What to Know in Washington: Yellen Visits China Amid Tensions

Treasury Secretary Janet Yellen visits China this week with the goal of finding areas of common economic ground and opening communication channels amid an increasingly turbulent relationship between the world’s two biggest economies.

It will be the first major test of a policy she outlined in April that’s geared toward defending and securing US national security without trying to hold China back economically.

Photographer: Al Drago/Bloomberg

Yellen’s arrival tomorrow comes days after China imposed restrictions on exporting two metals that are crucial to key technology industries, the latest escalation in a trade war that ramped up last year with US export controls on semiconductors and chipmaking equipment. She also happens to touch down in Beijing exactly five years after the Trump administration imposed tariffs on the first wave of more than $300 billion of goods from China — duties that President Joe Biden has kept in place despite Yellen’s criticism of them.

Still, while in Beijing, Yellen will seek to find common ground on other issues. She will meet with senior Chinese government officials to discuss the importance of responsibly managing the US-China relationship, communicating directly about areas of concern, and working together to address global challenges like climate change and debt distress in poorer nations.

A key priority for the Treasury has been pressing Beijing to boost debt relief for developing nations, where China has become one of the largest creditors. Yellen’s visit will follow a recent agreement in principle for Zambia, which she has praised.

Among other potential issues in the upcoming talks: a recent crackdown by China on access to information about its companies, and continuing questions about prospects for Chinese firms listing on US exchanges. For their part, Chinese leaders have been continuously emphasizing that their country welcomes overseas firms.

Another likely source of tension is an impending executive order by the Biden administration curbing US outbound investment in China, which may come as soon as late July and which would cover certain investments in sensitive technologies including semiconductors, AI, and quantum computing. Viktoria Dendrinou and Enda Curran have more on what to watch.

BIDEN’S AGENDA:

• At 2 p.m., the president will hold a bilateral meeting with Swedish Prime Minister Ulf Kristersson. The pair plan to reaffirm their view that Sweden should join NATO. Read more.
• Press Secretary Karine Jean-Pierre will hold a briefing at 2:15 p.m.

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To contact the reporters on this story: Giuseppe Macri in Washington at gmacri@bgov.com; Andrew Small at asmall@bgov.com

To contact the editor responsible for this story: Kayla Sharpe at ksharpe@bloombergindustry.com