US urged to address China’s concerns as Yellen lands in Beijing

As US Treasury Secretary Janet Yellen landed in Beijing on Thursday to kick off a long-awaited visit, many in China are watching the latest round of talks between Chinese and US officials with mixed feelings, with businesses and analysts welcoming the trip while remaining cautious over the potential breakthroughs it could achieve.

At the heart of such mixed feelings is the question of the US’ sincerity in not only pursuing productive communication with China, but also earnestly addressing each other’s core concerns, experts noted. To many Chinese, US officials, including Yellen, have repeatedly stated they do not seek to decouple from China or contain China, but their actions, that range from lingering tariffs on Chinese goods to blatant crackdowns on Chinese firms and strict restrictions of high-tech supplies, show the exact opposite.

Facing such a two-faced approach by Washington, China is well-prepared to respond in kind by maintaining communication with US officials, while also taking necessary measures to firmly safeguard its sovereignty, security and development interests against US aggression, industry insiders and experts said, pointing to the recent announcement of export controls on two metals crucial for the making of chips and other high-tech components.

Yellen arrived in China on Thursday and will visit through Sunday, during which she is expected to meet senior Chinese officials. The trip has garnered widespread global attention as talks between Chinese and US officials in recent months have increased. It comes just weeks after US Secretary of State Antony Blinken’s visit to China, and as the world faces serious challenges from an economic downturn and debt distresses to climate change, which all require cooperation between the world’s two biggest economies.

“I can’t say anything about ‘expectations,’ but the hope is that there will be some relaxation [in tensions] between China and the US, including trade, finance, technology and even business exchanges, especially in the current situation where the global economy is under pressure,” an insider in the Chinese mechanical and electrical industry who is closely involved in businesses in the US told the Global Times on Wednesday.

Such low expectations are shared by many, including apparently US officials. “No major breakthroughs are expected, but Yellen will push to open new lines of communication and coordination on economic matters, and stress the consequences of supplying lethal aid to Russia,” US officials said, Reuters reported on Wednesday.

Citing US National Foreign Trade Council President Jake Colvin, Reuters reported that the trip “won’t end $360 billion in tariffs imposed under former president Donald Trump, or export controls that have gathered steam under [US President Joe Biden].”

While those thorny issues are not expected to be addressed through a single trip, there should be talks at least on how to address them, as they remain sticking points in the bilateral economic and trade relationship that prevent any meaningful improvement in bilateral ties, analysts said. The US’ failure to demonstrate a willingness to address these issues also lays bare the US’ insincerity, they further pointed out.

“If the US is to show its sincerity, it must do so by adopting concrete policies, such as lowering tariffs with China, relaxing restrictions on investment in China, and so on,” Hu Qimu, deputy secretary general of the digital real economies integration Forum 50, told media.

However, as US officials have been saying one thing yet doing the exact opposite, “public statements by US politicians do not have any credibility,” Hu said, adding that the “biggest achievement” of the trip is likely to be that both sides are still talking.

Yellen, who is widely viewed by Chinese analysts as a pragmatic economic official, has been vocal about cutting US tariffs on Chinese exports and avoiding decoupling. In 2022, she said that lowering US tariffs on Chinese goods was “worth considering” given its “desirable effects” on lower US inflation.

Last month, she warned that “it would be disastrous for us to attempt to decouple from China,” adding that “I certainly do not think it is in our interest to stifle the economic progress of the Chinese people.”

However, growing signals, including from the US Treasury Department, portend that Yellen will likely largely repeat the same talking points as previous US officials have. In a media advisory about the trip on Sunday, the department reiterated three principles guiding the US economic relationship with China laid out by Yellen in April. They include securing the US’ and its allies’ national security interests and protecting human rights, seeking a healthy economic relationship with China, and cooperating on global challenges.

Analysts noted that “securing national security and protecting human rights” have become a catch-all pretext for the US to launch economic, trade and technological crackdowns against China.

Under such pretexts, the US Treasury Department has imposed sanctions on Chinese entities and individuals, and there should be a discussion on their removal, said Gao Lingyun, an expert at the Chinese Academy of Social Sciences in Beijing. “If the US wants to show its sincerity, it must first match its words with deeds,” Gao told media on Wednesday.

However, that might be hard to achieve, as Yellen, during her speech in April, stated that securing US national security and protecting human rights “are areas where we will not compromise.”

China has made clear that  it will firmly safeguard its own national security and interests, though the difference is that China’s national security and interests are actually threatened by constant US crackdowns and sanctions. On Monday, China announced export controls on gallium and germanium, which are critical for the making of chips and other high-tech components. Chinese officials maintained that the move is to protect China’s national security and interests, but it has been widely viewed as a response to West’s restrictions on chips and other supplies.

Foreign media outlets have linked the move to Yellen’s trip. Chinese analysts said that while there is no direct link, it shows that China will firmly safeguard its own national security and interests against the US-led West’s aggression, while keeping lines of communication open with the US and even pursuing cooperation in areas where they can.

During the trip, “it cannot be ruled that the two sides can make some progress in the area of financial and macroeconomic policies,” Gao said, noting that both sides share a common interest in coordinating macroeconomic policies.

Or at least that is the hope of many in the financial industry. “I hope that Yellen’s visit to China will help the two countries increase macro-policy coordination and jointly deal with the financial risks facing the world,” a senior financial professional at a Beijing-based firm told the Global Times on Wednesday.