Janet Yellen and China’s Liu He Talk ‘Frankly’ on Issues of Concern

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The U.S. and Chinese governments took another step toward restarting economic and trade talks, with Treasury Secretary Janet Yellen and Vice Premier Liu He holding what they described as frank discussions in their first call.

The two sides discussed how to “support a continued strong economic recovery and the importance of cooperating on areas that are in U.S. interests, while at the same time frankly tackling issues of concern,” according to a statement from the U.S. Treasury. A Chinese statement carried in state media also said the two “frankly exchanged views on issues of mutual concern.”

Janet Yellen and China’s Liu He Talk ‘Frankly’ on Issues of Concern

The meeting comes after a “candid” first conversation between Liu and U.S. Trade Representative Katherine Tai last week, and may indicate the Biden administration is trying to restart discussions to resolve differences over trade and economic relations. Including the acrimonious meeting of top diplomats in Alaska in March, the Yellen-Liu call is the fourth discussion between U.S. cabinet-level officials and Chinese officials since President Joe Biden took office in January.

The U.S. characterized the talk as an “introductory virtual meeting,” according to a Treasury statement released Tuesday evening Washington time. The former USTR and Treasury secretary led the negotiations with China on the phase one trade deal, which left in place higher tariffs on hundreds of billions of dollars worth of imports.

Janet Yellen and China’s Liu He Talk ‘Frankly’ on Issues of Concern

So far the Biden administration has retained much of former President Donald Trump’s economic policies toward China, with no reduction in the tariffs. There’s also been no sign that it’s looking to negotiate a phase two trade deal, or to replace the agreement that was signed in January 2020.

Instead, there are indications relations could be strained for an extended period of time. The White House’s top official for Asia said last week that the U.S. is entering a period of intense competition with China.

“The period that was broadly described as engagement has come to an end,” Kurt Campbell, the U.S. coordinator for Indo-Pacific affairs on the National Security Council, said last Wednesday. U.S. policy toward China will now operate under a “new set of strategic parameters,” Campbell said, adding that “the dominant paradigm is going to be competition.”

However, trade and investment flows between the two nations continue to strengthen, even with the political and diplomatic tensions. China’s exports to the U.S. are still growing, while China is stepping up its purchases of U.S. goods, even though that’s not enough to reach the levels promised in the trade deal.

“Secretary Yellen noted that she looks forward to future discussions with Vice Premier Liu,” the Treasury said in its statement, while the China said Liu was “willing to continue to maintain communication.”

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