China, US discuss key economic issues as Yellen visit continues

Trip sends positive sign; ‘US gesture may not be sustained’

He Lifeng, Chinese vice premier and Chinese lead person for China-U.S. economic and trade affairs, holds talks with U.S. Secretary of Treasury Janet Yellen, also U.S. lead representative, in Guangzhou, south China’s Guangdong Province, April 5, 2024. He Lifeng held several rounds of talks with Yellen here on Friday and Saturday. Photo: Xinhua

Visiting US Secretary of the Treasury Janet Yellen has reportedly arrived in Beijing on Saturday to continue meetings with senior Chinese officials, after having “candid, pragmatic and constructive” communication in the southern city of Guangzhou with Vice Premier He Lifeng, who is also China’s lead person for China-US economic and trade affairs.

Yellen is on a high-stakes six-day visit to China from April 4 to 9, her second since July 2023 during which she had five-hour talks with He. The two officials also met on the sidelines of the San Francisco China-US summit in November 2023.

Though visit by a high-profile US official signifies further stabilization of bilateral relations since the summit, Chinese analysts expressed concern that the US’ current gestures may not be sustained as flashpoints including the Taiwan question and South China Sea issue still exist, and the US continues to hold the wrong perception toward China.

According to Xinhua News Agency, Yellen and He held several rounds of talks on Friday and Saturday in the city of Guangzhou in south China.

Focusing on the implementation of the important consensus between the two countries’ heads of state, the two sides had candid, pragmatic and constructive discussions on the macroeconomic situation of the two countries and the world, the economic relationship between China and the US, and global challenges.

The two sides agreed to discuss issues such as balanced growth of the US, China and the global economy, financial stability, sustainable finance, and cooperation in countering money-laundering under the China-US economic and financial working group. The Chinese side expressed grave concern over US economic and trade measures restricting China and responded fully to the issue of production capacity. Both sides agreed to continue to maintain communication, Xinhua reported.

Yellen’s visit came days after Chinese President Xi Jinping and US President Joe Biden had a phone conversation on Tuesday, signaling willingness to manage tensions despite growing divergence.

Still a positive sign

Wang Peng, an associate research fellow from the Beijing Academy of Social Sciences, told the Global Times on Saturday that through talks between He and Yellen, China and the US can hopefully reach effective communication to promote future cooperation at the technical level, such as financial cooperation and enhanced regulatory exchanges.

Overall, the pros of maintaining close communication in the economic and trade areas between China and the US outweigh the cons, as it provides opportunities to strengthen mutual understanding and mutual trust, and facilitate the resolution of common challenges and send positive signals to the world, said the expert, adding that in the face of domestic debt and other issues, the US needs to maintain stable economic and trade relations with China to seek common interests, Wang noted.

However, Yellen raised the issue of so-called overcapacity of the Chinese green energy sector. According to Associated Press, claiming China’s role constitutes pressure on other countries, Yellen didn’t rule out taking additional steps to counter Chinese subsidies.

Observers also mentioned that the US’ crackdown on Chinese high-tech firms and chip sector, hacking accusations and smears against China’s development in Artificial Intelligence have not slowed down.

Chinese Ambassador to the US Xie Feng said during an interview with Newsweek that the accusation that China’s “overcapacity” is posing threats to other countries is untenable. Globally, high-quality industrial capacity and new-quality productive forces are not excessive, but in dire scarcity.

China’s new energy sector relies on the businesses’ innovation edge forged amid global competition and high-quality products, not on so-called subsidies or protection. Also, China’s green capacity is enabling the developing world to meet emission cutting targets and accelerate green transition, Xie said.

US products, particularly solar energy panels,face challenges from China in overseas markets. Accusing China of overcapacity is just an excuse for the US to impose tariffs or other protectionist policies against China products, Xin Qiang, deputy director of the Center for American Studies at Fudan University, told the Global Times on Saturday.

Such accusations from Yellen, an advocate for globalization, fully demonstrate US’ double-standards, Xin said, as the country “embraces free trade when the US is advantaged and imposes sanctions when it isn’t [advantaged].”

Analysts stressed that though Yellen reiterated the US does not seek “decoupling,” the reason is not that the US does not want to, but that the cost will be too high. Therefore, when China is open to talks on areas of shared concern, we should not overestimate the US’ sincerity and potential results of the visit.

Stabilization sustainable?

The phone call between the two heads of state, followed by senior US officials’ China visit, the first vice-ministerial meeting of the China-US commercial and trade working group in past two days and  the resumption of China-US Military Maritime Consultative Agreement Working Group meeting all indicated a trend of stabilization of the world’s most important bilateral relationship.

Sun Chenghao, head of US-EU program at the Center for International Security and Strategy at Tsinghua University, told the Global Times that since the November summit, engagement has seen progress in concrete fields and bilateral competition has become more stable.

The US seeks stability for the presidential election and there have been no “black swan” events like the balloon incident or Taiwan island visit by senior US officials occurred in past years, creating conditions for further stabilization, Sun continued.

However, Sun and other analysts suspect the US’ attitude could change according to domestic politics – it tones down in fields that need China’s help while remaining hawkish in others.

The US eagerly resumed military talks as it does not want to become involved in more possible conflicts amid the Russia-Ukraine crisis and the war in Gaza ahead of its elections. However, attacks on China’s electrical vehicles are also related to the presidential election: the Biden administration needs to act harshly to woo the interest group of the US’ powerful automotive industry, Sun explained.

Xin noted that the US is making a utilitarian adjustment in its China policy, which is opportunistic in nature as its strategic positioning on China remains unchanged and the Biden administration’s China-targeted sanction lists are expanding.

Analysts shared the consensus that China always welcomes the US to talk and seek ways to manage competition and avoid misjudgment, but we cannot be overly optimistic when the US repeatedly breaks its promises or attempts to force China to yield to US’ pressure.

Actions matter

Experts also expressed concerns that US’ hype and China-targeted policies are also poisoning the foundation of people-to-people understanding and mutual trust.

Similar to the previous occasion when Yellen’s visit brought a Beijing restaurant to fame and made a mushroom dish extremely popular, the Chinese public also discussed aspects of Yellen’s visit this time round.

Yellen’s first stop was in Guangzhou this time, and her order at a Cantonese-style restaurant also went viral on Chinese social media platforms. Netizens also had mixed reactions to her appearance at the airport with plain handbags.

Some hailed her image as being close to the people, while others criticized her as putting on a “publicity stunt.”

Chinese public opinion was previously kind to Yellen, who appears more pragmatic in dealing with China. But public reaction this time suggested that Chinese people are tired of the US “lecturing the host while visiting their homes,” Xin said.

After seeing ups and downs in bilateral relations, the public now knows better and is “listening to what the US says but also looking at what the US does,” analysts said, as they urge the US to abide by its commitments and join China to responsibly manage bilateral differences.

Global Times

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