U.S. Treasury Secretary Janet Yellen began her four-day visit to Beijing on Friday by calling for market reforms in the world's second-largest economy, noting that the United States and its allies will resist what she described as "unfair economic practices" by China. Yellen made these remarks during a meeting with American companies operating in China and is scheduled to meet later with Premier Li Qiang.
An official from the U.S. Treasury announced that Secretary Yellen met with the Governor of the People's Bank of China, Yi Gang, and former top economic official Liu He for informal discussions about the U.S. and Chinese economies and the global economic situation on Friday. The official revealed that "Yellen and the Chinese officials had a substantive discussion," but did not provide further details. Although Liu is currently retired, he is close to Chinese President Xi Jinping, and this meeting follows discussions that took place in Zurich in January.
Yellen tweeted shortly after arriving in Beijing on Thursday evening, saying, "We look forward to healthy economic competition that benefits American workers and firms and to cooperation in addressing global challenges." She added, "We will take steps to protect our national security when necessary, and this visit provides an opportunity for communication and to avoid miscommunication or misunderstanding."
The Chinese Ministry of Finance stated in a statement today that "Beijing hopes the United States will take concrete actions to create a favorable environment for the proper development of economic and trade relations between the two countries."
During her visit to China, Secretary Yellen is attempting to ease increasingly tense relations between the two countries, as the two largest economies remain closely linked, though some signs indicate a potential weakening of that connection in the future. On Friday, Yellen is meeting with senior Chinese officials, committed to seeking healthy competition with Beijing amid a spotlight on trade tensions over U.S. technology export restrictions and planned investment limits.
Despite discussions about an economic decoupling between the U.S. and China, the latest data shows a strong trade relationship that primarily rebounded in 2022 after five years of disruptions caused by a trade war and the COVID-19 pandemic. The trade value between the two countries reached a record $690 billion last year, driven by strong U.S. demand for Chinese consumer goods and increased Chinese demand for American agricultural and energy products.
Michael Hart, President of the American Chamber of Commerce in China, stated, "I think it's important for people to realize that business and politics are two separate matters." However, this year's pace has noticeably slowed, with U.S. Census Bureau data indicating a decline in trade flows in both directions by $52 billion, or 18 percent, by the end of May compared to the first five months of 2022.
Yellen also addressed China's centrally planned economy, urging Beijing to return to market-based practices that fueled its rapid growth in past years. She indicated to American business leaders that "the shift toward market reforms will be in China's interest," and noted that "market-based approaches have helped stimulate rapid growth in China and lifted hundreds of millions out of poverty. It’s a great economic success story."
Yellen pointed out that China's vast and growing middle class offers a significant market for American goods and services. She emphasized that measures aimed at China by Washington are based on national security concerns, stating, "We seek diversification, not separation... The separation of the world's two largest economies would destabilize the global economy and would be practically impossible to manage."
