US Treasury Secretary Janet Yellen concluded a four-day visit to China, where she discussed the strained ties between the two largest economies. Before Yellen, Secretary of State Anthony Blinken had also visited China. The relationship between the USA and China has been under significant pressure, with concerns that competition between the two countries could escalate into conflict. There have been discussions about the possibility of decoupling their economies. However, both nations have recognized the importance of maintaining open communication channels, managing competition effectively, and identifying areas where cooperation is possible. Recent high-level meetings between officials from both countries indicate that while competition will persist, it is unlikely to escalate into a full-blown conflict.
Similarly, in the economic domain, there may be partial decoupling in certain areas, and the USA is also exploring diversification of its supply chain. However, complete decoupling is not considered feasible or practical. The focus now lies on finding a balance between competition and cooperation, ensuring that the relationship between the USA and China remains stable and manageable.
After Nancy Pelosi’s visit to Taiwan, the relationship between the countries came under extreme pressure. In addition to Pelosi’s visit, other high-level US officials also met with Taiwanese officials. The USA was also selling weapons to Taiwan and lobbying for Taiwan’s membership in the WHO. Moreover, it appeared that cracks were appearing in the USA’s One-China policy. Following Pelosi’s visit last August, military-to-military communication was disconnected between both countries, increasing the chances of accidental conflict.
In the economic domain, there was competition as well. The recent economic sanctions started in 2018. The ban on the use of Huawei systems, equipment, and services by U.S. agencies was implemented by the Trump Administration in 2018, signaling the beginning of tensions between China and the USA.
Thus, the relationship between the USA and China is characterized by competition and cooperation. Although competition will persist, both countries have shown a commitment to preventing it from escalating into a conflict. In terms of economic ties, while there may be some decoupling and diversification efforts, complete separation of the two economies is not a viable option. Both nations understand the importance of maintaining open channels of communication and identifying areas of cooperation, thereby managing their relationship amidst ongoing competition.
In November 2020, an executive order was signed by former President Trump, which placed restrictions on American institutional and retail investors. These restrictions prohibited them from investing in or purchasing from Chinese companies that had been identified by the Department of Defense as “Communist Chinese military companies.” As a result of the Russian invasion of Ukraine in 2022, sanctions have been imposed on various Chinese businesses. One of the businesses affected by these sanctions is Sino Electronics, located in Shenzhen.
In October last, the Biden Administration made an announcement regarding the implementation of restrictions on the sale of new semiconductors to China. The purpose of these restrictions is to decelerate the growth of the Chinese tech sector. Additionally, discussions are underway to sever Huawei’s ties with all its suppliers based in the USA.
In a June survey conducted by the European Union Chamber of Commerce in China, 23 percent of Western firms said they were considering moving operations away from the country, while 50 percent reported that business in China had become more politicized in 2021 than it had been in previous years.
Despite these sanctions, according to recent data from the US Commerce Department, the trade between the USA and China reached a new milestone in 2022, totaling $690 billion. This significant figure reflects a surge in US trade with various global partners throughout the previous year. Therefore; the USA and China are trying to manage competition between both countries and also trying to identify areas where both countries can cooperate.
Anthony Blinken’s first visit aimed to establish a high level of communication between the two countries. Furthermore, he sought to establish a military-to-military communication channel and accept the fact that both countries would compete in certain areas, while emphasizing that this competition is manageable. During Blinken’s visit, he also met with the Chinese president, and both countries characterized the talks as bold and constructive.
During the Yellen visit discussions took place on areas of cooperation, including addressing the climate crisis and sovereign debt sustainability. And highlighted the need for responsible global leadership and collaboration between the two largest economies. She mentioned her participation in a roundtable event with climate finance leaders and the collaboration between the US Treasury and the People’s Bank of China in the G20 Sustainable Finance Working Group. Yellen concluded by stating that the relationship between the USA and China should not be viewed as a great power conflict but as an opportunity for both countries to thrive and share in global prosperity.
Yellen’s visit was seen as an opportunity for dialogue, although experts cautioned against expecting significant changes in the relationship. The underlying dynamics and trajectory of the economic relationship between the two nations were not expected to change substantially.
Thus, the relationship between the USA and China is characterized by competition and cooperation. Although competition will persist, both countries have shown a commitment to preventing it from escalating into a conflict. In terms of economic ties, while there may be some decoupling and diversification efforts, complete separation of the two economies is not a viable option. Both nations understand the importance of maintaining open channels of communication and identifying areas of cooperation, thereby managing their relationship amidst ongoing competition.
