US-China officials meet on economy, aim to ease tension

ZURICH (AP) – U.S. Treasury Secretary Janet Yellen met with her Chinese counterpart Wednesday and pledged to try to manage differences and “prevent competition from always being in conflict” as the two nations seek to thaw relations.

Yellen’s first face-to-face meeting with Vice Premier Liu It was the most high-profile contact between the two countries since their presidents agreed last November to explore areas of possible cooperation.

Liu, for his part, said he was ready to work together to seek common ground between China and the US

“No matter how circumstances change, we should always maintain dialogue and exchanges,” he said.

The meeting comes as the US and Chinese economies grapple with different but intertwined challenges in trade, technology and more.

Yellen, in opening remarks to reporters, told Liu: “While we have areas of disagreement, and we will express them directly, we should not allow misunderstandings, especially those that arise from a lack of communication, to -making a bilateral economy unnecessarily worse. financial relationship.”

She said both countries have a “responsibility for managing our differences and preventing competition from coming close to conflict”.

Both economies have their challenges.

China’s economy is reopening after a resurgence of COVID-19 killed thousands of people and closed many businesses. The US is slowly recovering from 40 years of inflation and is on track to reach its statutory debt ceiling, setting up an expected political showdown between congressional Democrats and Republicans. The debt issue is of interest to Asia, as China is the second largest holder of US debt.

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There is also the Russian invasion of Ukrainewhich hampers global economic growth — and prompted the US and its allies to agree on an oil price cap on Russia in enthusiasm, presenting China as a friend and economic ally of Russia.

And high interest rates around the world have put increased pressure on debt-burdened nations that owe large sums to China.

“A wrong policy move or a reversal of the positive data and we could see the global economy go into recession in 2023,” said Josh Lipsky, senior director of the Atlantic Council’s Center for GeoEconomics. “Both countries have a mutual interest in avoiding that situation.”

The World Bank reported last week that the global economy will become “dangerous.” ” to decline this year, as a result of weaker growth in all the world’s top economies – including the US and China. Low-income countries are expected to bear the brunt of any economic downturn in superpowers, the report said.

“Debt restructuring is high on the list,” Lipsky said in Wednesday’s remarks. A number of low-income countries are at risk of debt default in 2023 and many owe large sums to China.

“Leaders have been trying to reach an agreement for two years and avoid a wave of defaults but they have had little success and one reason is China’s reluctance. I expect Yellen to press Liu He on this in the meeting,” Lipsky said.

Liu laid out an optimistic vision for the world’s second-largest economy in a speech Tuesday at the World Economic Forum in Davos, Switzerland.

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“If we work hard, we are confident that China’s growth will likely return to its normal trend in 2023. China’s economy will improve significantly,” he said.

After her stop in Switzerland, Yellen will travel to Zambia, Senegal and South Africa this week will be the first in a series of visits by Biden administration officials to sub-Saharan Africa throughout the year.

Zambia is renegotiating its nearly $6 billion debt with China, its largest creditor. During a closed meeting at the African Leaders’ Summit in Washington in December, Yellen and Zambian President Hakainde Hichilema discussed “the need to address debt sustainability and the need to finalize debt treatment for Zambia, ” according to Yellen.

The Zurich talks are a follow-up to the November meeting between President Joe Biden and China’s Xi Jinping on the sidelines of the Group of 20 summit in Bali, Indonesia. The two world leaders agreed to empower senior officials to work on areas of potential cooperation, including tackling climate change and maintaining global financial, health and food stability. Beijing cut such contact with the United States in protest at a trip by House Speaker Nancy Pelosi to Taiwan in August.

“We are going to compete vigorously. But I’m not looking for a conflict,” Biden said at the time.

US Secretary of State Antony Blinken will be traveling to China in early February.

Among economic sticking points, the Biden administration has blocked the sale of advanced computer chips to China and is considering a ban on investment in some Chinese technology companies, potentially undermining a key economic goal that Xi laid out for his country. Statements by the Democratic President that the US would defend Taiwan against a Chinese invasion also increased tensions.

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And while the US Congress is divided on many issues, members of the House agreed last week to further scrutinize Chinese investments.

New House Speaker Kevin McCarthy of California has identified the Chinese Communist Party as one of two “long-term challenges” for the House, along with the national debt.

“There is a bipartisan consensus that the era of confidence in Communist China is over,” McCarthy said from the House floor last week when the House voted 365 to 65 – with 146 Democrats joining Republicans – to the House Select Committee on to establish China.

Last year, the US Department of Commerce added dozens of Chinese high-tech companies, including makers of aviation equipment, chemicals and computer chips, to an export controls blacklist, citing concerns about national security, US interests and human rights. That move prompted the Chinese to file a lawsuit with the World Trade Organization.

Yellen was critical of China’s trade practices and its relations with Russia, as the two countries have deepened their economic ties since the start of the war in Ukraine. In a July call with Liu, Yellen spoke “frankly” about the impact of Russia’s invasion of Ukraine on the global economy and “unfair, non-market” economic practices, according to a US summary of the call.

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