US Treasury Secretary Janet Yellen recently stated that the separation of the US and Chinese economies would be virtually impossible and could destabilize global markets. This statement was made during her four-day visit to Beijing, where she engaged in numerous discussions with officials and businesses. This trip marked Yellen’s first visit to China as Treasury chief, following a recent visit by Secretary of State Antony Blinken.
The US has been vocal about its intentions to limit China’s access to advanced technology crucial to Washington’s national security, in an effort to “de-risk” the world’s second-largest economy. Several Chinese companies have been blacklisted by the US to prevent them from accessing advanced chips, with the US also encouraging its allies to do the same. However, Yellen emphasized that the US is not seeking a complete separation of the economies but rather aims to diversify.
During a meeting with representatives of US businesses hosted by the American Chamber of Commerce in Beijing, Yellen stated, “We seek to diversify, not to decouple. A decoupling of the world’s two largest economies would be destabilizing for the global economy. And it would be virtually impossible to undertake.”
Before Yellen’s visit, Beijing introduced new export controls on metals essential for semiconductor manufacturing, citing national security reasons. This move is seen as the latest development in the ongoing chips war. Yellen expressed concern over these restrictions, emphasizing the importance of building resilient and diversified supply chains.
China’s finance ministry expressed optimism about Yellen’s visit, stating that it would strengthen communication and exchange between the two countries. The ministry official highlighted the mutually beneficial nature of China-US economic and trade relations, asserting that there would be no winner in a trade war or decoupling scenario.
Yellen also had substantive conversations with her previous counterpart, former Vice Premier Liu He, and the outgoing governor of China’s central bank, Yi Gang. They discussed the global economic outlook and the respective economic outlooks of the United States and China.
Despite the agreement on the need to stabilize their relationship, Yellen faces challenges in convincing Beijing that US actions, such as tightened export curbs on high-end semiconductors, are aimed at safeguarding national security and not stifling China’s economic rise.
On Friday afternoon, Yellen met with Premier Li Qiang at Beijing’s Great Hall of the People to discuss the economic relationship, raise concerns, and explore opportunities for collaboration. Yellen expressed hope that this trip would provide an opportunity to communicate and avoid miscommunication or misunderstanding. While no specific policy breakthroughs were expected, the US hopes for frank and productive conversations that can pave the way for future talks.
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