US Treasury Secretary Janet Yellen is wrapping up her second trip to China, where she raised American concerns about Chinese overproduction, warned against support for Russia and, unexpectedly, caused a stir on Chinese social media over her travel style and chopstick-wielding skills.
Over the span of four days, Yellen had wide-ranging meetings with Chinese leaders, local officials, academics, students and American executives both in the southern metropolis of Guangzhou as well as the capital Beijing.
The visit, her second to China in nine months as treasury chief, is aimed at addressing escalating trade disputes between the world’s largest economies as the two sides try to stabilize relations following a summit between US President Joe Biden and Chinese leader Xi Jinping last November.
Despite the overall positive tone of Chinese state media coverage, Yellen had a tough message for Beijing: China’s surging exports of state-subsidized electronic vehicles (EVs), solar panels and batteries are threatening American jobs and businesses, and must be reined in.
At a news conference on Monday, Yellen said she expressed concerns to senior Chinese officials that there are features of the Chinese economy that have “growing negative spillovers” on the US and the world.
“I am particularly worried about how China’s enduring macroeconomic imbalances —namely its weak household consumption and business overinvestment, aggravated by large-scale government support in specific industrial sectors — will lead to significant risk to workers and businesses in the United States and the rest of the world,” she told reporters.
Here are four key takeaways from her trip:
1. Overcapacity is a problem
The issue of Chinese overcapacity in key industries such as EVs and solar panels has emerged as a major area of contention globally and in the run-up to November’s US presidential election. It was also a major focus of Yellen’s trip. She has repeatedly relayed the message to Chinese officials from Vice-Premier He Lifeng, known as the country’s economic tsar, to Premier Li Qiang.
“China is now simply too large for the rest of the world to absorb this enormous capacity,” Yellen told reporters Monday. “Actions taken by the PRC today can shift world prices. And when the global market is flooded by artificially cheap Chinese products, the viability of American and other foreign firms is put into question.”
But there’s little sign that Beijing is willing to budge on its economic policies.
In his meeting with Yellen on Sunday, Li, the Chinese premier, urged Washington not to “politicize” economic and trade issues or “overstretch the concept of national security,” but to adhere to “the basic market economy norms of fair competition and open cooperation.”
“The United States should look at the capacity issue objectively and dialectically from the perspective of market economy and a global vision” Li told Yellen, according to a readout from China’s Foreign Ministry. Beijing is aware of the country’s overcapacity problem, having acknowledged it as a key challenge at an annual economic work conference in December.
But last month, several Chinese state media outlets published editorials challenging the notion that China’s supply glut poses a threat to other economies. “What China exports is advanced production capacity that meets the needs of foreign customers,” the Xinhua news agency wrote.
At the news conference, Yellen conceded that concerns over Chinese oversupply will not be resolved in a week or a month, but “the exchanges that we announced during this trip will provide a dedicated structure for us to raise our concerns about China’s imbalances and overcapacity — among a wide range of other topics — in a detailed and targeted manner.”
2. Don’t support Russia
In a meeting with He, the economic tsar, in Guangzhou, Yellen warned that Chinese companies could face “significant consequences” if they provide material support for Russia’s war on Ukraine, according to a readout from the Treasury Department.
China has emerged as a key economic lifeline for Russia after its invasion of Ukraine as the United States and its allies cut trade and imposed sanctions to choke off the Kremlin’s war effort. Beijing has claimed neutrality and called for peace in the conflict, but it has also avoided criticizing Russia’s aggression and deepened economic, diplomatic and military ties with its neighbor.
US intelligence has warned that China is providing technology and equipment to Russia that is important to Moscow’s war in Ukraine. The Biden administration has imposed trade restrictions on Chinese companies for violating US sanctions.
On Monday, Yellen said she had “difficult conversations” about national security with Chinese officials.
“President Biden and I are determined to do all that we can to stem the flow of material that is supporting Russia’s defense industrial base and helping it to wage war against Ukraine,” she said. “We continued to be concerned about the role that any firms, including those in the PRC, are playing in Russia’s military procurement.”
“I also reinforced that any banks that facilitate significant transactions that channel military or dual-use goods to Russia’s defense industrial base expose themselves to the risk of U.S. sanctions,” she added. Asked about Yellen’s comments at a news conference Monday, China’s Foreign Ministry said “normal cooperation in various fields between China and Russia should not be interfered with or restricted.”
“Relevant countries should not attack and discredit China’s normal state-to-state relations, and should not harm the legitimate rights and interests of China and Chinese companies,” said ministry spokesperson Mao Ning.
3. It’s important to keep talking
Yellen’s trip is part of efforts by Washington to maintain regular open lines of communication with Beijing to manage competition and prevent unintended conflict, after bilateral relations plunged to a low point early last year.
Her visit also came days after Biden and Xi spoke on the phone last week, in the first conversation between the two since their in-person summit in San Fransisco in November.
“It is undeniable that the US-China relationship is on stronger footing today than this time last year,” Yellen said on Monday. “And during this trip, we have been able to build on that foundation to move the ball forward on specific issues that matter to Americans.”
But she warned that this does not mean the two powers have resolved all their differences.
“President Biden and I are clear-eyed about the complexities of this relationship. Our priorities include protecting our national security and that of our allies, advancing an objective of a healthy economic relationship with a level playing field for American workers and firms, and cooperating with China where both countries can and must.”
Yellen also met with China-based American executives and relayed their concerns about doing business in the country to Chinese officials, particularly after the raids by Chinese authorities on consulting firms last year.
“On each side, we need to be as transparent as we can about our national security concerns and how the actions we take will lead to resolving those concerns,” Yellen said on Monday in response to a question by CNN’s Marc Stewart.
“When we’ve put restrictions in place, we’ve proposed rules, gone through a full rulemaking process in which we take comments and make very clear what the rules of the game are. And I think that would be helpful on the Chinese side as well.”
4. Chopsticks skills can win friends
While Yellen talked tough at times, she received an unusually warm welcome in China, especially on social media, where anti-American sentiment has been running high in recent years.
Some of it comes down to her personal style — including her reported love for Chinese food. During her last visit to Beijing, Yellen dramatically boosted business for a Yunnan restaurant chain and its mushroom dish after her delegation was spotted dining there.
Yellen caught the attention of Chinese social media users from the moment she landed in Guangzhou on Thursday afternoon, when she exited the plane carrying a briefcase and a plain cross-body bag. Online commentators noted her down-to-earth style, with some comparing her to a Beijing “dama” — a Chinese term used to describe a middle-aged woman.
“Yellen came like an ordinary traveler. She got off the plane alone, had a bag slung across her body and a handbag in her hand. To be honest, as a senior official, she is so down-to-earth!” a comment said on Weibo, a popular social platform.
“It doesn’t matter what’s in her bags. The important thing is she didn’t have to show off (her power) and didn’t need a whole entourage crowding over her,” said another comment. Chinese officials usually travel with numerous assistants who carry their personal belongings, sometimes shielding them with umbrellas when outdoors.
Online commentators also marveled at Yellen’s dexterity with chopsticks, after a Weibo account affiliated with state broadcaster CCTV released a short video showing her dining at a Cantonese restaurant in Guangzhou.
The restaurant chain, Tao Tao Ju, is almost 150 years old. Yellen’s menu included classic dim sum dishes such as shrimp dumplings, egg tarts and pan-fried turnip cakes, as well as entrees including roasted goose, sweet and sour pork and stir-fried beef noodles.
“(I) noticed Yellen uses chopsticks quite well,” the CCTV reporter said in the post. “As a US official, Yellen needs to know more about China than just its food. Only by understanding China better, can she correct the US worldview and its views of China and China-US relations.”
