Yellen asserts that Washington may’respond to unexpected repercussions’ the Chinese

As she concluded a trip to Beijing aimed at mending frayed ties, Treasury Secretary Janet Yellen said she agreed Washington would pay attention to Chinese concerns about security-related restrictions on US technology exports and could “respond to unintended consequences.”

Yellen defended the “targeted measures” on trade that China’s authorities claim are intended to harm their country’s budding tech sectors.

She said that the Biden administration wanted to “avoid unnecessary repercussions” but made no mention of potential adjustments.

Due to disagreements over technology, security, and other irritants, relations between the two largest economies are at their lowest point in decades.

Limitations on access to processor chips and other US technology due to security concerns are a major source of Chinese discontent since they might thwart the growth of cellphones, artificial intelligence, and other sectors by the governing Communist Party.

At a news conference, Yellen stated, “We will open up channels so that they can express concerns about our actions, and we can explain and, in some cases, respond to unintended consequences of our actions.”

Over the course of ten hours of discussions, Yellen spoke with Premier Li Qiang, China’s No. 2 leader, and other representatives. On Saturday, she met for five hours with Vice Premier He Lifeng of China. There were no arrangements for her to see Chinese President Xi Jinping, Treasury officials said in advance.

Yellen was warmly welcomed and given considerable attention by the state media, but Chinese officials made no indication that they would alter any industry or other policies that the United States and other countries claim violate Beijing’s obligations to free trade.

He said that Washington should “adopt a rational and pragmatic attitude” to enhance ties on Saturday.

Yellen said that her department and Chinese officials will have “more frequent and regular” dialogue on Sunday, but she did not reveal any resolutions to significant conflicts or plans for future action.

Political tensions between the US and China are increasing the level of uncertainty, which is reducing consumers’ and companies’ desire to invest and spend money.

After anti-virus restrictions on travel and commercial activity were relaxed in December, China’s economy recovered from last year’s 3 percent decline to 4.5 percent growth in the first quarter of 2023. However, in the three months that ended in June, both manufacturing activity and consumer expenditure slowed.

In March, Xi said that Washington was attempting to impede China’s industrialization.

Beijing has been reluctant to respond to US technological restraints, perhaps to prevent upsetting its own industry.

However, the government placed vague export restrictions on the metals gallium and germanium, which are needed to make semiconductors and solar panels, three days before to Yellen’s visit. The largest producer of both is China.

Yellen said that she sought to reassure the authorities. While attempting to “de-risk” trade, Washington does not seek to divorce or remove its economy from that of China.

To lessen dependence on Taiwan and other Asian suppliers, which is considered as a security concern, the Biden administration is pressuring semiconductor firms to shift manufacturing to the United States.

Washington aims to provide alternatives to Chinese imports of metals used in cellphones, wind turbines, and other goods, as well as rare earth elements.

According to Yellen, “they have expressed some concern that de-risking equates to decoupling.” According to her, she made an effort to “assure my Chinese counterparts that this is by no means the same thing.”

“The de-risking” entails paying attention to explicitly stated and specifically defined national security issues, as well as a larger concern with diversifying our supply chains, which the US is doing in a few significant industries, she added.

Throughout her tour, Yellen spoke for “healthy economic competition,” alluding to charges that Beijing breaches its free-trade agreements by subsidising and protecting politically advantageous businesses from domestic and international competition.

Yellen said that she had spoken with Chinese leaders about “coercive activities” involving US firms.

This comes after raids on consulting companies, the arbitrary imprisonment of staff members, what the US government calls, or restrictions on persons leaving China, and accusations that some complaints are being used to push them in commercial disputes.

Chinese authorities are attempting to pique investor interest, but foreign businesses are unsure of their standing after Xi and other officials urged economic independence.

The governing party has also strengthened an anti-spying rule, which has increased ambiguity around what consultants or legal firms may perform.

On Saturday, Yellen urged He to work with her on issues including the debt loads facing emerging nations, climate change, and other global issues.

She said that their governments shouldn’t allow differences over trade and security to sour business and financial ties.

In retribution for Speaker Nancy Pelosi of the House of Representatives’ travel to Taiwan, the self-governing island democracy that China claims as part of its territory, Beijing ended climate talks with Washington in August.

Next week, John Kerry, the climate envoy for President Joe Biden, is scheduled to visit China as the next top representative.

The two countries that produce the most carbon emissions globally are China and the United States.

Last month, China and Zambia announced a deal to restructure Zambia’s debt, including billions of dollars in loans made as part of Beijing’s Belt and Road Initiative to develop ports and other infrastructure across Asia and Africa.

Treasury officials cited it as an example of productive collaboration.