US-China Relations: Yellen's Visit to Beijing and Beyond

U.S. Treasury Secretary Janet Yellen visited Beijing on July 7 in an effort to revive strained relations between the United States and China. During a meeting with a group of businesspeople, she defended U.S. controls on technology exports, saying they are necessary for national security, and rejected suggestions that Washington is trying to decouple, or separate the U.S. and Chinese economies.

Yellen expressed concerns about Chinese use of non-market tools like expanded subsidies for its state-owned enterprises and domestic firms, and barriers to market access for foreign firms. She also criticized China's treatment of U.S. companies and new export controls on metals used in semiconductors.

Yellen was due to meet with China's No. 2 leader, Premier Li Qiang, but did not meet with Chinese leader Xi Jinping. Officials said no breakthroughs on major disputes were expected. The Chinese finance ministry called Yellen's visit a “concrete measure” toward carrying out an agreement by Xi and President Joe Biden during a meeting in November to improve relations.

It gave no indication of possible initiatives or compromises. The U.S. and Chinese governments have been in conflict over technology, security, Beijing’s military expansion and other issues. Washington has imposed curbs on access to advanced processor chips, while Beijing has imposed unspecified controls on exports of gallium and germanium, metals used in making semiconductors and solar panels.

Businesspeople have warned that the two countries might split into separate markets with incompatible products, which would hurt economic growth and innovation. Yellen has rejected these claims, arguing that “A decoupling of the world’s two largest economies would be destabilizing for the global economy, and it would be virtually impossible to undertake.”

The latest flareup between the U.S. and China came after President Joe Biden referred to Mr. Xi as a dictator, and Beijing responded with protests. President Joe Biden said his blunt statements are “just not something I’m going to change very much.” U.S. Secretary of State Antony Blinken met with Xi last month in the highest-level U.S. visit to Beijing in five years, but the two failed to agree on improving communications between their militaries.

President Biden's climate envoy, John Kerry, is scheduled to become the next U.S. official to visit China next week with the goal of stabilizing the global economy and challenging Chinese support of Russia during its invasion of Ukraine.