YELLEN ENDS VISIT WITH ‘MORE WORK TO DO’ ON TRADE
US Treasury chief admits many issues remain unresolved while analysts warn pressure of election may force Biden to be more aggressive
The week-long trip to China by US Treasury Secretary Janet Yellen sidestepped core economic disputes and, without headway, analysts warned the pressure of November’s presidential election could force the Biden administration “to be more aggressive” on the trade front.
Yellen ended her second trip to China in 10 months yesterday, having met Chinese officials and American business representatives in Guangzhou and Beijing over the past week, with the pressing issue of overcapacity having featured high on the agenda.
“The November election pressure may force Biden to be more aggressive on the US-China trade front, as this is one issue that American politicians can win easy points [with],” said Chen Zhiwu, the chair professor of finance at the University of Hong Kong, after Yellen and her Chinese counterparts failed to address some major issues.
“But, the Biden team has in general taken a mild approach towards China, and I don’t think they want to start a real trade war in 2024.”
He said Yellen had focused on addressing practical short-term issues, such as the prevention of possible dumping of electric vehicles and other manufacturing products, money laundering and the mistreatment of US firms in China, during her trip.
Yellen claimed that “major steps” had been taken to stabilise relations since her last visit in July, with a particular reference to the meeting between President Xi Jinping and US counterpart Joe Biden in November, but acknowledged that many issues remained unresolved.
“During this trip, we have been able to build on that foundation to move the ball forward on specific issues that matter to Americans,” she said in Beijing on Monday.
“That does not mean we have resolved all our differences. There is much more work to do. And it remains unclear what this relationship will endure in the months and years ahead.”
Lu Xiang, a senior researcher with the Chinese Academy of Social Sciences, also said both countries would maintain a level of communication with deeper exchanges.
“Yellen’s trip will ease the tension between China and America, [and] the meeting with Liu He shows that China is consistent in the bilateral relationship,” he said, referring to the former vice-premier who led previous trade negotiations with the US.
“But the real issues revolve around the small-yard high-fence strategy of the US and its worry regarding overcapacity, and we don’t exclude the possibility that the Biden administration will implement other restrictive measures.”
Yellen also met People’s Bank of China governor Pan Gongsheng on Monday, and the pair discussed the macroeconomic situation, financial stability, currency policies and global financial governance, according to a statement from the central bank.
Ye Yu, deputy director of the Institute for World Economy Studies at the Shanghai Institutes for International Studies, said China was concerned about trade tariffs and export controls.
“Beijing will raise these issues [to Yellen], but it’s for sure that they don’t expect any of these will get resolved,” she said. “The situation now is more about whether these [measures] will be further escalated.”
Liang Yan, chair of economics at Willamette University in Salem in Oregon, said Xi was eager for foreign investors to return to China. “The fact that Yellen went to China in July and so quickly returned is a ‘good sign’ of intent to keep things moving,” she said.
Yellen said she also had “difficult conversations about national security” with Chinese leaders, while they exchanged information on the use of economic tools in the national security space.