Janet Yellen tells China the world is ‘big enough for both our countries to thrive’

The US treasury secretary, Janet Yellen, has said a four-day trip to Beijing has put ties with China on a “surer footing” and paved the way for better communication between top officials who run the world’s two largest economies.

This relatively modest outcome had been flagged by US officials and expected by analysts before Yellen arrived, and is a reflection of how fraught one of the world’s most critical relationships had become.

“I expect that this trip will help build a resilient and productive channel of communication,” Yellen said at a press conference before returning home on Sunday.

“My hope is that we can move to a phase in our relationship where senior-level diplomacy is simply taken as a natural element of managing one of the world’s most consequential bilateral relationships.”

China has accused the US of trying to hobble its growth and choke off trade between the two countries – or “decouple” their economic growth. US sanctions on hi-tech chips that are vital for advanced computing are a particular concern.

Yellen said despite “significant disagreements” between the two countries, the US did not view its economic might as a weapon to be deployed against China. “President [Joe] Biden and I do not see the relationship between the US and China through the frame of great power conflict. We believe that the world is big enough for both of our countries to thrive.”

Trade and close ties between the two countries was vital for global prosperity, she added. “We know the decoupling of the world’s two largest economies would be disastrous for both countries and destabilising for the world. And it would be virtually impossible to undertake.”

The US would not back away from economic controls needed to protect its national security, but they would be narrow and closely focused on key concerns, Yellen said.

Washington would also consider responding to Chinese concerns about “unintended consequences” of any controls, if they were not strictly targeted in practice, she added.

Yellen said she had raised the US’s own “serious concerns” in 10 hours of meetings with China’s top policymakers. They include China’s “coercive” treatment of American firms, lack of protection for intellectual property and keeping its markets walled off in defiance of international deals.

She used the trip to seek greater cooperation on areas where Washington thinks there is room for more progress through international collaboration.

These include climate financing, where more support from the world’s current top emitter of greenhouse gases should push faster change, and debt relief for poorer countries.

China is the world’s largest creditor nation and there are increasing worries that crippling repayment obligations across the global south could badly damage the world’s most vulnerable people. Goverments are already facing diverting scarce resources away from education, health and other priorities, to service loans owed to Beijing and other creditors.

Yellen met many people from a new team that are just taking up top posts or preparing to move into them. She appeared to effectively confirm the appointment of a new central bank chief, by referring to Pan Gongsheng, the deputy governor of the People’s Bank of China, as the acting head.

The talks “served as a step forward in our effort to put the US-China relationship on a surer footing”, she said.

High-level talks were once a regular part of the relationship between Washington and Beijing. But they were brought to an end by controls on movement in response to the Covid-19 pandemic, even as tensions between the US and China rose on issues from trade and Taiwan to tech and the origin and handling of Covid.

Trips this summer by Yellen and the secretary of state, Antony Blinken, were the first by top US officials in over three years, since before the Covid-19 pandemic began.

She also raised Russia’s invasion of Ukraine. China has a close “no-limits” relationship with Moscow and although it has not supplied weapons, it has supported Russia in other ways since it sent troops across the border.

“I communicated to this it is essential that Chinese firms avoid providing Russia with material support or assistance with sanctions evasion.”

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