Yellen To Visit China Again In 2024, Focusing On ‘Difficult’ Topics

(Bloomberg) -- Treasury Secretary Janet Yellen said she plans to visit China again in 2024, seeking to deepen areas of cooperation and improve communication even as she vowed to continue confronting Beijing over national security concerns and human rights.

“A significant portion of the agenda will focus on discussing difficult areas of concern with my counterpart,” Yellen said of her plans for a second trip to China as Treasury secretary. The remarks came in a speech Thursday evening in Washington to the US-China Business Council.

Yellen made clear the US would continue to pursue export controls and investment restrictions that have angered Beijing, but she also stressed it’s crucial to engage with China in ways that could prevent a wide range of potential crises — from diplomatic to financial.

“We seek not to resolve all our disagreements nor avoid all shocks,” Yellen said. “But we aim to make our communication resilient so that when we disagree, when shocks occur, we prevent misunderstanding from leading to escalation and causing harm.”

Each country’s ambassador read a letter from their president thanking the council for its work to support relations between the nations over the years and expressing optimism over US-China ties.

Yellen has emerged as something of a “good cop” in the Biden administration’s handling of China relations, gradually building ties with the country’s economic leadership. She visited Beijing in July and held extensive talks with Vice Premier He Lifeng last month in San Francisco, before also taking part in a meeting there between President Joe Biden and Chinese President Xi Jinping.

Along the way she’s employed a strategy of compartmentalization, confronting China in certain areas while simultaneously pursuing areas of collaboration.

Yellen also emphasized the importance of using her exchanges with China to gather information about the world’s second-largest economy.

“Understanding China’s plans, especially how China intends to respond to challenges with local government debt and the real estate market, or how it might react if unexpected weaknesses in its economy should arise, is crucial for those of us charged with policymaking in the United States,” she said. 

Toward that end, Yellen said she also aims to increase exchanges between financial regulators in the US and China. For example, the countries are facilitating discussions on how each side might handle the failure of a global systemically important bank.

Injecting an election campaign flavor to her remarks, the Treasury chief said the Biden administration has “course corrected” its broader policy toward China following the administration of former President Donald Trump.

“The Trump administration had failed to make investments at home in critical areas like infrastructure and advanced technology, while also neglecting relationships with our partners and allies that had been forged and strengthened over decades,” she said. “The Biden Administration strategy towards China begins with investing at home and rebuilding alliances abroad.”

Yellen also reiterated criticism of Chinese policies that she said had harmed American workers and firms by creating an uneven playing field. 

“The PRC deploys unfair economic practices, from non-market tools, to barriers to access for foreign firms, to coercive actions against American companies,” she said.

Shifting away from its state-driven economic approach in industry and finance would benefit China too, Yellen added. “Too strong a role for state-owned enterprises can choke growth and an excessive role for the security apparatus can dissuade investment.”

(Updates with Biden, Xi letters and additional Yellen comments.)

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