Janet Yellen says China, US economies inseparable

US Treasury Secretary Janet Yellen made a significant statement during her visit to Beijing, emphasising that a complete decoupling of the US and Chinese economies would be extremely challenging and could have destabilising effects on global markets. 

Yellen's four-day trip marked her first visit to China as Treasury chief and followed Secretary of State Antony Blinken's visit last month. The United States has recently taken steps to "de-risk" from China by limiting its access to advanced technology essential for national security.

Yellen clarified that the US is not seeking a wholesale separation of the two economies but rather aims to diversify its economic relationship. She stressed that a decoupling of the world's two largest economies would be detrimental to the global economy and practically impossible to achieve. 

During a meeting with representatives of US businesses in Beijing, Yellen highlighted the importance of maintaining economic stability and avoiding disruptive measures.

The visit took place against the backdrop of Beijing's introduction of new export controls on metals crucial for semiconductor manufacturing, citing national security concerns. Yellen expressed concerns about these restrictions and underscored the need for resilient and diversified supply chains.

Beijing has expressed optimism about the visit, stating that it will strengthen communication and exchange between the two countries. Chinese officials have emphasised the mutually beneficial and win-win nature of the economic relationship and the importance of avoiding a trade war or decoupling.

Yellen held substantive conversations with former Vice Premier Liu He and outgoing central bank governor Yi Gang, discussing the global economic outlook and the respective economic outlooks of the United States and China. She also met with Premier Li Qiang to address concerns and explore opportunities for collaboration.

Yellen's visit is seen as an opportunity to improve communication and understanding between the two countries. While specific policy breakthroughs were not expected, the discussions held during the visit could lay the groundwork for future engagement. 

However, challenges remain in convincing Chinese officials that US actions are driven by national security concerns rather than an intention to hinder China's economic rise. 

The complexity of the relationship was further highlighted by reports suggesting potential restrictions on Chinese firms' access to US cloud computing services.

Overall, Yellen's visit aimed to foster dialogue and cooperation while protecting US national security interests, highlighting the importance of maintaining a stable and mutually beneficial economic relationship between the two countries.