Yellen’s new approach to economic diplomacy with China
On Thursday morning, U.S. Treasury Secretary Janet Yellen sent a strong message about the relationship between the two superpowers: tensions are real and won’t go away, but this shouldn’t get in the way of a cooperative economic relationship.
Why it’s important The Biden administration is attempting to gauge the possibility of finding areas of limited, practical collaboration after a few months (and years) of chilly relations between the two largest economies in the world.
They are specifically attempting to reassure Beijing that efforts to restrict their access to cutting-edge technologies are restricted to those that are crucial for national security and do not form part of a larger plan to stop China from developing into a more advanced economy.
Between the lines: There are policy areas in which there is no real hope of the two nations seeing eye-to-eye, particularly around Chinese support of Russia, and its aspirations involving Taiwan.
Yellen’s speech — and broader diplomacy with Chinese economic policymakers — aims to carve out areas less politically fraught and not shaped by zero-sum dynamics.
It looks to recreate some of the communication channels that existed under Treasury Secretary Hank Paulson’s “Strategic Economic Dialogue” in the 2006 to 2008 time frame. That allowed policymakers to carve out areas for constructive diplomacy away from hot-button national security topics.
“As a foundation, we must continue to develop steady lines of communication between our countries for macroeconomic and financial cooperation,” Yellen said Thursday morning.