USA-China: Yellen Speaks About Strong Economic Ties
In a significant diplomatic effort to strengthen USA-China economic relations, Treasury Secretary Janet L. Yellen and her Chinese counterpart, Vice Premier He Lifeng, have concluded two days of intensive discussions in San Francisco. Their commitment to forging a “healthy economic relationship” and working collaboratively signals a thawing of relations between the United States and China, the world’s two largest economies.
Averting Economic Decoupling
The two economic powerhouses seem determined to avoid “decoupling” their economies. This move both parties believe would be detrimental to their own nations and the global stability and economic order. Ms. Yellen emphasized the importance of preserving strong ties. She also underlined that economic interdependence is vital in an increasingly interconnected world.
Global Economic Challenges
The timing of these discussions is crucial, given the ongoing USA-China economic challenges. While the United States has shown signs of economic strength, the Chinese economy has been grappling with sluggish growth. Recent statistics reveal falling prices in China as households and businesses remain cautious about spending. And that happens despite state-controlled banks investing in the construction of new factories.
Setting the Stage for Diplomacy
The talks between Yellen and He paved the way for a highly anticipated meeting between President Biden and China’s top leader, Xi Jinping, during the upcoming Asia-Pacific Economic Cooperation summit in San Francisco. After years of strained relations, the Biden administration is prioritizing the stabilization of the USA-China relationship. They are also establishing economic and financial working groups to address grievances and explore collaborative opportunities.
Contentious Economic Issues
Numerous contentious economic issues continue to challenge the USA-China relationship. The mistreatment of American companies in China, intellectual property theft, and China’s dominance in the electric vehicle market remain sources of concern for US officials. Conversely, China has expressed its discontent regarding restrictions imposed by the US on Chinese investment, tariffs applied to Chinese imports, and challenges encountered by Chinese companies investing in the United States.
USA-China: Pursuing Fair Treatment
Treasury Secretary Yellen insists that a “healthy economic relationship requires American workers and firms to be treated fairly,” emphasizing the importance of creating a level playing field for all businesses.
During the discussions, Yellen also expressed concerns about Chinese companies supporting Russia’s defence sector. She urged her counterpart to take measures to prevent Chinese companies from violating American sanctions.
Strengthening Bilateral Communication
Yellen highlighted the significance of face-to-face meetings with China’s economic team, helping the US better understand China’s post-pandemic recovery plans. She assured that the Biden administration is actively working to raise tax revenue and reduce budget deficits. China, as one of the largest holders of US Treasury securities, closely monitors the fiscal outlook in the United States.
China: Challenging Political Landscape
These high-level meetings coincide with a shifting political landscape regarding relations with China. While some Republican presidential candidates advocate for severing economic ties, Yellen emphasizes the necessity of diversifying supply chains and the dire consequences that further deterioration of economic ties could have on the global economy.
Hope for Preventing Escalation
Although there were no specific policy breakthroughs, Yellen remains hopeful that continued dialogue will help prevent misunderstandings and unintended escalations, leading to specific policy outcomes that benefit both nations.
Moreover, Yellen and He reached an agreement to work together in addressing climate change and offering debt relief to low-income nations at risk of default. They pledged to maintain regular communication and anticipate future diplomatic visits to strengthen economic cooperation.
