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The backstory: Tensions have been escalating between China and the US, and several issues have contributed to the strain. First, the US is concerned about China's growing closeness to Moscow, which has raised eyebrows in Washington. On top of that, the US is imposing restrictions on the sale of advanced technology to China, further fueling the tension.
US President Joe Biden and Chinese President Xi Jinping met in November at the G20 summit, a sign of working toward cooling things down between the two countries. But since then, disagreements involving Taiwan have surfaced, and things escalated in February when a Chinese surveillance balloon trespassed into US airspace. The US shot it down, which led to Secretary of State Antony Blinken's visit to China getting canceled.
More recently: In April, Treasury Secretary Janet Yellen made it clear that it's crucial to keep ties with China intact. She warned against "decoupling" and highlighted the need to address human rights concerns and trade policies. Then, in June, she chatted with some top American CEOs, emphasizing the significance of working with China on global challenges.
In a noteworthy development, Secretary of State Antony Blinken visited China last month, marking the first visit by an American secretary of state in five years. But last week, China introduced some restrictions on exporting germanium and gallium – components crucial for high-tech stuff like semiconductors and electronics – which it’s the biggest global supplier for. China said this move was about protecting national security, but others felt it was retaliation for the tech curbs coming from the West.
The development: Yellen just wrapped up a trip to China on Sunday. The discussions started with some heavy hitters in China's economic policy, Liu He and Yi Gang. They had some "informal and substantive" talks, covering the global economic outlook and how things are shaping up economically in both countries.
Then, on Friday, Yellen sat down with Chinese Premier Li Qiang for a little over an hour. She made it clear that she doesn't see the competition between the US and China as a "winner-take-all" situation. Yellen believes they should follow a fair set of rules that benefit both countries in the long run. Premier Li responded with optimism, saying that he believes bilateral relations will eventually improve and become like a "rainbow" after weathering the storm.
Yellen had a five-hour talk with Chinese Vice Premier He Lifeng on Saturday. The Treasury described their meeting as "candid, constructive, and comprehensive." They dug into concerns and talked about the Biden administration's approach to healthy competition and a “level playing field” for American workers and businesses.
"I am … concerned about new export controls recently announced by China on two critical minerals used in technologies like semiconductors," said US Treasury Secretary Janet Yellen in Beijing.
"A decoupling of the world's two largest economies would be destabilizing for the global economy, and it would be virtually impossible to undertake," said Yellen. "We seek to diversify, not to decouple."
"The United States will, in certain circumstances, need to pursue targeted actions to protect its national security. And we may disagree in these instances," said Yellen. "However, we should not allow any disagreement to lead to misunderstandings that needlessly worsen our bilateral economic and financial relationship."