Yellen's trip through Sunday will be her first to China as treasury secretary, and comes just weeks after Secretary of State Antony Blinken paid a rare visit to the country.
While Yellen had previously expressed her intent to visit China, these plans were cast in doubt as tensions surged earlier this year after the United States said it detected a Chinese spy balloon and shot it down.
The latest travel plans will see her seek to expand lines of correspondence, avoid miscommunications and widen collaboration on issues like the global economy, climate change and debt distress, according to a Treasury official.
On such a trip -- which comes amid concerns over China's economic recovery and US interest rate hikes -- officials on both sides generally have a chance to speak about their countries' growth outlooks as well.
"The fact that she's spending four days in Beijing, given all of her other domestic and international pressures, underscores the importance she is attaching to this visit," Asia Society Policy Institute vice president Wendy Cutler told AFP.
While each side will have a long list of complaints to raise with the other, with little flexibility to adjust their policies, the visit could allow Yellen to lay groundwork for future collaboration, Cutler added.
- Reframing relations -
Yellen's trip continues an effort by the United States to reframe US-China ties diplomatically and in other areas, said Lindsay Gorman, senior fellow at the German Marshall Fund of the United States.
"It's about managing the new realm of strategic competition," she said, noting that Yellen has pointed to competition only so far as it implicates security and values like human rights.
The message-bearing could be the "most important and most tangible piece of a potential Yellen trip," Gorman told AFP.
With technology export controls and competitive measures "dominating the economic policy agenda now, I think there's a real role to explain and communicate what the purpose of these measures really is," she said.
Underscoring the challenges Yellen will face, the Wall Street Journal reported that the US administration is mulling restricting Chinese companies' access to US cloud-computing services provided by companies like Amazon and Microsoft.
Ahead of the trip, Beijing appears to have adopted reciprocal actions such as new export controls on metals key to semiconductor manufacturing, underscoring that a shift in relations could take time.
But Yellen may be best positioned to build bridges with China on shared global challenges, Gorman said.
For now, the Treasury chief's visit likely marks her first meetings with new Chinese counterparts.
Details of her talks have not been announced, but analysts are watching closely for potential engagement with Chinese Vice Premier He Lifeng, who succeeded top economic official Liu He.
- Tensions remain -
But tensions remain over a host of economic issues, including possible plans by President Joe Biden's administration to restrict certain outbound investments involving sensitive technology -- which could hit investment in China.
Washington also has concerns over Beijing's "coercive actions and non-market economic practices," and plans to push for corrective actions, according to the Treasury official.
Although top American officials have stressed that Washington is not looking to decouple from China, instead pushing to "de-risk," it remains unclear if Beijing will be convinced of a shift in US policy.
And other issues could include recent amendments to China's anti-espionage law, which broadened the definition of spying and bans the transfer of information relating to national security.
There are, however, areas like debt distress where cooperation appears more likely.
The United States has welcomed progress in the case of Zambia -- whose creditors including China agreed to restructure its public debt -- along with that in Sri Lanka.
Washington has been pushing bilateral creditors for quicker debt treatments, while previously accusing China of delays.
Looking ahead, Biden has voiced confidence that he would meet China's top leader Xi Jinping again soon.
Sources of US-China economic tension as Yellen visits Beijing
Beijing (AFP) July 6, 2023 -
US Treasury Secretary Janet Yellen will arrive in China on Thursday in a bid to inject stability into fraught ties between the world's two biggest economies.
The top US official is expected to meet with Chinese counterparts and representatives from major American companies during a visit that will run through July 9.
Here are the key sources of strain on the US-China economic relationship:
- Decoupling and de-risking -
Washington and Beijing have butted heads in recent years over a range of hot-button geopolitical issues, fuelling belief among some policymakers that the United States should decouple economically from China.
Many officials in President Joe Biden's administration emphasise the less drastic term "de-risking", or the targeted protection of certain sectors deemed vital to national security.
The Biden administration is considering a programme to restrict certain US outbound investments involving sensitive technology with key national security implications -- an issue that has riled Chinese officials.
"It has very much been received as the US is trying to corner China, trying to stop its rise," Lindsay Gorman, a senior fellow at the German Marshall Fund, told AFP.
"De-risking is essentially the same thing (as decoupling) in their minds," she said.
- Chips -
Semiconductors represent a key faultline, with China seeking to protect its fledgling domestic industry from mounting export restrictions imposed by the United States.
In March, Beijing launched an investigation into US chipmaker Micron, five months after Washington unveiled sweeping curbs aimed at cutting off China's access to high-end chips, chipmaking equipment and software used to design semiconductors.
Washington has blacklisted many Chinese companies to prevent them from accessing the most advanced chips while pushing its allies to follow suit.
Beijing said Monday that it would slap export controls on two rare metals essential for the manufacture of semiconductors -- gallium and germanium -- citing security concerns.
- Debt -
Debt will also be on the agenda for Yellen -- both the towering US debt to China, and Beijing's controversial lending to developing countries that are now struggling to repay.
"The open question is whether China is close to reaching agreement with either Sri Lanka or Ghana on the terms of an official debt restructuring," Brad Setser, a former Treasury official and now senior fellow at the Council on Foreign Relations, told AFP.
Yellen's visit represents an opportunity for Washington to coordinate efforts with Beijing in helping the indebted developing nations avoid financial crises.
- Tech giants -
China's top technology firms have faced increasing global scrutiny in recent years as countries worry about the national security implications of their potential links to the Chinese government.
The United States has warned that using equipment made by Huawei -- China's leading telecommunications firm -- could mean giving access to infrastructure that could be used for state espionage, a claim vehemently denied by Beijing.
Meanwhile, the wildly popular social media platform TikTok, which is owned by Beijing-based ByteDance, has also raised eyebrows in Washington, where policymakers worry about the security of US user data and the potential for the app to be used as a propaganda tool for the Chinese Communist Party.
- Trade -
Tariffs implemented during a trade war launched by former US president Donald Trump are also likely to be discussed during the trip.
Gorman told AFP that she didn't think the United States would be eager to do away with tariffs, and "certainly not unilaterally".
"I don't think anything we've heard from public statements has suggested that that's really on the top of the agenda," she said.
- Business environment -
The business environment for US firms operating in China has also grown more challenging, with a series of raids and investigations spooking foreign companies.
Recent amendments to China's anti-espionage law -- broadening the definition of spying while banning the transfer of information related to national security -- have caused "a lot of concern for foreign business", said Edward Alden, a senior fellow at the Council on Foreign Relations.
"If there is a resumption of dialogues, then foreign investors become just a little more confident that investing in China is a long-term proposition," he said.
Otherwise, added Alden, if all signals indicate the early stages of decoupling are under way, "the smart thing for foreign investors to do is to look for the exit ramps and figure out how to get out".
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