US-China Officials Meet to Discuss Economy, with a view to ease tension.
U.S. Treasury Secretary Janet Yellen is seated to talk with her Chinese counterpart Wednesday during the highest-ranking meeting between the two countries since their respective presidents decided to find solutions to strengthen relations, which have become increasingly difficult in the past few years.
The first time Yellen has met face-to-face with Vice-Premier Liu He comes as the U.S. and Chinese economies struggle with a variety of interconnected technological, trade and many other issues.
The Chinese economy is returning to normal following a COVID-19 revival that killed hundreds of thousands of people and shut down a multitude of enterprises.
In the U.S. is slowly recovering from a 40-year-high inflation and is poised to surpass its legal debt ceiling, triggering the possibility of a political showdown between Congress Democrats as well as Republicans. The issue of debt is of great importance to Asia since China is the second largest holder in U.S. debt.
Also, there is another issue: the Russian attack on Ukraine that continues to slow the global economy — and has forced the U.S. and its allies to come to an agreement on a price cap for Russia as a retaliation measure, which puts China in a bind as a friend and an economic ally of Russia.
and high interest rates across the globe have pushed up the burden of debt on nations who owe huge sums to China.
“An incorrect policy choice or a change in positive economic data, and we may see the world economy enter a recession by 2023.” added Josh Lipsky as the director of senior positions at the Atlantic Council’s Geo Economics Center. “Both countries share a goal of avoiding this scenario.”
The World Bank reported last week that the world economy could reach ” dangerously close ” to recession this year, due to slower growth across all of the top economies in the world which includes those of the U.S. and China. Countries with low incomes are likely to be impacted by any recessions that are caused by superpowers, according to the report.
“High on the agenda is restructuring debt,” Lipsky said of the talks on Wednesday. A number of countries with low incomes are in danger of debt default by 2023. Many of them owe huge amounts to China.
“Leaders are trying over the last over two years to come to an agreement to avoid the possibility of defaults, but they haven’t had much success. The reason for this is China’s indecisiveness. I’m assuming Yellen will push Liu He on this in the next meeting,” Lipsky said.
Liu presented an optimistic plan for the world’s second largest economy in a speech Monday during the World Economic Forum in Davos, Switzerland.
“If we are able to put in the work We are sure that by 2023, the growth of China is likely to be back to normal. The Chinese economy is expected to see an improvement in its performance,” he said.
After her trip to Switzerland, Yellen will travel to Zambia, Senegal and South Africa this week. It is the first of the series of trips made by Biden administrators to Sub-Saharan African countries during the course of the year.
Zambia is currently negotiating its 6 billion dollars debt agreement with China, the largest creditor. In a closed-door discussion during the Africa Leaders Summit in Washington in December Yellen as well as Zambia’s President Hakainde Hichilema discussed “the need to discuss debt sustainability and the necessity of concluding an agreement on debt relief to Zambia,” according to Yellen.
US-China officials to meet on economy, aim to ease tension https://t.co/VRsJY9VTVl
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The Zurich talks follow-up on meetings held in November between the president Joe Biden and China’s Xi Jinping on the sidelines of the Group of 20 summit in Bali, Indonesia.
Biden and Xi Jinping decided to give key officials to focus on possible cooperation areas such as the fight against climate change and maintaining global health, financial and food security. Beijing had shut down contact between China and the U.S. in protest of the House Speaker Nancy Pelosi’s trip to Taiwan in August.
“We’re going to fight hard. However, I’m not seeking conflicts,” Biden said at the time.
U.S. Secretary of State Antony Blinken will be traveling to China in the beginning of February.
As one of the major economic issues in the current economic climate, the Biden administration has blocked the sale of high-tech computers for sale to China and is looking at an investment ban for certain Chinese tech firms, potentially harming a major economic objective that Xi has set for his country.
A statement by Biden’s Democratic president, Xi Jinping, that would ensure that the U.S. would defend Taiwan against the threat of a Chinese invasion has also heightened tensions.
Even as it is true that the U.S. Congress is divided on a variety of issues, the members of the House reached an agreement this week to further examine Chinese investments.
The new House Speaker Kevin McCarthy of California has identified the Communist Party of China as one of the two “long long-term challenges” that could be a problem for the House in addition to the nation’s debt.
“There is a bipartisan consensus that the time of believing in Communist China is past,” McCarthy said from the House floor last week , when the House approved 365 votes to 65 -with 146 Democrats joined by Republicans in a vote to create the House Select Committee on China.
In the past year in the year 2000, this year, the U.S. Commerce Department added hundreds of Chinese high-tech firms, including manufacturers of aircraft equipment, chemicals, and computer chips to a blacklist of export controls in response to concerns about the security of nationals, U.S. interests and human rights.
This move led China to file a lawsuit with the World Trade Organization. Chinese to bring a suit against the World Trade Organization.
Yellen has been criticizing China’s trade practices and its relations with Russia because both countries have stepped up their economic ties following the outbreak of conflict in Ukraine.
In a call in July together with Liu, Yellen talks “frankly” about the effects of Russia’s attack on Ukraine on the world economy as well as “unfair and not market-based” trade practices as per an U.S. recap of the phone conversation.