US Treasury Secretary Janet Yellen wrapped up her second trip to China, where she raised American concerns about Chinese overproduction, warned against support for Russia, and unexpectedly caused a stir on Chinese social media over her travel style and chopstick-wielding skills.
During her four-day visit, Yellen held wide-ranging meetings with Chinese leaders, local officials, academics, students, and American executives in Guangzhou and Beijing, aimed at addressing escalating trade disputes and stabilizing relations between the world's largest economies.
Despite the overall positive tone of Chinese state media coverage, Yellen had a tough message for Beijing: China's surging exports of state-subsidized electronic vehicles (EVs), solar panels, and batteries are threatening American jobs and businesses, and must be reined in.
"I am particularly worried about how China's enduring macroeconomic imbalances -namely its weak household consumption and business overinvestment, aggravated by large-scale government support in specific industrial sectors - will lead to significant risk to workers and businesses in the United States and the rest of the world," Yellen told reporters at a news conference on Monday.
The issue of Chinese overcapacity in key industries has emerged as a major area of contention globally and in the run-up to November's US presidential election. Yellen relayed this message to Chinese officials, including Vice-Premier He Lifeng and Premier Li Qiang. However, there's little sign that Beijing is willing to budge on its economic policies, with Li urging Washington not to "politicize" economic and trade issues or "overstretch the concept of national security."
In her meeting with He, Yellen also warned that Chinese companies could face "significant consequences" if they provide material support for Russia's war on Ukraine. China has emerged as a key economic lifeline for Russia after its invasion of Ukraine, and US intelligence has warned that China is providing technology and equipment to Russia that is important to Moscow's war effort. Yellen reinforced that any banks that facilitate significant transactions channeling military or dual-use goods to Russia's defense industrial base expose themselves to the risk of US sanctions.
Despite the complexities of the US-China relationship, Yellen's trip is part of efforts by Washington to maintain regular open lines of communication with Beijing to manage competition and prevent unintended conflict. "It is undeniable that the US-China relationship is on stronger footing today than this time last year," Yellen said on Monday. "And during this trip, we have been able to build on that foundation to move the ball forward on specific issues that matter to Americans."
Yellen's personal style, including her reported love for Chinese food, caught the attention of Chinese social media users. Her down-to-earth demeanor, carrying a briefcase and a plain cross-body bag upon arrival in Guangzhou, drew comparisons to a Beijing "dama" - a term used to describe a middle-aged woman. Online commentators also marveled at Yellen's dexterity with chopsticks, as shown in a video released by a state broadcaster of her dining at a Cantonese restaurant in Guangzhou.
In an interview with CNBC's Sara Eisen, Yellen did not rule out any measures, including potential tariffs, on China's green energy exports. "I wouldn't rule out anything out at this point. We need to keep everything on the table. We want to work with the Chinese to see if we can find a solution," she said, stressing the need to create a level playing field in the green technology space.
The Treasury secretary's visit comes amid growing skepticism around the risks that Chinese technologies pose to US national security, particularly in light of recent legislation calling for Chinese tech giant ByteDance to divest its popular TikTok social media app in the US or face an effective ban. When asked about the potential sale of TikTok's assets to a US company or investors, Yellen refrained from speculating, saying, "This is an important and profitable company, and I think they're concerned by the prospect that they would be forced out of the United States."
