Yellen Will Go To Beijing As Biden Seeks To Move Supply Chains Away From China

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by Tyler Durden
Monday, Jul 03, 2023 - 12:55 PM

Treasury Secretary Janet Yellen will be the next top Biden admin official to try and calm spiraling relations with China, as the Treasury Department confirmed Sunday she'll travel to Beijing this week, Thursday through Sunday, for meetings with senior officials, in what will mark the first trip of her tenure. 

"While in Beijing, Secretary Yellen will discuss with [People’s Republic of China] officials the importance for our countries — as the world’s two largest economies — to responsibly manage our relationship, communicate directly about areas of concern, and work together to address global challenges," Treasury said in the statement.

However, a Treasury official sought to temper expectations, saying no breakthrough is expected, following Secretary of State Blinken's mid-June trip where he met with President Xi Jinping. Any positive opening created by Blinken's trip was damaged when within days of his return to Washington, President Biden during a campaign event in California called Xi a "dictator"

Via Reuters

"The reason why Xi Jinping got very upset in terms of when I shot that balloon down with two box cars full of spy equipment is he didn’t know it was there," Biden had said nearly two weeks ago. "No, I’m serious," he added. "That was the great embarrassment for dictators, when they didn’t know what happened."

Yellen had been in Paris at the time, and attempted to soften the remarks before a press conference, saying of Biden's remarks which had outraged Bejing officials, "With respect to the comments, I think President Biden and I both believe it’s critical to maintain communication …to clear up misperceptions, miscalculations. We need to work together where possible." 

"But we have disagreements, and we are also forthright in recognizing we do have disagreements," Yellen added. But as The Associated Press noted in follow-up, Biden has not reversed in assessment amid China's wrath:

President Joe Biden said Thursday that his comments calling Chinese leader Xi Jinping a "dictator" did not undermine progress in the U.S. relationship with China and that he expects to meet with Xi in the future.

Biden said his blunt statements regarding China are "just not something I’m going to change very much."

Yellen's upcoming trip set amidst a backdrop of concerns over fragmenting global economy, as Barron's underscores, "US companies such as Apple that have long relied on China as a manufacturing base are moving production elsewhere, and tit-for-tat restrictions on exports of semiconductors shows how uneasy relations have become." The publication further noted a glimmer of optimism in markets on the news of Yellen's trip:

The Hang Seng Index rose 2.2% on Monday. China-exposed stocks such as Taiwan Semiconductor (2330.TAIWAN) and Nvidia (NVDA) were rising in premarket trading. Apple , (APPL) which recently topped a $3 trillion valuation, was little changed. 

But the recent angry rhetoric from Beijing is likely to return this week for the time being, given former Vice President Mike Pence has added his voice to the Xi "dictator" commentary. 

He told CBS's Margaret Brennan in a Sunday interview when asked if Xi is a dictator: "I think it’s a statement of fact." Pence said that "there’s no more effective way to send a deafening message to communist China to check their military ambitions in the Asia Pacific" than continuing to steadily give arms to Ukraine to repel Russia.

"I guarantee you President Xi is watching what’s happening in Ukraine very carefully," Pence asserted. "We give the Ukrainians, much more quickly than Joe Biden’s doing now, we give them what they need to win this fight to repel the Russian invasion."

He then pivoted to the case of Taiwan. "The United States of America should continue to be providing … Taiwan with the military means to defend themselves," he said. "What we want is a policy of deterrence." Pence is just coming off a trip to Kiev where he met with Zelensky days ago. Zelensky over the weekend took a swipe at Congressional GOP members who are not on board, warning that some Republicans have a "dangerous" message concerning lessening support for Ukraine. As for China, it has long condemned any comparisons between the Ukraine and Taiwan situations.