US-China relations: Yellen, Blinken meetings won’t fix weakening foundation

A series of high-level meetings and positive rhetoric meant Yellen’s visit was encouraging to many, but the underpinnings of US-China tensions remain
Leaders on both sides will have to expend significant political capital for a desperately needed diplomatic breakthrough in the near future

Richard Heydarian

Published: 1:00am, 11 Jul 2023

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“We believe that it is in the best interests of both countries to make sure we have direct and clear lines of communication at senior levels,” US Treasury Secretary Janet Yellen said ahead of four-day visit to Beijing last week. In her first visit to China, she vowed to help facilitate a “stable and constructive relationship” in spite of disagreements over a whole host of issues.

Yellen has made it clear that there is “ample room” for bilateral US-China trade as well as globally consequential cooperative initiatives, especially against climate change. She said the United States is not pursuing a zero-sum approach to China but instead is committed to a long-term trade and investments relationship.

Her trip, which came not long after Secretary of State Antony Blinken’s visit to Beijing last month, underscored growing efforts towards stabilising the world’s most consequential bilateral relationship. The top US climate envoy John Kerry is expected to visit later this month as the two sides explore restoration of bilateral dialogue on areas of shared concern.

A long-term detente between the two superpowers remains a tall order, though, thanks to tit-for-tat sanctions, an increasingly protectionist turn in US economic strategy coupled with growing mistrust towards China among the American people.

In fairness, Yellen’s visit was encouraging for many. Although striking a defiant note on the need to protect the interest of American businesses in China, she held cordial meetings with top Chinese technocrats. These included meeting Premier Li Qiang, who spoke of a potential rainbow in bilateral relations after a stormy year, as well as Chinese economic tsar and Vice-Premier He Lifeng, who is known for his advocacy for greater openness to foreign investment.

Crucially, Yellen underscored how the US will “seek to diversify and not to decouple” from China’s economy, instead focusing on enhancing its supply-chain resilience and national security through a more calibrated ‘de-risking’ strategy. The ultimate purpose of her visit was to establish a floor for relations, to arrest a perilous spiral in interactions between the world’s two leading powers.

US Treasury Secretary Janet Yellen (centre) speaks during a lunch meeting with women economists in Beijing on July 8. Photo: EPA-EFE

Although no major diplomatic breakthroughs were announced, her visit paved the way for a bilateral summit between US President Joe Biden and President Xi Jinping. That could come as soon as September’s Group of 20 summit in New Delhi or during the Asia-Pacific Economic Cooperation gathering in San Francisco in November.

Even on the economic front, there are three interrelated factors which place significant limits on the ability of both leaders to negotiate a long-term detente. To begin with, the US has drifted towards an “America First” economic strategy which goes beyond the antics of the Trump administration. During her trip to China, Yellen said a “shift toward market reforms would be in China’s interests”.

The Biden administration, meanwhile, has embraced a more protectionist approach to economics. As early as 2020, future national security advisor Jake Sullivan, then a top Biden aide, co-authored a report on how the US needed to embrace an aggressive economic strategy which both protects the middle class as well as ensures the country will maintain as large a lead as possible in cutting-edge industries.

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Since coming to power, the Biden administration has overseen the passage of three key pieces of legislation: the Bipartisan Infrastructure Law, the Chips and Science Act and the Inflation Reduction Act, all of which mobilise trillions of dollars to enhance US economic foundations. Just passing such massive legislation in a highly polarised political environment is a testament to the rare bipartisan consensus on the supposed need for the US to meet the challenge from China.

Aside from strengthening its economic foundations, the Biden administration has also unleashed a wave of sanctions targeting China’s cutting-edge industries. As a 2022 report from the Centre for Strategic and International Studies – a top US think tank – put it, what we are witnessing is nothing less than a “new US policy of actively strangling large segments of the Chinese technology industry”.

Even if the Biden administration loses power next year, there is little indications of a major reboot in US economic strategy. Republican strategists such as Elbridge Colby, who played a role in shaping the Trump administration’s national defence strategy, are calling for a whole-of-nation strategy that targets the foundations of China’s economic and military power.

This brings up the second major structural challenge: deepening public scepticism towards Sino-American detente in the near future. It appears the US policy elite’s view on China are shared by the broader populace. A Gallup poll published in March found that only 15 per cent of US respondents viewed China either very favourably or mostly favourably, with two-thirds of respondents seeing China as a “critical threat” to vital US interests.

The current sentiment towards China is even lower than the American public’s views of the Soviet Union during the Cold War. With an election next year, the Biden administration will come under increasing pressure to maintain a tough stance on China.

Trump’s tariffs on China have cost the US, but they look likely to stay

The third, and perhaps most crucial, factor is the impact of US economic strategy on the geopolitical front. Beijing has repeatedly insisted that restoring institutionalised bilateral dialogue hinges on the removal of US sanctions which have not only targeted Chinese economic champions but also defence leadership.

In response, the Biden administration has maintained that diplomacy should come without preconditions, giving little indication of a significant compromise.

The upshot is the continued absence of fully functional military-to-military diplomacy even as the two superpowers continue to ramp up their naval presence in the South China Sea, Taiwan Strait and the broader Western Pacific. In short, leaders in both the US and China will have to expend significant political capital for a desperately needed diplomatic breakthrough in the near future.

Richard Heydarian is a Manila-based academic and author of Asia’s New Battlefield: US, China and the Struggle for Western Pacific, and the forthcoming Duterte’s Rise