Experts welcome Yellen visit, talks but warn breakthrough needs Washington to end zero-sum mentality

Premier Li Qiang (right) meets with United States Treasury Secretary Janet Yellen (left) at the Great Hall of the People in Beijing on July 7 to discuss economic relations between the two countries. (FENG YONGBIN / CHINA DAILY)

Premier Li Qiang urged the United States to maintain a rational and pragmatic attitude and meet China halfway to bring bilateral ties back to a normal track as early as possible, during a meeting with visiting US Treasury Secretary Janet Yellen on July 7.

Yellen’s successful four-day visit, which saw her meet with several high-ranking officials, showed that the world’s two largest economies are beefing up in-depth, candid communication to settle differences, experts said. 

However, more efforts are needed to yield a significant breakthrough in easing bilateral economic tensions, they added.

Mutual respect, peaceful coexistence, and win-win cooperation are the basic principles for countries to get along. Strengthening cooperation is the realistic need and right choice for Beijing and Washington, Li told Yellen, whose visit ended on July 9.

Li recalled their brief encounter at the Summit for a New Global Financing Pact in Paris last month, saying that he was impressed by Yellen’s “candor and pragmatism”.

He also noted that she was greeted by a rainbow upon her arrival in Beijing. “We can go through winds and rain, but after that, a rainbow is always on the horizon,” he said.

Li called upon both countries to strengthen dialogue and build consensus on key economic issues and inject stability and positive energy into bilateral economic ties.

According to a US Treasury Department news release, Yellen told the Chinese premier that “there are important global challenges where the US and China have a duty both to our own countries and to the world to cooperate and show leadership”. She said Washington seeks economic ties that are not “winner-take-all” and can benefit both countries.

The two sides should not allow any disagreement to lead to misunderstandings that unnecessarily worsen the economic and financial relationship, she said.

Speaking at a roundtable discussion on July 7 with US businesses operating in China, Yellen said it is “in the best interests of both countries to make sure we have direct and clear lines of communication at senior levels”.

The US seeks to diversify, not to decouple, she said, adding that decoupling of the world’s two largest economies would be destabilizing for the global economy.

The visit by Yellen came as Beijing and Washington started restoring high-level exchanges in June. She was the second Cabinet-level member of the Biden administration to visit Beijing in a month, following the visit by US Secretary of State Antony Blinken.

US climate envoy John Kerry is also set to travel to China this month for talks on global warming, Bloomberg reported.

Su Xiaohui, deputy director of the Department of American Studies at the China Institute of International Studies, said the fact that Yellen undertook a longer trip to Beijing than Blinken speaks volumes for the need for Beijing and Washington to deepen communications. “The US has now realized that containing China could also entail risks for Washington,” she said.

Recent visits by US business leaders, including Tesla chief Elon Musk, have also conveyed a message to Washington of their wishes for stable bilateral relations, she added.

Beijing has always emphasized the win-win nature of bilateral economic and trade relations, and maintained that trade wars between the world’s two largest economies benefit no one, Su said.

Pang Ming, chief economist with consultancy firm JLL China, said the recommencement of senior-level talks in multiple areas could open the way for greater cooperation on bilateral and global issues.

“I expect more working-level communications ahead, on topics where there is more consensus than disagreement, such as climate change and the tariff reduction list, among others,” he said. “I also expect progress toward de-escalation to emerge.”

Highlighting that the US crackdown on China’s tech industry could slow global economic recovery, experts and political advisers said Washington must give up its zero-sum mindset and respond to Beijing’s key concerns if any substantive progress is to be made.

During her visit, Yellen met with high-ranking officials including Vice-Premier He Lifeng. During their meeting, the vice-premier expressed concerns over US sanctions against China.

He said the overstretching of national security does no good for normal economic and trade exchanges, Xinhua News Agency reported.

The talks were constructive, and the two sides agreed to strengthen communication and cooperation in addressing global challenges and maintain exchanges and interactions, according to Xinhua.

Finance Minister Liu Kun also met with Yellen on July 8 to exchange views on topics such as the global macroeconomic situation and the fiscal policies of the two countries.

Liao Min, deputy head of the Office of the Central Committee for Financial and Economic Affairs, said that during Yellen’s visit, the Chinese and US economic and trade teams held candid, long meetings, and the two sides agreed to maintain communication.

Zhang Tengjun, deputy director of the Department for American Studies at the China Institute of International Studies, said Yellen’s candid and practical exchanges with Chinese officials are conducive to bringing the bilateral ties back on a healthy track.

“But it remains to be seen to what extent Yellen’s visit can help allay the distrust between China and the US. The relationship cannot be repaired overnight, and more efforts are needed to tackle practical problems,” Zhang said.

Yellen’s visit came as China-US economic ties are plagued by broader geopolitical tensions and disputes in multiple areas, such as semiconductor technology, supply chains, and debt problems.

Former vice-minister of commerce Wei Jianguo said that during the trip, Yellen emphasized that the US does not seek to decouple from China, which is in line with Washington’s recent shift in rhetoric from “decoupling” to “de-risking” in key supply chains.

“But the two phrases, in essence, seem to be the same, judging from the recent practices of (the) US coercing countries such as the Netherlands and Japan to impose stricter chip export controls on China,” said Wei, who is vice-chairman of the China Center for International Economic Exchanges.

“Washington should never expect Beijing to cooperate with it in areas such as macroeconomic policies while it continues cracking down on China’s high-tech industry. It must give up the zero-sum game mindset,” he added.

Zhang Lianqi, a member of the Standing Committee of the 14th National Committee of the Chinese People’s Political Consultative Conference, the country’s top political advisory body, said, “Apart from listening to what the US says, it is more important to see what it does.”

To achieve substantive progress in easing bilateral economic tensions, the US should respond to China’s key concerns, he said. 

“Washington needs to adjust its strategy of pressuring allies to suppress China’s semiconductor industry, eliminate extra tariffs imposed on Chinese products and establish a regular communication mechanism with Beijing,” Zhang Lianqi said.

“More efforts are also needed to reduce the risk of misunderstanding, and pave the way for future cooperation between the two countries in areas such as climate change and debt crisis,” he added.

The comments come as the world closely watches how China-US ties will move forward, as industrial decoupling between the two sides would pose a huge risk to global economic recovery.

The International Monetary Fund estimated that economic decoupling could cost anything between a manageable 0.2 percent of world GDP and an alarming 7 percent.

“In general, technological decoupling is very expensive for not just Asia but also for the rest of the world,” said Krishna Srinivasan, director of the IMF’s Asia and Pacific Department.

Su Jian, director of the 13th Central Economic Committee of the China Democratic League, said: “To break the standoff, the key is for the US to stop abusing the concept of national security concerns, and let trade be trade. That is the prerequisite for more in-depth discussions.”

Amid the current China-US ties, as long as communication exists between the two sides, it is beneficial to the world, Su Jian said, adding that “in fact, communication itself is a good result, and more high-level exchanges can be expected in the future”.

Yao Yang, president of the National School of Development at Peking University, said at the Global Forum of Finance and Economics on July 8 in Beijing that last year, the trade volume between China and the US had already recovered to the level before 2018, despite a string of extra trade tariffs that Washington imposed on China.

Now, China accounts for more than 14 percent of the world’s trade volume, higher than the pre-COVID-19 level of 12 percent, Yao said.

Economist Jeffrey Sachs, director of the Center for Sustainable Development at Columbia University in New York, said a lot of the tension between the US and China arises from the US side.

“Economics is not a zero-sum game, but a win-win cooperative game,” he said.

Zhang Yue contributed to this story.

Contact the writers at xuwei@chinadaily.com.cn