US Treasury Secretary Janet Yellen, Chinese counterpart He Lifeng begin talks to help lay groundwork for Biden-Xi meeting

US Treasury Secretary Janet Yellen said on Thursday that she would talk to her Chinese counterpart Vice-Premier He Lifeng about “the use of economic tools for national security purposes” as they hold two days of meetings in San Francisco.

Their visit – the second since July, when Yellen visited China – came days before the start of the Asia-Pacific Economic Cooperation leaders’ summit, where US President Joe Biden and Chinese leader Xi Jinping are expected to meet on Wednesday.

Yellen said the US would continue to take “targeted actions to protect our and our allies’ national security”.

“But we are also committed to communicating clearly about these actions to prevent any misunderstandings or miscalculations. And we welcome more clarity on China’s thinking and actions,” she added.

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Yellen hails ‘step forward’ in US-China ties despite national security concerns

Yellen hails ‘step forward’ in US-China ties despite national security concerns

Yellen repeated that the US had no desire to decouple the world’s two largest economies, which she said “would be economically disastrous for both our countries, and for the world”.

“We seek a healthy economic relationship with China that benefits both countries over time,” she said on Thursday. “When we have concerns about specific economic practices, such as those that prevent American firms and workers from competing on a level playing field, we will communicate them directly.”

She said she also hoped to discuss collaboration on global challenges – including climate change and debt distress in low-income countries and emerging markets – with He, who oversees economic and trade dialogues.

In August, Biden signed an executive order prohibiting some new US investment in key Chinese tech industries including semiconductors and microelectronics, quantum information technologies and certain artificial intelligence systems.

US-China economic rivalry not ‘winner-take-all’, Yellen says

And in October, his administration released new measures to close loopholes in last year’s landmark export controls on high-end chips.

He’s visit comes amid a recent uptick in diplomacy between the two countries. They resumed talks on maritime and nuclear issues after foreign minister Wang Yi visited Washington last month.

Yuyuantantian, a social media account affiliated with Chinese state media CCTV, said on Thursday that the US had long “generalised and abused” the concept of “national security” and that “China requires the United States to pay attention to China’s concerns, which is the prerequisite for this exchange” between He and Yellen.

It also mentioned US tariffs, the more than 1,300 sanctioned Chinese companies, and a state law restricting foreign ownership of farmland, among other issues.

In her op-ed, Yellen said she would talk to He about US concerns regarding Beijing’s unfair economic practices, including its large-scale use of non-market tools, its barriers to market access and its coercive actions against American firms in China.

In April, she outlined the three-pillar approach to US economic relations with China, which included the pursuit of a “healthy economic competition”, targeted action to advance the national security of the US and its allies, and cooperation on global challenges.