What will be discussed in the first high-level economic talks with the new Chinese government?, Depth | US Treasury Secretary's upcoming visit to China China US visit | China visit | Yellen

Following US Secretary of State Antony Blinken's visit to China more than two weeks ago, a new round of high-level interaction between China and the US will be launched this week.

According to the agreement between China and the United States, US Treasury Secretary Yellen will visit China from July 6th to 9th. This will be Yellen's first visit to China as finance minister.

The high-level visits from diplomacy to the economic sector signify the active operation of the key "two rounds" driving China US relations, and are seen as another positive sign that China US relations have stopped falling and stabilized.

However, analysts remind that the US policy towards China still focuses on containment and suppression, and increasing contact with China is only aimed at stabilizing rather than truly improving bilateral relations. Therefore, it remains to be seen whether a series of interactions can achieve substantial results.

Follow Antony Blinken's footsteps

Yellen's trip can be said to follow Antony Blinken's footsteps. This means that in less than three weeks, two heavyweight cabinet officials under Biden visited China successively, seemingly revealing the urgency of the US to strengthen dialogue and maintain communication with China.

In fact, for Yellen herself, she has expressed her willingness to visit China multiple times. But it was put on hold earlier due to the sudden "airship incident". Therefore, this week's trip to China has also been described by the outside world as a long-awaited visit.

At the same time, this visit is also an important action to implement the consensus of the first Bali meeting between China and the United States.

Chen Fengying, a researcher at the China Institute of Modern International Relations, said that an important consensus reached at the Bali Summit between China and the United States is to agree to dialogue and coordination between the financial and economic teams of the two countries on macroeconomic policies, economic and trade issues.

In the current context, Yellen's rapid visit to China is closely related to the world, the US economy, and the current state of China US economic relations.

From a global perspective, due to the COVID-19 epidemic, the Ukrainian crisis and other factors, the world economic recovery is weak and risks abound.

"Yellen's trip will focus on stabilizing the global economy," the Associated Press said.

The US Treasury Department stated that Yellen's visit aims to deepen communication between the two countries on a range of issues, including global macroeconomic and financial development.

Wu Xinbo, Dean of the International Studies Institute at Fudan University, pointed out that the world economy is facing downward pressure this year, and some countries are still deeply mired in debt difficulties. To solve these problems, the US cannot do without cooperation with China and needs to engage in dialogue with China on macroeconomic stability issues.

Chen Fengying stated that there is uncertainty in the world economic outlook. The United States and China are the world's largest and second largest economies, and Yellen is well aware of the enormous economic influence of both countries. She hopes to coordinate macroeconomic policies through her visit to China, in order to inject momentum into boosting global economic growth.

From the perspective of the United States, Wu Xinbo believes that the current US economy is also facing many problems, such as inflation, banking risks, and the negative effects of interest rate hikes, which have triggered recession concerns. Therefore, strengthening communication and cooperation with China is also a practical need for the United States.

From a bilateral perspective, this visit will help stabilize the economic relations between the two countries affected by the tense situation between China and the United States.

The Wall Street Journal and other media outlets have pointed out that overall, the tense relationship between China and the United States in trade, technology, and Taiwan is reshaping the economic relationship between the two countries. In terms of specific policies, there has also been division between China and the United States. For example, China is relaxing its monetary policy to promote economic recovery, while the United States is focusing on tightening its monetary policy to curb inflation. In this context, coordinating macroeconomic policies and establishing communication channels are crucial for stabilizing economic relations.

Chen Fengying added that another important reason why Yellen is eager to visit China is that he hopes to connect with the leadership team responsible for economic affairs in the new Chinese government.

As Yellen previously stated in an interview with Microsoft National Broadcasting Corporation, China has appointed a new group of senior officials in the hope of rebuilding contacts and promoting mutual understanding.

In summary, "this visit has shown hope to the outside world that China and the United States can resume substantive dialogue, explore how to overcome the obstacles faced by global recovery, and even find a new path to prevent further derailment of bilateral relations," commented the Hong Kong South China Morning Post.

Own "exclusive" agenda

Strengthening mutual communication and stabilizing bilateral relations can be seen as the common goal of Yellen and Antony Blinken. However, Yellen's trip also has an exclusive agenda.

Unlike Antony Blinken, the Secretary of State in charge of foreign affairs, Yellen, as the finance minister, is the head of the Biden administration in charge of economic affairs. Based on this identity, engaging in high-level dialogue with China on economic affairs will be Yellen's top priority.

Moreover, this visit will be the first high-level consultation between the new US and Chinese governments on economic and trade issues.

The US Treasury Department stated that during her stay in Beijing, Yellen will discuss with Chinese officials how to responsibly manage bilateral relations, engage in direct communication on areas of concern, and work together to address global challenges.

Analysts predict that there are three major focus points in the high-level talks between the two sides.

Firstly, Yellen will reiterate the so-called "Three Principles" regarding economic and trade relations with China.

When announcing Yellen's visit to China, the US Treasury Department had already issued a signal reaffirming Yellen's previously proposed "three principles" regarding economic relations with China: seeking to ensure the national security interests of the United States and its allies; Seeking to establish healthy economic relations with China; Seeking cooperation with China to address urgent global challenges such as climate change and debt difficulties.

The so-called "Three Principles" were once considered the most complete economic strategy of the Biden administration towards China. US officials stated that Yellen will emphasize the above principles during his visit to China.

However, the outside world has also noticed subtle changes in the US statement recently.

According to Bloomberg, in recent months, both Yellen and senior White House officials have attempted to emphasize that the United States is not seeking to "decouple" from China, but is trying to "de risk.".

Wu Xinbo expects that Yellen will explain to China the principle and position of the United States in its economic and trade relations with China. It may include two key points: firstly, reiterating that the United States will not "decouple" from China and proposing "de risk" or other similar expressions. The second is to continue to defend the pan security of the United States. It is necessary to impose restrictions on China's economic and trade relations, including trade, supply chain, technology, etc., in order to maintain US national security and even human rights values.

Chen Fengying pointed out that Yelen may explain to the Chinese side which areas require "risk reduction" and how to control risks. However, it should be noted that from Yellen's previous speech, it can be seen that the United States has tied economic policies with national security, emphasizing that national security is the top priority of its economic policy towards China.

Some comments point out that given the US's inconsistency in words and actions, China will demand that the US take practical actions to prove that decoupling and containment of China are not the ultimate goals of the US. Yellen is likely to face sharp questions from the Chinese side regarding the true intentions of the Biden administration.

Secondly, both sides will not avoid differences and express their concerns directly.

As far as the Chinese side is concerned, "there are many issues of concern and we will make demands and suggestions to the US side," Wu Xinbo said. These concerns include the tariffs imposed on China during the Trump era; The United States has implemented widespread security measures, such as imposing sanctions on over 1000 entities under the guise of national security; The US plans to restrict investment in China; The trend of the US economy, including inflation, prospect of interest rate hikes, financial risks, and so on.

As for the US side, according to US media reports, Yellen will express concerns about China's recent ban on Micron Technology, the trend of the RMB exchange rate, and commercial activities that affect US interests. Even some issues unrelated to economic and trade, such as human rights, the newly revised Anti Espionage Law of the People's Republic of China implemented on the 1st of this month, and China's position in the Ukraine crisis, have been included in Yellen's list of topics.

Thirdly, discuss global challenges, including debt issues, climate change, etc.

Chen Fengying stated that Yellen is highly concerned about the global debt issue and hopes to cooperate with China to solve it. In addition, the food issues and climate change caused by the Ukrainian crisis are also areas that Yellen hopes to explore cooperation with China.

Wu Xinbo believes that China will also discuss with the United States how to maintain multilateralism, multilateral rules and international mechanisms, as well as promote global economic governance and other topics. In addition, China is expected to emphasize its opposition to trade protectionism, economic nationalism, and pan security measures.

In addition to meeting with senior Chinese officials, Yellen's trip will also include meetings with relevant personnel from American companies conducting business in China.

Difficulty in achieving "significant breakthroughs"

For Yellen's visit, the US is not expected to bring "significant breakthroughs", but it will be "constructive" and "frank". At the same time, we hope to establish long-term communication channels with China's new economic policy team through this visit to avoid misjudgment risks.

Wu Xinbo stated that the US's imposition of tariffs, technological suppression, and investment restrictions on China are all key issues that China needs to discuss, but it is estimated that there will not be significant breakthroughs.

"The United States' policy towards China still focuses on containment and suppression, with only a slight increase in contacts for the purpose of stabilizing bilateral relations and avoiding conflicts," said Wu Xinbo.

Chen Fengying does not have high expectations for the achievements of Yellen's visit to China. In her opinion, Yellen's visit to China for communication and the establishment of contacts between the two sides would already be considered a result if consensus could still be reached on some issues.

Nevertheless, Wu Xinbo believes that Yellen's visit still has positive significance.

Firstly, it will help the economic and trade teams of the two countries achieve normalized communication in the future. Secondly, it helps to enhance understanding and avoid misjudgment. Thirdly, it helps to improve the atmosphere of bilateral relations.

"In the Biden administration, Yellen is more pragmatic and rational. In terms of economic and trade relations with China, it is hoped that her visit will help enhance the influence of this rational voice within the Biden administration."

There is also a viewpoint that Yellen's visit to China will help ease the intense political conflict between Washington and Beijing.

For a period of time, there has been frequent contact between Chinese and American officials. In particular, after Antony Blinken took the lead in opening his first visit to China during his term of office, he was considered to have opened a window for stabilizing bilateral relations. Nowadays, Yellen is visiting China one after another. Next, senior US officials such as the climate envoy and the Minister of Commerce are also expected to visit China. The outside world hopes that with intensive high-level interaction, China US relations can stabilize and return to the right track.

Wu Xinbo stated that in the next two to three months, there will be a relatively intensive high-level interaction between China and the United States. I hope that through these exchanges, we can enhance mutual understanding, reach some consensus, and produce some concrete results. However, there is still uncertainty about whether the above expectations can be achieved.

"The biggest problem is still domestic politics in the United States," Wu Xinbo said. "There are powerful and active anti China forces in the United States, which cross both parties and the government and opposition, and are the biggest destructive factor and obstacle to stabilizing and improving Sino US relations.". In addition, China and the United States have different goals for their relationship. China hopes that the relationship between China and the United States can be stable, improved, and continuously developed, while the Biden administration only wants to stabilize the relationship through contact, rather than improve it. It hopes to contain and suppress China while avoiding the risk of conflict.