(UPDATE) BEIJING: US Treasury Secretary Janet Yellen and Chinese Premier Li Qiang sounded a hopeful tone on US-China cooperation on Sunday, though the American policymaker noted that both sides could not shy away from tough conversations.
The US-China relationship can only move forward with direct and open communication, Yellen told Li, after arriving in the Chinese capital from the southern city of Guangzhou.
Li, in welcoming Yellen, said "China sincerely hopes that the two countries will be partners, not adversaries".
He added that Chinese internet users had closely followed the details of her trip since her appearance in Guangzhou, showing "expectation and hope for the China-US relationship to continue to improve."
US Treasury Secretary Janet Yellen (C) walks with US ambassador to China Nicholas Burns (2nd L) for a meeting with Chinese Premier Li Qiang at the Great Hall of the People in Beijing on April 7, 2024. US Treasury Secretary Janet Yellen and Chinese Premier Li Qiang sounded a hopeful note on bilateral relations at the start of their April 7 meeting in Beijing, as Yellen begins two days of high-level talks in Beijing. AFP PHOTO US Treasury Secretary Janet Yellen (center) takes her seat for a meeting with Chinese Premier Li Qiang (right) at the Great Hall of the People in Beijing on April 7, 2024. AFP PHOTO US Treasury Secretary Janet Yellen (left) shakes hands with Chinese Premier Li Qiang at the Great Hall of the People in Beijing on April 7, 2024. AFP PHOTO US Treasury Secretary Janet Yellen (left) shakes hands with Chinese Premier Li Qiang at the Great Hall of the People in Beijing on April 7, 2024. AFP PHOTO US Treasury Secretary Janet Yellen (center left) meets with Chinese Premier Li Qiang (center right) at the Great Hall of the People in Beijing on April 7, 2024. AFP PHOTO US Treasury Secretary Janet Yellen (left) shakes hands with Chinese Premier Li Qiang at the Great Hall of the People in Beijing on April 7, 2024. AFP PHOTO
Yellen had a series of meetings in the southern port city, including hours of discussions with her counterpart, Vice Premier He Lifeng.Both countries have since agreed to hold talks on balanced growth under an existing working group, allowing officials to discuss the key US concern of "overcapacity."
This refers to a situation where Chinese government support to industries fuels production capacity but risks a surge of exports at depressed prices to the global market, undercutting international competitors.
Washington is especially concerned about this phenomenon in new industries such as electric vehicles and solar energy.
Yellen's trip marks her second visit to China in less than a year.
"While we have more to do, I believe that, over the past year, we have put our bilateral relationship on more stable footing," she said in opening remarks to Li as she began two days of high-level talks in Beijing.
Rather than avoiding hard conversations, this has meant "understanding that we can only make progress if we directly and openly communicate with one another," the Treasury chief said.
Yellen also stressed, ahead of talks with Beijing's mayor, the need to engage with local officials to understand China's "economic future."
"Local governments play a critical role, from boosting consumption to addressing overinvestment, and Beijing, of course, has particular importance," she said.
A senior Treasury official told reporters Saturday that Washington believed household spending needed to be a bigger part of China's economy.
Tensions remain
Yellen added that both countries — the world's two biggest economies — had a duty to "responsibly manage our complex relationship" and show leadership when it comes to working on global challenges.
On Saturday, the Treasury also announced that the United States and Chinese officials would start talks under another existing working group for cooperation on tackling money laundering.
The aim is to cut off financing for actors such as drug traffickers.
Washington has been seeking to work with Beijing to curb supply lines for the production of fentanyl, the synthetic painkiller behind a US overdose epidemic.
Despite the outcomes of meetings so far, China's state-run Xinhua news agency warned in a commentary of the "specter of protectionism" in the United States.
It criticized existing US tariffs on Chinese imports, while accusing Washington of "suppressing" China's electric vehicle-related industries, signaling at tensions that remain.
Another state media outlet, the Global Times, pointed to "negative actions toward China" in an editorial, referring to US trade and tech curbs and "an ever-growing list of sanctions against Chinese companies."
'Possibility for progress'
"Yellen's visit has opened space to test the possibility for progress," Brookings Institution senior fellow Ryan Hass told AFP.
He added that her trip had "illuminated that the Chinese recognize a need to engage on overcapacity and are prepared to explore cooperation on anti-money laundering."
But only time can tell if these efforts bring material progress, he said.
In meetings with Vice Premier He, Yellen also warned companies in China not to provide support for Russia's war in Ukraine — including to Moscow's defense industrial base — cautioning of "significant consequences."
While in Beijing, Yellen also met with the city's mayor Yin Yong and Chinese Finance Minister Lan Fo'an on Sunday.
On Monday she is due to speak with former vice premier Liu He and central bank governor Pan Gongsheng.
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