Yellen to travel to China as US weighs investment restrictions

Treasury Secretary Janet Yellen is planning a trip to China “in the near future,” the Treasury Department announced Wednesday, following a meeting between Yellen and a top Chinese official in Switzerland.

The secretary “looks forward to traveling to China and to welcoming her counterparts to the United States in the near future,” Treasury said in a readout of the meeting in Zurich between Yellen and Chinese Vice Premier Liu He.

It marks the latest outreach on behalf of the U.S. to China, with President Biden and Chinese President Xi Jinping meeting last November in Bali during the G-20 summit and Secretary of State Antony Blinken scheduled to visit the country in February.

A spokesperson for the Chinese Foreign Ministry said Tuesday that China and the U.S. were in touch about the specifics of Blinken’s visit.

The Treasury said Wednesday that China and the U.S. acknowledged that they should be talking to each other more about economic issues.

“Both sides agreed it is important for the functioning of the global economy to further enhance communication around macroeconomic and financial issues,” the Treasury readout said.

The announcement of Yellen’s upcoming trip comes amid reports that the White House is considering placing restrictions on U.S. investments in China, likely in the technology sector, where an economic and defense rivalry between the two countries has long been brewing. In 2022, Congress passed legislation to increase domestic production of semiconductors in a bid to pull the industry away from its long-established base in east Asia.

Such proposed restrictions also have a bipartisan foothold in Congress. Sens. Bob Casey (D-Pa.), John Cornyn (R-Texas) and Charles Schumer (D-N.Y.) and other top lawmakers wrote to Biden last fall, telling him to restrict “outbound investments to foreign adversaries.”

“As deliberations continue in Congress, we urge your Administration to move forward with executive action— which can then be bolstered by statutory provisions—to safeguard our national security and supply chain resiliency on outbound investments to foreign adversaries,” the lawmakers wrote.

“The [People’s Republic of China] … has an egregious track record of promoting intellectual property theft and forced technology transfer. While this unsettling trend is not new, we know action is needed to address vulnerabilities for many sectors of our economy,” they added.

A spokesperson for the Chinese Foreign Ministry accused the U.S. on Monday of playing its own games of economic statecraft, “deliberately impeding the appointment of new judges to the [World Trade Organization’s] appellate body.” The U.S. has criticized the WTO’s appellate body as “exceeding” its authority.

No single issue would be the reason for Yellen to visit China, which has a far-reaching and complex relationship with the U.S. Despite regular rhetorical hostilities, trade relations between the U.S. and China are on course to hit a new record.

Data from the Census Bureau shows that the U.S. exported more than $140 billion in goods to China last year and imported nearly $500 billion. Both of those numbers will be higher when the final numbers for last year come in next month.

Still, security concerns around territorial disputes in the Pacific Ocean and on potential military actions involving Taiwan have put stress on the relationship between the U.S. and China, especially following the Russian invasion of Ukraine, which some U.S. analysts feared could inspire military action on Taiwan from China.

Another source of uncertainty is the economic fallout from China’s relaxed COVID-19 policy following widespread protests aimed at the country’s previous “zero-COVID” pandemic policy. Those protests were sparked by a deadly fire in China’s western province of Xinjiang in the city Urumqi, where residents had been on lockdown in their homes.

After abandoning its “zero-COVID” policy, the country reported nearly 60,000 deaths resulting from the coronavirus between Dec. 8 and Jan. 12, although the World Health Organization has requested more detailed data.

Disruptions to the Chinese labor force resulting from the country’s evolving health policies could have serious ramifications for global supply chains and production levels.

“The Chinese government has taken the initiative to adapt its Covid response measures in light of the latest situation. This is a right step in effectively coordinating epidemic response and socioeconomic development,” Foreign Ministry spokesperson Wang Wenbin said Tuesday. 

Treasury said Wednesday the U.S. and China would also be working more closely with international organizations on climate financing in order to stop global warming and environmental degradation.

“[Both sides] also agreed about the importance of sustainable development and that they would enhance cooperation on climate finance on a bilateral and multilateral basis, such as within the UN, G20, and APEC,” the Treasury readout said.

The White House and Treasury declined to comment for this story.