Yellen Suggests Possible Adjustments to Tech Export Curbs Impacting China

Janet Yellen, the U.S. Treasury Secretary, said on Sunday that Washington could adjust to the unintended consequences of U.S. technology export restrictions affecting China, as she concluded a Beijing trip aimed at mending frayed ties. Yellen supported “focused measures” on trade that Chinese officials claim are designed to harm its burgeoning tech sectors. She didn’t provide any hints of potential adjustments, despite emphasizing the Biden administration’s desire to “steer clear of unnecessary repercussions.”

Tensions are at an all-time high between the world’s two largest economies, with disagreements over technology, security, and other contentious issues. China’s primary grievance is the restrictions on access to U.S. technology, including processor chips, on security grounds, which may obstruct the Communist Party’s development of industries like smartphones and artificial intelligence.

During her visit, Yellen held numerous meetings, totaling around ten hours, with Chinese officials including China’s second-in-command, Premier Li Qiang, and Vice Premier He Lifeng, her Chinese equivalent. She received a cordial reception and extensive state media coverage, but Chinese officials showed no inclination to alter industrial or other policies that, according to Washington and other nations, contravene Beijing’s commitments to free trade.

Despite announcing no resolutions on major disagreements or future plans, Yellen confirmed that her department and Chinese officials would maintain “more frequent and regular” communication. The current U.S.-China political tension contributes to a climate of uncertainty that hinders consumer and business expenditure and investment.

China’s economy saw a recovery to 4.5% growth in Q1 2023, up from last year’s 3%, following the lifting of anti-virus restrictions on travel and business activities in December. However, there has been a slowdown in factory output and consumer spending in the quarter ending in June.

Yellen reassured Chinese officials that the U.S. has no intention to uncouple its economy from China’s, despite efforts to “de-risk” trade. The U.S. is advocating for semiconductor manufacturers to relocate production to American soil to lessen dependence on Taiwan and other Asian suppliers, viewed as a security threat. The U.S. also intends to develop alternatives to China’s supply of rare earth elements used in smartphones, wind turbines, and other items.

Yellen emphasized the importance of “healthy economic competition” throughout her visit, addressing grievances that Beijing flouts its free trade obligations by favoring and protecting politically favored industries from private and foreign competition. She conveyed her concerns about “coercive activities” against U.S. companies to Chinese officials.

Despite Beijing’s efforts to restore investor interest, foreign companies remain apprehensive about their standing following calls for economic self-reliance by Chinese leaders. An expanded anti-spying law also creates uncertainty about the extent of what law firms or consultants can do.

Yellen urged He for collaboration on global issues such as climate change and the debt problems of developing nations, emphasizing that differences over trade and security shouldn’t undermine economic and financial ties. Climate discussions with Washington were cut off by Beijing last August in retaliation for a visit by then-House Speaker Nancy Pelosi to Taiwan.

John Kerry, President Joe Biden’s climate envoy, is set to be the next high-ranking official to visit China. China and the U.S., as the world’s largest carbon emitters, hold key roles in combating climate change. Last month, China agreed to restructure Zambia’s debt, including billions of dollars borrowed under Beijing’s Belt and Road Initiative. Treasury officials cited this as a successful instance of cooperation.

Frequently Asked Questions (FAQs) about US-China Tech Export Curbs

More about US-China Tech Export Curbs

• U.S. Treasury Department
• Details on U.S.-China Relations
• Background on U.S. Technology Export Restrictions
• Overview of the U.S. Semiconductor Industry
• Information on China’s Economic Growth
• Insights on Belt and Road Initiative