Yellen’s trip likely motivated by US debt issue; Washington needs more sincere moves in fixing US-China ties
Published: Jun 27, 2023 09:00 PM Updated: Jun 27, 2023 11:30 PM
China-US Photo: GT

China-US Photo: GT

After the long-delayed visit of US Secretary of State Antony Blinken to Beijing last week reopened channel for high-level exchanges between the US and China, US Secretary of the Treasury Janet Yellen is reportedly planning to visit China in July, as business insiders believe that official economic engagement is poised to take center stage amid soured bilateral ties, which is mainly caused by Washington's erroneous perception. 

The trip is likely to be motivated by issues around the US debt ceiling, but some Chinese experts warned on Tuesday that while there is still a window of opportunity to repair US-China relations, it will not be open for long, therefore Washington needs to make sincere moves rather than creating new troubles. 

Yellen plans to visit Beijing in early July for the first high-level economic talks with her new Chinese counterpart Liu Kun, Bloomberg reported on Tuesday, citing people familiar with the scheduling. The Treasury chief would be the second US cabinet official to travel to Beijing after relations between the two countries soured earlier this year. 

Meanwhile, a Biden administration executive order that would regulate and potentially cut off certain US investments in China is nearing completion, and officials are aiming to have it ready as soon as late July, according to the report. 

As a professional macroeconomist with a background in the US Federal Reserve, Yellen is seen as a rational US official with a less hawkish view on China, as she understands how important bilateral cooperation is to the US economy, especially as the lingering Trump-era tariffs are hurting American consumers badly and the US has been facing high inflation and growing debt ceiling problems, Chinese experts said. 

Yellen, who had previously expressed willingness to visit China, also called for a healthy economic relationship with China in a recent Congress testimony, saying that de-coupling with China would be a big mistake. But she emphasized in a speech in April that national security comes first, even if it has an impact on the economic relationship with China. 

The Chinese Foreign Ministry didn't confirm this reported visit as of press time on Tuesday. But Mao Ning, spokesperson of the ministry, said that "China and the US are in touch about dialogue and exchange at various levels."

"Yellen's visit is likely motivated by concerns over US debt," Gao Lingyun, an expert at the Chinese Academy of Social Sciences in Beijing, told the Global Times on Tuesday. 

With the US having raised its debt ceiling, there is a need to find buyers for the debt. Additionally, there may be discussions around debt repayments for developing countries, which cannot be solved without China's involvement, Gao noted.

In early June, US President Joe Biden signed a bill to suspend the nation's debt limit, which was then at $31.4 trillion, through January 1, 2025. Markets read this as a prelude to a new wave of bond issues. 

Yellen's possible visit would come after Blinken wrapped up his two-day trip to Beijing last week that was closely watched when bilateral relations had dipped to their lowest point in decades. While some experts expect that Yellen's visit could yield some positive results in the economic field, they said that the Biden administration will not change its major containment strategy toward China as it always takes the country as main strategic component. 

Although Washington's open hostility toward Beijing has been somewhat decreasing since Blinken's visit, it has continued provoking troubles recently such as on the fentanyl issue, hype over a Chinese spy base in Cuba and even a vicious attack on the Chinese leader, all overshadowing already complex bilateral ties. 

'Window of opportunity' 

Following the consensus reached by the two heads of state in Bali, Indonesia in November 2022, the business teams of the two sides should have followed up on next-phase exchanges but they failed to do so due to interference from national security and diplomatic officials, including hyping the balloon incident, Lü Xiang, a research fellow at the Chinese Academy of Social Sciences, told the Global Times on Tuesday. "After Blinken's visit, the conditions for Yellen's trip to China are mature," he said. 

"As a professional economist who knows where the US' problems are and understands how important a stable US-China relationship is for the country's economy, Yellen would not behave like those US officials in charge of diplomacy and security who understand little or nothing about China's economy. We can feel the urgency of her visit," Lü said. 

On Monday, China's top diplomat Wang Yi met the National Committee on US-China Relations chair Jacob Lew, a former US treasury secretary, pointing out that the roots of the difficulties facing China-US relations lie in the US' severe deviation in its position on China, which lead to a series of misguided measures against China. 

The US should respect China's legitimate right to development and fulfill the commitments it has already made multiple times, Wang said.

The US Justice Department announced on Friday the arrest of two individuals and the unsealing of three indictments in the Southern and Eastern Districts of New York charging China-based companies and their employees with crimes related to fentanyl production, distribution and sales resulting from precursor chemicals.

Also, US lawmakers and media have been hyping the so-called Chinese spy facility in Cuba in recent days, and some congressmen have called on the Biden administration to give a classified briefing on the issue. 

"Although the official communication channel has been reopened, it remains unknown whether this channel could help fix any of the problems between the two sides, when the US insists on rivalry and confrontation with China," Li Haidong, a professor at the China Foreign Affairs University, told the Global Times on Tuesday. 

China's policy toward the US and its recognition of China-US relations are based on the reality of China-US relations and handling of China-US relations in a responsible way, but Washington's China policy is based on its arbitrary misjudgment, adding uncertainties for future engagement, Li said. 

As Yellen's reported visit comes as the Biden administration is finalizing new investment curbs aimed at China, some experts said the new restriction will lower the sincerity of the US government in engaging with China and could also be used as a bargaining chip for upcoming high-level talks between Chinese and US officials. 

"It's not yet the time to say 'now or never', as the two countries are still in a window of opportunity for improving the relations. But this opportunity won't last long and the US side should be aware of that," Lü said.