By Scott Horsley
July 5, 20232:54
Treasury Secretary Janet Yellen testifies before the House Financial Services Committee on Capitol Hill in Washington, D.C., on June 13, 2023. Yellen is traveling to China amid tensions over a number of issues including Taiwan.
Kevin Dietsch/Getty Images
Treasury Secretary Janet Yellen is on her way to Beijing for talks with her Chinese counterparts at a a tense time for the two countries, with tit-for-tat trade restrictions and rising strategic frictions around Taiwan and the South China Sea.
Treasury officials say they don't expect any diplomatic breakthroughs from Yellen's trip, which will also include meetings with Chinese citizens and U.S. business leaders in Beijing. She's due to be in China from July 6 to July 9.
But the secretary hopes to forge stronger communications with China's new economic leaders in an effort to avoid an deeper souring of relations between the world's two biggest economies. Her visit — her first to China as Treasury Secretary — comes less than three weeks after Secretary of State Antony Blinken visited Beijing.
This week, China announced new limits on exports of key minerals used in making semiconductors and solar panels. The Chinese Commerce Ministry described the move as an effort to promote national security.
It could also be seen as retaliation for export limits the U.S. has directed at China. The Biden administration has restricted the sale of advanced computer chips to China, and according to The Wall Street Journal, it's considering limiting China's access to U.S.-based cloud computing services.
Working with China
Within the administration, Yellen has adopted a less confrontational approach to China.
While she has defended efforts to keep high-tech tools out of the hands of the Chinese military and cultivate backup supply lines in other countries, Yellen insists the U.S. is not trying to sever economic ties with China altogether.
"A full separation of our economies would be disastrous for both countries," Yellen said in a speech in April. "It would be destabilizing for the rest of the world."
Yellen and former Chinese vice-premier Liu He pose for a picture ahead of their meeting in Zurich on January 18, 2023. The relationship between China and the U.S. has soured over issues including frictions around Taiwan and the South China Sea.
Sebastien Bozon/AFP via Getty Images
China is the third-largest trading partner for the U.S., with nearly $691 billion in goods traded between the two countries last year.
That said, Treasury officials insist that Yellen will not shy away from raising complaints about China's human rights record or trading practices that the U.S. sees as unfair.
"China and the United States can and need to find a way to live together and share in global prosperity," Yellen said in her April speech. "We can acknowledge our differences, defend our own interests, and compete fairly."
Treasury officials say turnover in the top ranks of China's economic leadership make this an opportune time to re-establish communication channels.
Yellen is also expected to discuss potential cooperation between the U.S. and China on global challenges such as climate change and the debt burden facing poor countries.