The United States and China continue to talk, but the economic gap remains wide | Trending Viral hub


When Treasury Secretary Janet L. Yellen traveled to Beijing last summer, her mission was to restore dialogue between the world’s largest economies and stabilize a relationship that seemed to have hit rock bottom.

The United States and China created formal economic working groups to keep the conversation going. Months later, Yellen met with her Chinese counterparts in San Francisco and Morocco. And the Treasury Secretary’s consumption of a dish made with “magic” psychedelic mushrooms at a Yunnan-style restaurant in Beijing sparked something of a culinary craze in China. where Ms. Yellen is popular for being an acclaimed economist.

But despite those signs of progress, thorny economic issues continue to divide China and the United States. When Ms. Yellen arrives on Thursday for four days of meetings in Guangzhou and Beijing, the two sides are expected to exchange views on the state of the global economy, the Biden administration’s concerns about the China situation wave of green energy technology exports and Beijing’s frustration over rising barriers to Chinese investment in the United States.

“We don’t want to decouple our economies,” Yellen said Wednesday during a stop in Alaska en route to China. “We want to continue and we believe we both benefit from trade and investment, but it needs to be on a level playing field.”

But he suggested the administration was prepared to take new trade action against China to ensure the survival of the clean energy sector that the United States has been trying to grow through tax subsidies and other investments.

These are some of the most contentious issues that have sown divisions between the United States and China.

A top priority for Ms. Yellen will be to convey the Biden administration’s deep concerns that a excess of heavily subsidized green technology exports of China is distorting global markets.

Ms. Yellen, during a visit to a solar cell plant in Georgia last week, argued that an increase in Chinese exports of electric vehicles, batteries and solar technology was problematic at a time when the United States is spending huge sums to try to develop those industries. She argued that China was following the same playbook it used when it flooded global markets with cheap, state-subsidized steel and aluminum, hurting American producers who couldn’t compete.

On Wednesday, Yellen suggested that the United States could take steps to ensure that money being spent as part of the Inflation Reduction Act is not undermined by China’s practices.

“We are providing tax subsidies to some of these sectors, and I wouldn’t want to rule out other possible ways we would protect them,” he said when asked about the possibility of new tariffs on Chinese imports.

China has focused on industrial production to boost its faltering economy. Its exports, measured in dollars, rose 7 percent in January and February from last year. The increase in exports has also angry officials in the European Unionand the bloc announced last month that it was preparing to charge tariffs, which are import taxes, on all electric cars arriving from China.

China has rejected claims that its economy is struggling and too reliant on exports. But it has been fixed an ambitious economic growth goal of “around 5 percent” for this year, and achieving it will depend largely on strong demand for goods produced by Chinese factories: electric vehicles, solar panels and consumer electronics.

The Biden administration has maintained tariffs on more than $300 billion in Chinese goods. Those levies, first imposed by the Trump administration, remain a major source of tension between the two countries.

Yellen came into office saying that tariffs are taxes on consumers and argued that Trump’s taxes were not well designed. However, reducing tariffs is particularly difficult in an election year, and it is unlikely that Yellen will be able to offer much relief to China on that front.

The White House has been weighing the possibility of relaxing some of the tariffs affecting American consumers and imposing new ones that would target China’s green energy exports.

And another round of solar tariffs could arrive in the US this summer. when a two-year pause President Biden issued expires in 2022.

China has its own complaints about US trade policies and filed a complaint last week when the World Trade Organization argued that the Biden administration’s electric vehicle subsidy policies are discriminatory.

Both the United States and China say they welcome foreign investment, but their policies remain hostile.

American companies operating in China have complained over the past year about having their offices searched and harassed by Chinese authorities. Yellen, who will meet with American business executives in Guangzhou, has been seeking clarity on the scope of a Chinese anti-espionage law that foreign companies believe will lead to additional government scrutiny.

China’s leaders are pushing to change the perception that the country is no longer a solid place for foreign investors to put their money. Beijing has reason to be worried: Foreign direct investment in China fell to its lowest levels in three decades last year, and the government took a series of measures that made foreign companies feel that the country is a increasingly hostile place to operate. On top of that, concerns about China’s economy have made many companies less willing to tolerate the advantages and disadvantages of running a business in the country.

Last month, Premier Li Qiang, China’s second-in-command, said the government was removing restrictions on foreign investment to make the country a “favorite destination” for foreign funds.

And Xi Jinping, China’s leader, met with a delegation of visiting American business leaders last week and declared that China remained committed to economic reform.

However, in a sign of mixed messages from Beijing, on the same day as Xi’s meeting, China’s Ministry of State Security warned the public about the intelligence risk posed by foreign consultancies (the type of advisory firms on which foreign companies trust to carry out their tasks). due diligence for investments.

The United States is also taking a tougher stance. During a call this week, Biden and Xi discussed the fate of TikTok, the social media platform owned by the Chinese company ByteDance. The House of Representatives passed legislation last month that would force the company to be sold on national security grounds, and Biden has said he supports the bill, which must still be approved by the Senate to become law. China is expected to block a forced sale of TikTok, and Chinese officials are expected to raise the issue with Ms. Yellen.

The Biden administration is also trying to clamp down on the flow of money to China, including banning new US investments in key technology industries that could be used to improve Beijing’s military capabilities. It has also limited China’s ability to benefit from the Inflation Reduction Act, the US climate and energy law.

As Treasury secretary, Yellen oversees the US sanctions program, which in recent months has increasingly targeted China.

In late March, the United States and Britain imposed sanctions on China’s elite hacking units, accusing Beijing’s top spy agency of a year-long effort to plant malware in power grids, defense systems and other critical US infrastructure, and stealing the voter rolls of 40 million people. British citizens.

Yellen has openly pressured China not to help Russia evade US sanctions. During a speech last year, she expressed dismay at China’s “boundless” partnership with Russia and called it “essential” that China not provide Russia with material support or assistance to evade sanctions.

The Treasury Department has also increasingly focused on Hong Kong-based companies that have been accused of helping Russia and Iran circumvent US sanctions.

The United States has imposed broad restrictions on the sale of advanced computer chips, chip-making equipment and related products to China, saying Beijing has used these products to develop advanced weapons and surveillance systems that run counter to national security interests. of the United States.

China remains angry about those restrictions. After the White House revised rules for exporting American artificial intelligence chips and chip-making equipment last week, China criticized the United States, saying it was arbitrarily changing the rules and creating more obstacles to trade.

China sees the tightening of controls as part of a US strategy to thwart the country’s rise by limiting access to products critical to the advancement of AI and other next-generation technologies.

Daisuke Wakabayashi contributed reporting from Seoul.


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