BEIJING — U.S. Treasury Secretary Janet Yellen’s recent visit to China marks a significant shift in the bilateral relationship between the two countries. Yellen is the second U.S. Cabinet member to visit China in a month, following Secretary of State Antony Blinken’s visit in June. The visits of high-ranking officials demonstrate a renewed commitment to communication and dialogue between the United States and China.
Earlier this year, geopolitical tensions between the two countries caused a delay in Blinken’s travel plans to Beijing. However, Yifan Hu, an expert from UBS Global Wealth Management, suggests that as long as talks and communication continue, the market will adapt to this new normal. The expectation is that market performance will become less volatile.
Both the U.S. and Chinese governments have expressed their intention to engage in further talks. China’s Ministry of Finance stated that differences should not lead to estrangement but should instead be a catalyst for strengthening communication and exchanges. During the meetings, the Chinese side requested the removal of tariffs on Chinese goods and an end to the pressure on Chinese companies.
While talks have increased, the overall bilateral relationship has not improved significantly. Just before Yellen’s visit, China’s Commerce Ministry announced forthcoming export controls on two metals used in semiconductor manufacturing. Yellen confirmed that the U.S. is still considering investment restrictions on high-end Chinese tech. However, she assured her Chinese counterparts that any restrictions on outbound investments from the U.S. would be narrowly targeted.
Despite the lack of significant progress, increased communication can help establish boundaries for government actions. Yellen’s main objective is to prevent unintended escalations that could harm the economic relationship between the two countries. The COVID-19 pandemic has contributed to the lack of contact between U.S. and Chinese senior officials, creating room for misunderstandings. Yellen believes her visit has been successful in forging relationships and creating opportunities for deeper and more frequent contacts at the staff level.
Yellen’s visit follows Blinken’s meeting with Chinese President Xi Jinping in Beijing a few weeks ago. Yellen had the opportunity to meet with people close to Xi, including recently promoted Premier Li Qiang. The Treasury official described the meetings as productive, with discussions on significant matters. A meeting with Vice Premier He Lifeng lasted longer than scheduled, indicating the constructive nature of the talks.
While no single meeting is expected to produce a breakthrough, the overall process of frequent and direct communication is crucial for maintaining a fragile stability. Scott Kennedy, an expert from the Center for Strategic and International Studies, believes that the normalization of direct communication will support stability between the U.S. and China. Kennedy anticipates that other cabinet officials will engage in visits in both directions in the coming months.
These high-level meetings come at a critical time, with approximately a year and a half remaining in the current Biden administration. Yellen expressed her hope for a phase in the U.S.-China relationship where senior-level diplomacy is considered a natural element of managing one of the world’s most consequential bilateral relationships.
The recent visit of U.S. Treasury Secretary Janet Yellen to China signifies a shift in the bilateral relationship between the two countries. The increased high-level talks and communication demonstrate a commitment to resolving differences and maintaining stability. While challenges remain, the normalization of direct communication is expected to support the fragile relationship between the United States and China.
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