Treasury Secretary Yellen Visits China as Dialogue Continues

Despite increasing tensions, communication between the U.S. and China continues to flow. U.S. Treasury Secretary Janet Yellen is the latest high level U.S. official to visit China and underscored the importance of the connection between the two economic giants during her visit.

“We should not allow any disagreement to lead to misunderstandings that unnecessarily worsen our bilateral economic and financial relationship,” Yellen said in a prepared statement during a meeting with Premier Li Qiang, reported CBNC. Yellen also went on to highlight the need for the two countries to “cooperate and show leadership” in facing “important global challenges”.

Competition between the U.S. and China led to ratcheting trade tensions in recent years. Most recent are U.S. restrictions on high-end semiconductor chips and manufacturing capabilities. In response, China announced new restrictions on the export of gallium and germanium, two metals key to semiconductors and EVs.

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“The issue really is how do you define the guardrails within that competition,” said Andrew Sheng, chief advisor at CBIRC, said on CNBC’s Street Signs.

Sheng went on to explain that in the last five years, trade and finance have become weaponized between the two countries. The recent back and forth bans and restrictions regarding semiconductors and related materials seem to indicate that the weaponization of technology is the next battleground between the two countries.

Yellen’s visit indicates the willingness of both sides to continue the dialogue regarding co-existence on the international stage.

“This is what I see as very hopeful,” Sheng said. “The two sides are basically talking, trying to find that strategic space for both sides to operate, and this will be very good for the rest of the world.”

Ongoing High-Level Dialogue a Net Positive

The tensions between China and the U.S. remain palpable as trade restrictions continue. Despite the escalation in recent years, the communication now happening between high level officials of both countries is significant.

Secretary of State Antony Blinken’s recent visit to China was the first in five years that a U.S. diplomat visited Mainland China. Now with Treasury Secretary Yellen’s visit, and the promise of return visits by high-ranking Chinese officials, the flow of communication continues.

While it remains to be seen if the two countries can successfully negotiate around current tensions, the interconnected economic nature of the U.S. and China underscores the importance of continued dialogue.

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