Yellen seeks ‘substantive’ talks with Chinese Vice-Premier ahead of Apec summit

SAN FRANCISCO - US Treasury Secretary Janet Yellen began two days of meetings with Chinese Vice-Premier He Lifeng on Thursday, in a bid to limit the economic fallout from tensions between Washington and Beijing and keep the lines of communication open on topics from national security to climate change.

US Treasury officials have sought to downplay expectations for any breakthroughs from the meetings in San Francisco, where US President Joe Biden next week will host a summit of Asia-Pacific Economic Cooperation (Apec) country leaders, including Chinese President Xi Jinping.

Mr Biden and Mr Xi are expected to steal the spotlight

with a planned meeting on the summit sidelines.

Dr Yellen first met Mr He during a visit to Beijing in July that was among a series of Cabinet-level engagements that paved the way for the two leaders to meet.

In her opening remarks, Dr Yellen said she wanted “an open and substantive discussion” on the US-China economic relationship, Beijing’s subsidy practices, and global challenges such as climate change and debt relief, among other issues.

“The United States has no desire to decouple from China: A full separation of our economies would be economically disastrous for both our countries, and for the world,” she told Mr He.

Flanked by more than a dozen staff on each side facing each other across a swath of marigold flowers, Dr Yellen sought to reassure China that the US wants a healthy economic relationship with it based on a level playing field. She added that she would discuss and explain the reasons behind continued US national security restrictions.

China’s concerns

Mr He, China’s new economic czar, who faces flagging growth at home, said through an interpreter that his engagements with Dr Yellen so far have been “constructive”. But he added that the two sides needed to bring their relationship “back to a healthy and stable development”.

He said he would communicate China’s “key concerns on the economy”, including improving the investment and business environment, and “to also take effective measures to bring our economic and trade relations back on track” – references to longstanding Chinese objections to US tariffs on its exports and restrictions on US investment in China.

The San Francisco meetings mark the first in-person gatherings of new US-China economic and financial forums involving staff-level officials from both sides, after their launch in October.

But in announcing the consultations on Monday, Dr Yellen said this would not be a re-creation of the Obama administration’s US-China Strategic and Economic Dialogue, a broad forum that was widely criticised for its lack of substance.

A US Treasury official said a key goal for the meetings was deepening communication with China, gaining a better understanding of the relationship and avoiding any misunderstandings about US policy decisions.

‘Fractured’ relationship

Ms Kelly Ann Shaw, a former White House trade adviser to former president Donald Trump, said it was important for Dr Yellen to re-engage with China, but that the meeting would do little to change the overall trajectory of US-China relations.

“This relationship is fundamentally fractured. And I think it’s going to stay that way for the foreseeable future,” said Ms Shaw, a partner at law firm Hogan Lovells.

“So it’s about figuring out, what do we want this relationship to look like knowing that?

“And just because you don’t like each other doesn’t mean you can’t get along where your interests align.”

Dr Yellen also said that she would discuss cooperation with China on global challenges, including climate change and debt relief for low-income countries, where the US and China “have an obligation to lead”.

The meetings are being held just days after the US Treasury’s semi-annual currency report chided China over a lack of transparency in its foreign exchange intervention practices. But the report said no major trading partners, including China, met the thresholds for currency manipulation. REUTERS