U.S. Treasury Secretary Janet Yellen has outlined her key priorities for managing U.S.-China relations in the coming year, which include plans for a second visit to China and efforts to accelerate collaboration on climate risks and financial markets.
In remarks prepared for a dinner hosted by the U.S.-China Business Council, Yellen emphasized that the United States does not intend to decouple from China but is instead focused on establishing robust communication channels to address issues as they arise. She stated, "We seek not to resolve all our disagreements nor avoid all shocks. 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."
Yellen's upcoming visit to China follows her meeting with Chinese Vice Premier He Lifeng before last month's Asia-Pacific Economic Cooperation (APEC) gathering in San Francisco. During that meeting, she accepted an invitation to return to China next year. Her initial visit to China as Treasury secretary took place in July.
Notably, until earlier this year, there had been limited contact between Washington and Beijing on economic matters. This was due to tensions stemming from former President Donald Trump's tariff disputes with China and recent U.S. national security restrictions on Chinese access to U.S. technologies.
In her recent remarks, Yellen highlighted several key points:
- Washington's intention to continue pressing China on national security actions and to seek clarity on how it plans to address issues related to local government debt and its real estate market.
- A commitment to demand transparency from China regarding its non-market practices and foreign exchange policies.
- Plans to facilitate exchanges between financial regulators in the United States and China to ensure swift responses in the event of financial stress. This initiative mirrors similar exchanges between the U.S. and other major financial centers such as the European Union and the United Kingdom.
- Ongoing efforts to exchange information about modeling climate-related stress scenarios, which Yellen described as "crucial" in preparing for the financial risks posed by climate change.
- Collaboration on how to respond to the failure of a globally systemically important bank in either country and how such responses could be coordinated.
Yellen also stated that the U.S. Treasury would continue to urge China to make progress on sovereign debt restructurings and advocate for changes to debt architecture, particularly at the intersection of debt and climate.
In summary, the United States, under the leadership of Treasury Secretary Janet Yellen, is actively engaging with China to foster cooperation on climate issues and financial market stability while also addressing economic and national security concerns. These efforts reflect a commitment to maintaining open lines of communication and collaboration between the two economic giants.