Janet Yellen, the United States former Treasury secretary, begins a four-day visit to China this Thursday. The trip follows a recent stop by Foreign Minister Antony Blinken and comes as President Joe Biden relations with Beijing face renewed strain after he labeled Xi Jinping a dictator. The trip is viewed as a pragmatic effort to mend friction and preserve important diplomatic gains while exploring cooperation where possible.
Treasury officials stress there is no expectation of dramatic breakthroughs. In a statement about Yellen’s visit, which does not include a meeting with Xi but does involve discussions with senior Chinese officials and American business leaders, the aim is to stabilize the relationship, widen channels of communication, reduce misunderstandings, and deepen cooperation whenever possible.
The geopolitical context is exceptionally complex. Tensions between the two powers span issues from Taiwan to Russia’s war in Ukraine, and a recent Chinese aerial incident over the U.S. further complicated already fragile ties. The IMF has warned that fragmentation could slow global growth and disrupt the world economy.
Reduce the risks
The official line from Washington is not a plan to break the two economies apart but to reduce risks. Biden administration advisers have voiced concerns that protective measures, including tariffs from the previous administration and new controls on high-tech exports, could constrain cooperation. Restrictions on semiconductor equipment and other advanced technologies may affect U.S. firms and global supply chains.
These steps aim to limit the ability of China to advance in artificial intelligence and other advanced computing areas important to national security and military capabilities. China’s slow recovery after the pandemic has put pressure on its growth, while Washington is urging allies like the Netherlands and South Korea to align with U.S. approaches as Beijing pursues its own supply-chain independence.
Biden has spent months outlining an executive-order framework to curb investments in sensitive technologies for national security, with a decision anticipated soon. The Wall Street Journal reported this week that the administration is weighing restrictions on China’s access to cloud computing as part of this broader effort, a move it has so far avoided.
Politicization of economic issues
Beijing accuses the United States of politicizing economic matters and argues that such moves could hinder China’s growth while not leaving U.S. investors untouched. In May, Micron Technology, the largest U.S. memory-chip maker, faced scrutiny over whether its products could be sold to Chinese firms involved in critical infrastructure.
On the same day, Washington announced export controls on gallium, germanium, and dozens of other materials used in chips, solar cells, missile systems, and telecommunications. The controls also aim at decarbonization initiatives in the EU, where European leaders plan to visit Beijing shortly after Yellen’s departure.
A new Chinese anti-espionage and national-security law, effective July 1, broadens the definition of espionage and restricts transfer of sensitive information. The move has raised concerns among American companies operating in China about compliance and risk, while China continues to boost its domestic capabilities to reduce reliance on foreign suppliers.
China’s broader aim is to strengthen self-sufficiency. In bilateral trade, total commerce with the United States reached about $690 billion in 2022, with imports from Beijing around $154 billion and exports to the United States around $536 billion.
Personal ties
Yellen has emphasized the importance of personal relationships in diplomacy, noting a private discussion earlier with leading Chinese officials in Switzerland this January. Senior Chinese leaders in recent months include Lifeng, a trusted adviser to Xi, and Pang Gongsheng, who has long been involved in monetary policy and regulatory oversight. These figures contribute to shaping the trajectory of financial diplomacy and policy.
Yellen’s interactions are expected to press for progress on debt-relief initiatives for developing countries. Beijing has engaged as a major creditor in global efforts to assist struggling nations, including recent developments with several African nations and others seeking relief. The U.S. sees this as a chance to foster a more cooperative framework for international lending and development.
If Yellen adheres to a three-pillar approach for the bilateral economic relationship, human rights concerns may surface alongside discussions on market access and fair competition. The trip could also address issues that Washington believes warrant corrective actions by China and practices outside typical market norms.
The yuan’s depreciation has drawn attention as a factor in global trade. While some argue it reflects U.S. rate policies, the dollar’s strength and China’s export competitiveness remain closely watched in both capitals and by a broad international audience.