US Treasury Team Travels to China to Discuss Economic Policy and Subsidies

Paresh Jadhav

11 months ago

The meeting, a follow up from one held in November, comes amid growing tensions between China and the US over Beijing’s economic policies. According to Treasury, they will stress the importance of both sides responsibly managing their relationship while keeping open communication channels open and effective.

In doing so, they hope to underline US concerns that China’s non-market policies create excess industrial capacity and distort global markets.

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U.S. officials plan to have frank conversations about China’s trade tactics

According to The New York Times, this trip will focus on economic policies that have put both superpowers on an adversarial path, specifically China’s non-market practices, government subsidies, and industrial overcapacity. Treasury officials plan to raise concerns over China’s “non-market” practices as well as investment screening regimes for national security in both nations as well as discuss ways they can work together on climate change mitigation efforts and debt relief for poor nations.

President Joe Biden issued an order to his administration after meeting President Xi Jinping last year to strengthen economic communications between their economies. Treasury Secretary Janet Yellen will likely attend, although she likely will not meet directly with Xi.

Yellen has stated that the United States seeks a healthy relationship with China that benefits both nations over time, yet she emphasized the need for fair competition on an equal playing field, encouraging China to drop restrictions on export controls and fight corruption so as to make operating there easier for foreign firms.

U.S. officials plan to raise concerns about China’s industrial subsidies

Treasury staffers will have open discussions with Chinese economic policymakers regarding Beijing’s non-market policies that have created excess industrial capacity and inundated global markets with cheap products. Furthermore, concerns will be voiced regarding subsidies offered to boost development of certain sectors considered strategic to the country – like electric car manufacturing – such as Chinese subsidies that boost such sectors as electric car manufacturing.

These meetings follow United State Secretary of State Antony Blinken’s July visit to China, during which he met with President Xi’s top economic adviser. These talks form part of an administration push to strengthen communications over economic issues – something inspired by an agreement reached between Biden and Xi during their November summit meeting.

These meetings will mark the launch of two bilateral Economic Working Groups and a Financial Working Group that are expected to serve as ongoing structured channels for open dialogue about economic and financial matters, with reports going to both Yellen and Vice Premier He on a regular cadence. Their purpose is to fulfill President Biden’s directive to stabilize China-US relations by improving economic ties.

U.S. officials plan to talk about climate change

United States and China today unveiled two Working Groups designed to foster open and in-depth discussions of economic and financial policy matters between them. Both will be led by Treasury Secretary Janet Yellen of the U.S. and Chinese Vice Premier He Lifeng of China respectively; who have agreed to meet at regular intervals.

These new formal dialogues on economic issues follow agreements made between Presidents Biden and Xi last year to increase communication about each nation’s economies, as well as an effort to stabilize U.S.-China ties, evidenced by Secretary of State Antony Blinken’s visit to Beijing this week.

Climate-related talks could help ease tensions among the world’s major greenhouse gas emitters, yet these discussions will prove challenging as 9 out of 10 Americans believe climate change has already had an effect on their lives, according to a new survey from E3G. Most respondents who claim climate change has had an impact live in low-income communities or rural areas that experience additional hardship due to extreme heat, drought, wildfires or flooding.

U.S. officials plan to talk about Ukraine

Officials from the Biden administration do not anticipate Russia to abandon its full-scale war in Ukraine anytime soon, according to officials. They expect President Putin will continue fighting until he runs out of funds or the United States and its allies lose public support for helping Kyiv purchase weapons and other supplies.

Treasury’s Yellen will meet with both Chinese government officials and executives of companies doing business there, according to two people familiar with her plans. She hopes these meetings will further facilitate communication between two of the world’s largest economies following President Biden’s directive following his meeting with Xi.

Officials also are seeking to address concerns that China is using its financial markets for competitive gain, especially as its stock market experiences its biggest decline since October 2018. A Treasury delegation will meet with Vice Premier He Zhiyun who oversees foreign exchange; discussions will focus on investment screening regimes and ways both nations can work together on climate change mitigation strategies, national security matters and global economic development challenges.