Yellen says China talks will help put relations on ‘surer footing’

Beijing — US treasury secretary Janet Yellen says 10 hours of meetings with senior Chinese officials in recent days were “direct” and “productive”, helping stabilise the superpowers’ often rocky relationship.

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

“The US and China have significant disagreements,” Yellen told reporters  at the US embassy in Beijing, citing Washington’s concern 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 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.

Secretary of state Antony Blinken visited Beijing in June, the first trip by the top US diplomat in Biden's presidency. Climate envoy John Kerry is expected to visit in July.

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 a Asia-Pacific Economic Co-operation gathering scheduled for November in San Francisco.

Yellen said her visit was aimed at establishing and deepening ties with China’s new economic team, reducing the risk of misunderstanding and paving 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 expects increased and more regular communications at the staff level.

Briefing reporters after the visit, a senior Treasury official said the trip as expected did not result in specific policy breakthroughs, but was “very successful” in terms of “re-establishing contact” and building relationships.

She said Chinese officials raised concern about an expected US 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 concern about US actions, so Washington could explain, and “possibly in some situations, respond to unintended consequences of our actions if they’re not carefully targeted”.

Decoupling would be ‘disastrous’

Yellen met officials including Prime Minister Li Qiang and People’s Bank of China deputy governor Pan Gongsheng, whom 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 hi-tech microchips that Washington fears could have military applications, and is considering an executive order to curb US investment in sensitive areas.

But some US legislators want stronger action. A bipartisan group has proposed giving the government sweeping powers to block billions in US investment into China.

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

Yellen stressed that any executive order would not be for economic gain and talked through what such an order “might look like” with her Chinese counterparts, according to the senior treasury official.

Asked about plans by Brazil, Russia, India, China and SA 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” that Chinese firms avoid providing Moscow with material support for the war or in evading sanctions.

Reuters