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US Treasury Secretary Janet Yellen concluded her four-day trip to China on July 9, at a time of heightened tensions between the world’s two largest economies.
She said in a conciliatory tone, “There are major differences between the United States and China. These differences must be communicated clearly and directly… We believe that the world is big enough for our two countries to flourish.”
Yelin is among the top US officials who have scheduled visits to China recently. US Secretary of State Anthony Blinken was in China on June 18-19, and Special Climate Envoy John Kerry will also visit soon. In November 2022, when US President Joe Biden met Chinese President Xi Jinping on the sidelines of the G-20 summit in Bali, Indonesia, Biden highlighted the need to maintain communication between the two countries.
The Treasury Secretary met with Chinese Premier Li Qiang and her counterpart, Vice Premier He Lifeng; Finance Minister Liu Kun, and chief banker of the People’s Bank of China, Pan Gongsheng.
The trip yielded no major agreement or breakthrough on many of the issues plaguing US-China relations — from raids on US companies in China in recent months to the US leading the call for “de-risking” the Chinese economy, which is chinese. had objected to.
However, several recent issues of concern have been discussed. Here are some points from Yellen’s visit:
1. The interests of corporate America were discussed
Yellen said in a letter that the American business community in China is concerned about its use of “non-market tools,” such as subsidies to state-owned and domestic firms in China, as well as “barriers to market access for foreign firms.” Aiming to promote Chinese enterprises. She also reported on recent actions taken against American companies, with officials questioning and raiding their headquarters for alleged violations of laws.
China’s recent decision on export restrictions has been reported for two critical metals (used in technologies such as semiconductors), gallium and germanium. “We are still assessing the impact of these measures, but they remind us of the importance of building resilient and diversified supply chains,” Yellen said.
2. Continued focus on “diversification and de-risking, not decoupling”
Repeating terminology first used by European Commission President Ursula von der Leyen in March this year, the strategy of “de-risking” and “diversification” from China was referred to rather than “decoupling”.
It has been interpreted as a desire to reduce dependence on China in the economic sphere – to supply materials or as a market for finished goods – so that potential risks to trade and disruption to supply chains are minimized when relations become strained. But the United States said that would not mean a policy of economic isolation (or disengagement).
In China, Yelin said, “there is an important distinction between decoupling, on the one hand, and, on the other hand, diversifying critical supply chains or taking targeted national security measures. We know that decoupling the world’s two largest economies would be disastrous for both countries and destabilize the world. It would be virtually impossible to do that “.
Anthony Blinken also reiterated the ideas after his visit this year, pointing to the links between the two economies. He said, “Our trade relationship reached an all-time high last year — about $700 billion in trade. American foreign direct investment in China has reached levels not seen since 2014.”
3. Common interests of climate finance and net zero carbon economies
Cooperation between the United States and China on climate finance was discussed, citing the two countries’ position as the largest emitters of greenhouse gases and largest investors in renewable energy.
“It is also critical that we encourage economy-wide shifts toward net zero, which must include the private sector,” Yellen said. She pointed to the G20 Sustainable Finance Working Group as one of the forums for this. The United States chairs the group, while China is the co-chair.
The group was given a mandate in 2021, to develop, in a collaborative manner, the evidence-based and climate-focused G20 Sustainable Finance Roadmap, to “improve sustainability reporting, identify sustainable investments, and align the efforts of international financial institutions with the Paris Agreement.”
Net zero or carbon neutrality refers to a state in which a country’s greenhouse gas emissions are offset by the absorption and removal of those gases from the atmosphere. This could be through creating carbon sinks, such as forests, or using technologies such as carbon capture and storage.
Notably, China has said it aims to reach net-zero status by 2060, while the US has kept 2050 as its own deadline. The New York Times reports that China has also made huge investments in solar installation, and in exporting solar panels to other countries.
But it also relies on coal for electricity and has said it plans to continue to do so.
Yellen said the G20 Sustainable Finance Group is a good example of “what bilateral cooperation can achieve” and that it should move forward. “Over the past three years, the Sustainable Finance Working Group has developed a roadmap for sustainable finance, held workshops on carbon pricing and non-pricing policy, developed a framework for transition finance, and made a set of recommendations on climate finance,” it added.
An editorial in China’s state-owned media agency the Global Times welcomed Yellen’s “positive” message. She said this could help establish a constructive economic and trade relationship and increase the chances of stability in bilateral relations.
But it also reiterated China’s position on its issues with the United States. Washington’s actions in recent years have so severely undermined the outside world’s confidence in China-US relations that it is difficult to trust anything the United States says. This can only be changed through concrete actions by Washington.
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