The Chinese government has made five demands on the United States, including the cancellation of its chip exports ban and sanctions, during US Treasury Secretary Janet Yellen’s four-day China trip ended Sunday.
China’s Ministry of Finance said in a statement on Monday that it has expressed concerns to Yellen about the extra tariffs, company sanctions, investment restrictions, export controls and Xinjiang product bans imposed by the US on China in recent years. It said the US should take concrete actions to respond to China’s concerns.
Chinese commentators said the China side arranged meetings between key economic officials and Yellen, showing that Beijing attaches great importance to her visit. They said Washington knows clearly what to do if it wants China to purchase its treasury bonds.
During her four-day trip ended Sunday, Yellen met with Premier Li Qiang, Vice Premier He Lifeng, Finance Minister Liu Kun and People’s Bank of China (PBoC)’s party secretary Pan Gongsheng, as well as former Vice Premier Liu He and PBoC governor Zhou Xiaochuan. She had a total of about 10 hours of discussions with them.
“China’s development is an opportunity, not a challenge, for the US. It is a gain, not a risk,” Deputy Chinese Finance Minister Liao Min said in a statement published on Monday. “Strengthening cooperation between China and the United States is the practical need and the correct choice of the two countries.”
“To achieve a healthy Sino-US economic relationship, we must fully respect the legitimate development rights and interests of all parties, and conduct healthy competition in accordance with market economic principles and World Trade Organization rules,” he said. “Differences should not be a reason for estrangement, but rather a driving force for strengthening communication and exchange.”
He said China and the US should seek consensus on important issues in the bilateral economic field through candid exchanges, so as to inject stability and positive energy into their economic relationship. He said that during Yellen’s trip, China had shown its willingness to help resolve global challenges, such as financial stability, climate change and smaller countries’ debt problems.
Technology curbs
Last month, media reports said Washington will soon announce its plan to ban Nvidia from shipping its A800 and H800 artificial intelligence chips to China, and also restrict US funds from investing in China’s high-technology sectors later this month.
Yellen told the media on Saturday that Washington will listen to China’s complaints about security-related curbs on US technology exports. She said the Biden administration will try to avoid unnecessary repercussions but she did not indicate any possible changes.
“We will open up channels so that they can express concerns about our actions, and we can explain and possibly in some situations respond to unintended consequences of our actions,” she said.
She said she had tried to explain to Chinese officials that the United States’s strategy of “de-risking” is not the same as “de-coupling.” She described her conversations with top Chinese officials as “direct, substantive and productive.”
“Even where we don’t see eye-to-eye, I believe there is clear value in the frank and in-depth discussions we had on the opportunities and challenges in our relationship, and the better understanding it gave us of each country’s actions and intentions,” she said. “Broadly speaking, I believe that my bilateral meetings – which totaled about 10 hours over two days – served as a step forward in our effort to put the US-China relationship on super footing.”
Yellen did not announce any agreements on major disputes with Chinese officials. She said both sides will have more frequent and regular communication.
Three bows
Ahead of Yellen’s visit to Beijing, Chinese commentators had said that the former Fed chairman was coming to China to sell US treasury bonds.
This view came after US President Joe Biden and top Republican lawmaker Kevin McCarthy reached a tentative deal to raise the federal government’s US$31.4 trillion debt ceiling in May. The decision will be followed by the issuance of nearly $1.1 trillion in new treasury bills over the next seven months.
When Yellen met top Chinese economic official He Lifeng on Saturday, she was seen bowing three times to him while they were shaking hands. She was criticized by some US lawmakers and academics for showing weakness with such a diplomatic gesture. Yellen’s official Treasury Department biography doesn’t mention any previous Asia forays in which she might have boned up on relevant protocol.
Chinese netizens turned the footage of her bows into an animated GIF picture, making her bow repeatedly.
On Monday, Tian Liu, a Hubei-based columnist published an article with the title “If Yellen wants China to buy US debt, she must complete China’s tasks. Three bows are not enough.”
“From our or Yellen’s official statements, it is not difficult to see that the two sides mainly ‘exchanged views’ this time, and neither side got what they wanted. The US did not agree to lift the sanctions, and China did not agree to buy US debt,” the article says.
“Finding buyers for US debt is the top mission of Yellen. From a medium-and-long-term perspective, China is disposing of US debt,” it says. “Who else will buy it? Japan is the biggest creditor of the US but cannot buy more. The United Kingdom is facing an economic recession and sold $30 billion of US debt in April.”
“It is only the US side’s wishful thinking that the US can sell its debt to China, or set guardrails for the Sino-US relations, without giving what China wants,” Liu’s article says.
“Yellen’s bows will not be able to change anything. If the US does not satisfy China’s five demands, we will not respond to its call of buying US debt,” the article continues.
“It is possible that the US may not consider any of our demands and use all possible means to contain and suppress our country,” it says. “If the US does not show some sincerity, the Sino-US relations will not improve.”
However, some other analysts have said that whether China will invest in US debt depends on its trade surplus situation, not its relations with the US.
No immediate war
Chinese media and commentators have so far made positive comments about Yellen’s trip.
Caixin said in its editorial on Monday that people should look at the competition and cooperation between the US and China rationally.
It said China is not afraid of competition but opposes malicious confrontation. It said both China and the US can set areas and boundaries for competition and should avoid “de-coupling.” Another pundit also surnamed Liu says in his vlog that Yellen’s visit to China is important as it shows that China and the US are still having dialogues and will not have an immediate war.
“Yellen is obviously the dovish among all top US officials. If we do not want to talk to her or we fail to achieve anything, it will send a pessimistic signal to the whole world,” Liu says.
“China and the US almost had a hot war, but still both sides have some hopes on each other in the economic areas,” he says. “China hopes that the US can ease its blockages and sanctions and lower some tariffs. Although the chance is slim, Chinese leaders have not given up as these are what we urgently need now.”
He says the US wants China to buy US debt, completely open up its markets and stop investing in high technology but Beijing will only consider the first request.
Read: Cordial tone in Yellen’s Beijing visit
Follow Jeff Pao on Twitter at @jeffpao3