In an ever-evolving global theater, the economic relations between the United States and China have been turbulent, to say the least. Treasury Secretary Janet Yellen, with her diplomatic acumen, attempts to steady the seesaw, not letting national security disputes overshadow the economic prospects.
Her recent trip to Beijing, intended to stabilize the strained relations between the two powers, marks an important development in this diplomatic saga.
Yellen’s hopeful diplomatic gesture
On her inaugural visit to China as the US Treasury Secretary, Yellen did not shy away from addressing the elephant in the room. She recognized the occasional disagreements, particularly concerning national security.
Yet, she maintained that such differences should not impair the bilateral economic and financial ties needlessly.
Yellen’s endeavor to initiate more regular channels of communication reflects her hope for a harmonious path forward. She argued that the U.S. and China, as world leaders, have a global responsibility to tackle the worldwide challenges hand in hand.
Following her diplomatic approach, Yellen, however, stood firm on voicing the concerns of the U.S. business community. In a discussion at the American Chamber of Commerce, she expressed concern about China’s punitive measures towards foreign companies and possible export controls on critical minerals.
She underlined the non-market tools like expanded subsidies for Chinese state-owned enterprises and domestic firms and the barriers to market access for foreign firms as areas of concern.
Yellen’s visit comes on the heels of Secretary of State Antony Blinken’s trip, marking an attempt by the Biden administration to strengthen ties and ensure that competition does not escalate into conflict.
However, certain incidents, such as a suspected Chinese spy balloon crossing North America, have posed challenges to this endeavor.
The semiconductor saga and diversified supply chains
One of the most pressing issues, at the core of the US-China tug of war, is the control over semiconductors. Beijing recently banned Chinese entities involved in critical infrastructure from purchasing semiconductors from Micron, an Idaho-based memory chipmaker, seen by Washington as a retaliatory move.
Following this, Beijing announced that Chinese groups would have to seek licences for the export of gallium and germanium, critical components in chip making. Yellen’s response underscored the need for “resilient and diversified supply chains,” noting that the U.S. is still assessing the implications of Beijing’s move.
Despite these significant developments, experts are not expecting a groundbreaking shift in bilateral relations following Yellen’s visit. The primary objective of her trip was to engage with Chinese officials who recently took over key economic portfolios. In the Chinese economic machinery, individuals and their bureaucracies hold considerable sway, and Yellen’s interactions could potentially set the tone for future negotiations.
While the state of relations between the two nations may not see an immediate overhaul, Yellen’s initiative could help alleviate misunderstandings and lay the groundwork for more constructive dialogues.
As the world keeps a close eye on this saga, Yellen’s strategic approach might just be the bridge that navigates through the storm to find the proverbial rainbow, as hinted by Chinese premier Li Qiang.
It’s a painstaking process, and much like diplomacy itself, it’s about taking one step at a time.
