Yellen to Lay Out Goals for US-China Relations in 2024

Treasury Secretary Janet Yellen is slated to lay out the Biden administration’s plan to keep U.S.-China relations on the right track on Thursday night.

At the 50th anniversary dinner of the US-China Business Council in Washington, Yellen will provide an overview of her goals for the U.S.-China relationship in 2024, including building on communication, pushing for transparency on China’s policies, and collaboration between Beijing and DC on regulatory and other mutual concerns, like fentanyl trafficking, according to an excerpt of her prepared remarks.

“We seek not to resolve all our disagreements nor avoid all shocks,” Yellen will say. “This is in no way realistic. But we aim to make our communication resilient so that when we disagree, when shocks occur, we prevent misunderstanding from leading to escalation and causing harm.”

In the next year, Yellen hopes that more clarity from China on its economic policies, as well as non-market and foreign exchange practices, will help ensure a “level playing field” for U.S. firms and workers. She also plans to underscore the importance of transparency in preventing spillover effects from China’s shaky real estate market and slowing economic growth, given its outsize role in the global economy, accounting for nearly 20% of the world’s GDP. 

“Financial shocks in China — and China’s response to them — do not occur in isolation,” she will say. “Understanding China’s plans, especially how China intends to respond to challenges with local government debt and the real estate market or how it might react if unexpected weaknesses in its economy should arise, is crucial for those of us charged with policymaking in the United States.”

Tensions between the world’s two largest economies reached new heights this year after the Biden administration shot down a Chinese spy balloon off the coast of South Carolina in February. The incident led to the postponement of Secretary of State Antony Blinken’s visit to China until June.

The two governments have also ramped up export controls on semiconductors and their components. China announced the restriction of exports of key minerals found in semiconductors from the country in July, while the U.S. Department of Commerce has in recent months continued to expand export controls on semiconductors and semiconductor manufacturing equipment to China in what it says is an effort to curb espionage and military development.

Of late, relations appear to have relatively smoothed over, with Chinese President Xi Jinping and Biden meeting at the Asia-Pacific Economic Cooperation conference in San Francisco last month. This was also Xi’s first visit to the U.S. since 2017.

In her Thursday speech, Yellen is also planning to announce her second trip to China, which will “focus on discussing difficult areas of concern” with her Chinese counterpart. Yellen met in July with Premier Li Qiang in Beijing, where she underscored the importance of economic cooperation between the two countries, despite security challenges. At the time, Yellen said she hoped the visit would “spur more regular channels of communication between” the U.S. and China.

While the speech will strike an optimistic note, Yellen is also set to acknowledge that the two countries’ relations “will face continued challenges” and that there continue to be “many areas on which the U.S. and China strongly disagree.”

Yellen's remarks come just days after the Select Committee on the Chinese Communist Party on Tuesday adopted nearly 150 policy recommendations to reset economic and technological terms of the U.S. relationship with the People's Republic of China.

Ranking Member Raja Krishnamoorthi (D-IL) said that the report "embraces the clear reality that our current economic relationship with the People's Republic of China needs to be reset in order to serve the economic and national security interests of the United States."