US Treasury Secretary Janet Yellen unequivocally declared on Friday that any attempt to sever the interdependence of the US and Chinese economies would be utterly futile. Yellen boldly asserted that such a monumental undertaking would not only pose immense challenges but also unleash grave repercussions that would profoundly affect global markets. These resolute remarks were delivered amidst great anticipation during her highly anticipated visit to Beijing, where she engaged in numerous pivotal discussions with esteemed government officials and influential business leaders.
Yellen’s visit to China, her first as Treasury chief, marks an important milestone. Notably, she follows in the footsteps of Secretary of State Antony Blinken, who also recently made a significant visit to China.
The United States has in recent months said it is seeking to “de-risk” from China by limiting the world’s second-largest economy’s access to advanced technology deemed crucial to Washington’s national security.
The US has blacklisted a number of Chinese companies to prevent them from accessing the most advanced chips while pushing its allies to follow suit.
Yellen on Friday stressed that Washington was not seeking a “wholesale separation of our economies”.
“We seek to diversify, not to decouple. A decoupling of the world’s two largest economies would be destabilising for the global economy,” Yellen told a meeting with representatives of US businesses at a session hosted by the American Chamber of Commerce in Beijing.
“And it would be virtually impossible to undertake.”
Ahead of Yellen’s trip, Beijing unveiled new export controls on metals key to semiconductor manufacturing on national security grounds, in the latest salvo in the chips war.
The Treasury secretary Friday told American businesspeople Washington was “concerned” about the curbs.
“We are still evaluating the impact of these actions, but they remind us of the importance of building resilient and diversified supply chains,” she said.
‘Win-win’
Beijing has expressed a positive outlook regarding the visit, as China’s finance ministry stated on Friday that it aims to enhance communication and interchange between the two nations.
“The nature of China-US economic and trade relations is profoundly beneficial and a thrilling win-win scenario. In the face of a trade war or any talk of ‘decoupling and breaking chains,’ there can be no winners. These words, spoken passionately by an official from the ministry, highlight the interconnectedness and shared prosperity that defines the bond between China and the US.”
On Friday morning, Yellen had an utterly captivating and intellectually stimulating dialogue with her esteemed former counterpart, the distinguished Vice Premier Liu He, alongside the remarkable outgoing governor of China’s central bank, the indomitable Yi Gang, as reported by an awe-inspiring US Treasury official.
“They discussed the global economic outlook as well as the respective economic outlooks for the United States and China,” the official added.
On Friday afternoon, Yellen is due to meet Premier Li Qiang at Beijing’s Great Hall of the People, providing a chance to discuss the economic relationship, raise concerns and find opportunities for collaboration.
“Yellen actually appears to be a more down-to-earth member of the Biden administration,” Tao Wenzhao, a fellow at the Chinese Academy of Social Sciences, told AFP.
“I think we welcome Yellen’s visit, and this on a functional level should allow both sides to warm up to each other,” he said.
“We are now reshaping, rebuilding China-US relations.”
‘Avoid misunderstanding’
In a tweet after arriving on Thursday, Yellen said that although the United States would protect its national security when needed, “this trip presents an opportunity to communicate and avoid miscommunication or misunderstanding”.
The United States does not expect specific policy breakthroughs this time, but hopes for frank and productive conversations that can pave the way for future talks, a US Treasury official told reporters on Thursday.
But, they said, “especially if they’re things that we may disagree about, it’s even more important that we’re talking”.
Tensions soared earlier this year when the United States detected and then shot down what it said was a Chinese spy balloon after the craft traversed its territory.
Blinken cancelled a visit to China over the incident but eventually travelled to the country in June.
During that trip, both sides agreed on the need to stabilise their relationship.
But Yellen faces an uphill struggle in persuading officials in Beijing that US actions — such as tightened export curbs on high-end semiconductors — are aimed at safeguarding national security and not an attempt to stifle China’s economic rise.
The Wall Street Journal reported that the US administration is considering the possibility of limiting Chinese firms’ access to US cloud computing services provided by companies like Amazon and Microsoft. This move is due to the challenges that could potentially arise from such a restriction.
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