Anti-China Sentiments Undermine U.S. Treasury Secretary’s Attempt To Restore Relations

Despite U.S. Treasury Secretary Janet Yellen’s attempts to ease U.S.-China tensions during her recent four-day trip to China, anti-China sentiments in the United States may have undermined Yellen’s attempts at smoothing relations. Yellen met with China’s number two leaders, Premier Li Qiang and Vice Premier He Lifeng, during her visit to discuss co-operation on the climate crisis and to improve relations between the U.S. and China, which comes amidst intensifying tension over the tech industry.

“President Biden and I do not see the relationship between the U.S. and China through the frame of great power conflict. We believe that the world is big enough for both of our countries to thrive,” Yellen said, according to a transcript of her speech on July 16th. At a news conference, she added, “We will open up channels so that they can express concerns about our actions, and we can explain and possibly in some situations respond to unintended consequences of our actions.”

Yellen’s visit received extensive coverage from the Chinese state media. According to Reuters, China’s state-run Global Times, usually critical of the U.S., called Yellen a “professional and pragmatic” official and expressed hope that she would influence the Biden administration to improve economic relations. However, anti-China sentiment in the United States, especially amongst the Republican party, may serve to undermine Yellen’s attempts at strengthening relations. Republican politicians have been critical of Yellen’s visit, with Republican Senator Josh Hawley tweeting that the Biden administration’s “embarrassing groveling” to China is a “historic mistake.” Republican presidential candidates have also adopted harsh rhetoric concerning China, which, according to Reuters, they regard as “the nation’s top geopolitical foe.”

Relations between China and the United States are at their “lowest level” in decades due to technology and security disputes. In an analysis for the Atlantic Council, economist Hung Tran explained that Beijing has perceived Washington’s attempts to “de-risk” trade reliance in Asia due to security concerns – which involve developing alternatives to Chinese-supplied rare earth elements, metals used in smartphones, and wind turbines –as an attempt to undermine Chinese progress. Economic tensions between the countries have further intensified in recent months following the Biden administration’s adoption of new export restrictions on advanced computer chips. China has accused Washington of hampering China’s industrial development through limiting access to U.S. technology to undermine the development of smartphones, A.I., and other technologies, which Yellen defended as essential for national security.

Just three days before Yellen’s arrival in China, Beijing responded to the restrictions by announcing controls on exports of two metals used for semiconductors and solar panels. Washington and other governments have claimed that China’s shielding of certain industries from private and foreign competition violates its free-trade commitments, and Yellen expressed concern over China’s new anti-espionage law and crackdowns on foreign companies during her visit.

China has called for the United States to end tariffs and export curbs, and whilst Reuters Trade and political analysts in Washington have said that cutting some tariffs would help U.S. companies and consumers, along with Chinese exporters, analysts have cautioned that doing so would result in extensive Republican criticism. Harry Broadman, a former White House, World Bank, and U.S. trade official who is now a managing director with Berkeley Research Group, told Reuters that anti-China sentiments in recent years are the highest he’s seen, largely due to former president Donald Trump’s China policies. In an interview with Reuters, Chad Bown, a trade economist with the Peterson Institute of International Economic, said, “There is no political appetite to reduce tariffs on China – Secretary Yellen will do well in this political climate if they manage to stay where they are.”

Yellen’s trip is the second visit by a Biden administration official to China, following Secretary of State Antony Blinken’s June meeting with Chinese president Xi Jinping. (John Kerry, the U.S. special envoy for climate change, became the third when he visited China later in July – China and the United States are the world’s top carbon emitters.) The establishment of stronger channels of communication between the two countries may indicate a potential movement towards easing geopolitical tensions. In a July 10th note to Business Insider, Vishnu Varathan, the head of economics and strategy at Mizuho Bank’s Asia and Oceania treasury department, said that whilst U.S.-China relations seem to remain “on the wrong foot,” the “silver lining is that candid conversations resulted in common ground on: ensuring there is no disengagement (keeping channels of communications open), and … not allowing diplomatic spats to usurp economic ties, with adverse spillover.”

Despite the generally optimistic responses from commentators in China and Yellen’s own calls for strengthened diplomatic relations, the treasury secretary’s visit ended with little suggestion of potential changes. China has not indicated that it will change the policies that Washington regards as violating its free trade commitments. Additionally, the anti-China political sentiment that dominates U.S. politics and calls for raised tariffs and new trade barriers from Republican politicians makes the prospect of tariff reduction extremely unlikely. Beyond announcing the establishment of “more frequent and regular” communication between her department and Chinese officials, little was resolved. U.S. officials have largely not commented on tariffs or new initiatives, or responded to Chinese calls to end tariffs and export curbs. Without the maintenance of communication, co-operation on global issues such as climate change, and high-level diplomatic talks, economic and political tensions between the two countries will continue to remain high.