Yellen Visits China Today... US to Coordinate with Allies on Export Controls to China

U.S. Commerce Department "Firmly Opposes" China's Export Restriction Policy
U.S.-China Economic Chiefs' Meeting Approaches Amidst Tense Standoff
Focus on Whether Deadlock Shifts to Management Phase

The U.S. government has indicated the possibility of retaliatory measures in solidarity with its allies in response to China’s decision to impose export controls on key semiconductor materials (gallium and germanium). Despite an imminent meeting between the economic leaders of the U.S. and China, both countries continue to engage in a tense standoff over advanced technology and trade issues.

On the 5th (local time), the U.S. Department of Commerce expressed "firm opposition" to China’s export restriction policy. In an email statement, the Commerce Department said, "China’s recent action highlights the need to diversify supply chains," adding, "The U.S. will work with allies and partners to address this issue and build resilience in critical supply chains."

This announcement from the Commerce Department came just before U.S. Treasury Secretary Janet Yellen’s trip to China. On the 6th, Secretary Yellen will visit China to hold a series of meetings with key figures in China’s economic leadership, including Premier Li Qiang, Vice Premier He Lifeng, and Finance Minister Liu Kun. These meetings are expected to involve intense negotiations over the measures each side has taken against the other.

China’s Ministry of Commerce’s sudden announcement of export controls on gallium and germanium is interpreted as a strategic move to pressure the U.S. at the negotiation table. Previously, China’s Ministry of Commerce announced that it would control exports of gallium and germanium, rare metals used in semiconductors, starting August 1. As a result, these metals cannot be exported without Chinese government approval. China monopolizes 80% of the world’s production of gallium and germanium. In May, China also announced sanctions against the U.S. semiconductor company Micron, tightening its grip to gain an upper hand in negotiations.

Janet Yellen, U.S. Secretary of the Treasury. [Photo by Reuters]

In response, the U.S. is expected to issue follow-up export controls on advanced semiconductors and semiconductor manufacturing equipment used in artificial intelligence (AI) and supercomputers as early as the end of this month, along with an executive order from President Joe Biden outlining these measures.

Earlier, in October last year, the U.S. announced similar export control measures and has continued efforts to block China’s access to American advanced technology. The U.S. is also preparing offshore investment restrictions to limit investments in China.

According to foreign media reports, the two countries are expected to engage in disputes over various issues during this meeting, including current economic and trade relations, macroeconomic policy directions such as interest rates and exchange rates, China’s strengthened counter-espionage law enforcement, and debt restructuring for developing countries.

Experts are paying close attention to whether the Yellen visit will mark a shift from the previously intense confrontation between the U.S. and China to a more managed phase. Alicia Garcia, chief economist at French investment bank Natixis, said, "It is uncertain whether U.S.-China relations can improve, but at least it is significant that the U.S. and Europe recognize that they cannot separate themselves from economic interdependence with China."

However, some remain skeptical about placing high expectations on Yellen’s visit to China. Wu Xinbo, director of the Institute of International Studies at Fudan University in Shanghai, predicted, "Even if Secretary Yellen’s visit does not lead to concrete problem-solving, it will improve the atmosphere between the two countries and allow reasonable voices advocating for improved relations within the Biden administration to be heard."

This content was produced with the assistance of AI translation services.