TAIPEI, TAIWAN – The United States and China have taken a significant step towards improving their economic relationship with the announcement of talks and the creation of two economic groups. The talks will focus on addressing American concerns about China’s economic model, promoting balanced growth in domestic and global economies, and combating money laundering. This positive development was announced by the U.S. Treasury Department on Saturday, during Treasury Secretary Janet Yellen’s official visit to China.
Yellen has been urging Chinese leaders to reform their domestic manufacturing policies, and this agreement is a clear indication of their willingness to engage in constructive dialogue. The talks will facilitate exchanges between Beijing and Washington on issues such as Chinese industrial overcapacity and its ability to supply more products than are demanded. This is a crucial step towards creating a more balanced economic relationship between the two countries.
In a statement to journalists, Yellen emphasized the importance of these efforts in addressing the concerns of American businesses. She stated, “I think the Chinese realize how concerned we are about the implications of their industrial strategy for the United States, for the potential to flood our markets with exports that make it difficult for American firms to compete.” This shows that the U.S. is committed to finding a mutually beneficial solution that will benefit both countries.
Yellen’s visit began in the southern city of Guangzhou, a key manufacturing and export center for China. This highlights the importance of the economic relationship between the two countries and the potential for collaboration. While the issue of Chinese industrial overcapacity will not be resolved overnight, Yellen has expressed confidence that the talks will pave the way for a more productive discussion on macroeconomic imbalances and their connection to overcapacity.
The Chinese state-run Xinhua news agency reported that Chinese officials have “comprehensively responded” to the issue of industrial overcapacity raised by the Americans. This is a positive sign that both sides are committed to finding a solution and maintaining open communication. The announcement of the talks comes just a day after Yellen urged Beijing to reform its trade practices and create a healthy economic relationship with the U.S. This shows that the talks are a result of ongoing efforts to improve the economic ties between the two countries.
Some analysts believe that this announcement reflects Yellen’s efforts to push forward on collaboration in areas that were agreed upon during the summit between U.S. President Joe Biden and Chinese leader Xi Jinping in San Francisco last November. Dexter Roberts, director of China affairs at the University of Montana’s Mansfield Center, believes that Yellen’s visit is a continuation of the working groups that were established during the summit. He stated, “When Xi met Biden in November, they agreed to set up working groups, so Yellen is continuing to push that forward with the meeting.”
While this is a positive development, Roberts also believes that it is unlikely that Beijing and Washington will reach an agreement on contentious trade issues during Yellen’s visit. He stated, “There could be temporary things like China easing off on subsidizing electric vehicles a bit, but it’s unclear how either side is going to change what’s happening in a way that allows the tension over trade to lessen.” This shows that there is still work to be done, but the talks are a step in the right direction.
The Chinese readout published by Xinhua focused on Beijing’s concerns about U.S. export controls on Chinese companies. However, some experts believe that progress can be made on this issue. Victor Shih, director of the 21st Century China Center at the University of California in San Diego, believes that the U.S. could ease some of the export restrictions, especially for chips. He stated, “Some U.S. businesses are calling for the government to remove some of the export restrictions, especially for chips [integrated circuits].” This shows that there is potential for cooperation in this area.
In addition to export controls, Shih also believes that the other major topic of discussion between Yellen and Chinese officials will be potential tariffs on Chinese products. He believes that China will push for the U.S. to lower tariffs and not impose new ones, as it is not in their interest to have a lot of tariffs on their exports. This shows that both countries are willing to discuss and find solutions to contentious issues.
During a phone call with Biden on Tuesday, Xi warned that if the U.S. continues to contain China’s high-tech development and deprive them of their legitimate right to development, China will not sit back
