US Treasury Secretary Janet Yellen and Chinese Vice Premier Liu He met in Zurich, Switzerland, on Wednesday in the highest-ranking meeting between the two countries since November 2021. The two discussed cooperation on issues around financing for battling climate change and working to support “developing countries in their clean energy transitions.”
The meeting occurred as the US and Chinese economies grapple with distinct but overlapping challenges on trade, technology, and more. In the near future, Yellen will visit China and welcome her counterpart to the United States.
Managing Differences and Preventing Conflict
As part of her opening remarks to reporters, Yellen said that while the two countries “have areas of disagreement, and we will convey them directly, we should not allow misunderstandings, particularly those stemming from a lack of communication, to unnecessarily worsen our bilateral economic and financial relationship.” Yellen emphasized that the two countries “have a responsibility to manage our differences and prevent competition from becoming anything even near conflict.”
Liu, on the other hand, expressed concern over US economic, trade, and technology policies toward China. He said he hoped the US would pay attention to the impact of those policies on both sides and called for earnest communication. Furthermore, he said both sides must maintain stability in their relationships by considering the bigger picture and resolving disputes properly.
Addressing Climate Change and Supporting Developing Countries
The two agreed that the US and China should cooperate more on finance for combatting climate change and support developing countries in transitioning to clean energy. As the two largest emitters of greenhouse gases in the world, cooperation on issues related to climate change is crucial to address global warming.
Addressing Economic and Financial Challenges
There are challenges facing both economies. After tens of thousands of people were killed and COVID-19 shuttered countless businesses, the Chinese economy is reopening. A political showdown is expected between congressional Democrats and Republicans as the US comes out of a 40-year high inflation period and approaches its statutory debt ceiling. As the second-largest holder of US debt, China is keenly interested in the debt issue.
The meeting also touched on the issue of nations indebted to China and understanding the country’s concerns about renegotiating that debt. A Treasury official who attended the meeting said that Chinese officials sounded optimistic about the country’s return to normal economic growth after removing its strict Coronavirus pandemic policies.
Stakes are High for Cooperation
The stakes and prospects are high for cooperation between the two countries as the threat of economic recession threatens nations worldwide. In a report last week, the World Bank said the global economy is “perilously close” to a recession, owing to weaker growth in all the world’s top economies, including the US and China. Low-income countries are expected to be hit the hardest by the economic downturn, making cooperation between the US and China even more crucial.
The meeting also took place against the backdrop of ongoing tensions between the two countries, including disputes over trade, technology, human rights, and military activities in the Indo-Pacific region. Both Yellen and Liu emphasized the importance of maintaining dialogue and exchanges to manage differences and prevent competition from escalating into conflict.
Overall, the meeting between Yellen and Liu is seen as a positive step towards improving economic and financial relations between the two countries. Still, it remains to be seen if the two sides can overcome their differences and find common ground.
It’s worth noting that this meeting could also be seen as a signal of a shift in the US’s stance towards China, as the Biden administration has been trying to take a more multilateral approach in dealing with China and other global issues, as opposed to the previous administration’s more confrontational stance. The emphasis on cooperation on climate change, supporting developing countries, and managing differences to prevent conflict, could be seen as a sign that the US is willing to work with China on mutual interests while also addressing areas of disagreement.
