was warmly received."
Her meeting on Saturday with He, China's new economic czar, was
scheduled for two hours but lasted five, followed by a "cordial" dinner,
the official said.
Yellen also met with Chinese Premier Li Qiang and People's Bank of China
Deputy Governor Pan Gongsheng during the trip, as well as senior
executives of U.S. companies doing business in China and six female
economists to highlight the need for gender diversity.
'SIGNIFICANT DISAGREEMENTS'
Yellen told reporters that she and her Chinese counterparts aired
"significant disagreements," and cited U.S. concerns about China's
"unfair economic practices" and recent punitive actions against U.S.
firms, including restrictions on critical semiconductor metals.
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![](../images/071023PIX/news_p14.jpg)
U.S. Treasury Secretary Janet Yellen
speaks during a press conference at the U.S. embassy in Beijing,
China, July 9, 2023. REUTERS/Thomas Peter
![](http://archives.lincolndailynews.com/2023/Jul/10/images/ads/current/graue_lda_preowned_070323.jpg)
Among issues brought up by the Chinese side was President Joe
Biden's consideration of a potential executive order to block
billions of dollars in U.S. investments into China related to
sensitive technologies such as quantum computing and artificial
intelligence.
Yellen said she told her Chinese counterparts that no decisions to
proceed had been made, and any Treasury-administered investment
curbs would be "highly targeted, and clearly directed, narrowly, at
a few sectors where we have specific national security concerns."
Trade experts said after the meetings it was still difficult to see
how Washington and Beijing would move towards compromise, but that
it was better for the two sides to talk.
"I think Yellen struck the right tone, balancing efforts by the U.S.
government and businesses to de-risk and diversify supply chains
with the reality that the United States and China still have an
important economic relationship," said Jake Colvin president of the
National Foreign Trade Council, which represents major U.S.
companies on trade matters.
Hong Hao, chief economist at Grow Investment Group in Hong Kong,
said a possible outcome could be an easing of some tariffs on
Chinese goods from a U.S. review now underway.
"Yellen has a say in the next phase of the U.S.'s four-year tariff
review," Hong said.
But Colvin said that with 2024 elections looming, it would be
"politically difficult" for Biden to unilaterally ease tariffs or
other restrictions without reciprocal action by China.
In the meantime, Yellen said the talks set the stage for more
frequent U.S.-China communications at the staff level about economic
issues, including areas of disagreement.
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Her visit is expected to be followed later this month by John Kerry,
Biden's climate envoy, to discuss areas where the world's two
largest carbon emitters could cooperate on fighting climate change.
U.S. Commerce Secretary Gina Raimondo has also expressed a desire to
visit China.
The Yellen trip boosts chances for a meeting between Biden and
Chinese President Xi Jinping later this year, said Wang Yiwei, an
international relations professor at Renmin University in Beijing. A
possible venue for this would be the Asia-Pacific Economic
Cooperation summit in San Francisco in November.
(Reporting by David Lawder; Additional reporting by Andrea Shalal in
Anchorage, Alaska, and Ryan Woo, Ellen Zhang and Qiaoyi Li in
Beijing; Editing by Stephen Coates)
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