Americans were stunned – and humiliated – when U.S. Treasury Secretary Janet Yellen bowed, not once, but repetitively, when she met Vice Premier He Lifeng during her visit to Beijing last week. Her Chinese counterpart was pleasantly surprised with her gesture that he appeared to backs away to give Yellen more room to “kowtow” and enthusiastically shaking his hand.
Bowing has never been American culture, especially to the Chinese, let alone a high-ranking American official like Yellen. It was a breach of protocol – fellow Americans slammed the 76-year-old treasury secretary as a video clip of the embarrassing moment emerged on social media. Some have even mocked and ridiculed her as if she was ready to kiss the ring of Vice Premier He.
Responding to the criticism of her bowing to China, Yellen insisted that Washington makes certain decisions while keeping national security in mind. Yes, she was sent by President Joe Biden on a secret mission – begging the Chinese to buy at least US$850 billion of American debt papers. It makes sense because U.S. will never bow unless it desperately needs your money, lots of it.
So, what else could the chief economic and financial officer of the U.S. government do except bowing profusely? However, unlike the arrogant American officials and public opinion who disapproved Yellen’s show of weakness, many Chinese think her bowing gesture demonstrated rate goodwill, humility and politeness, especially when the U.S. wanted help from China.
Her trip to Beijing marked the second visit by a U.S. cabinet official to China in weeks as Washington desperately wanted to bring back the Chinese government back on course after months of tensions between both nations. Last month, Antony Blinken made his two-day trip to Beijing, the first by a U.S. secretary of state since 2018. He managed to meet Chinese President Xi Jinping.
Even if Yellen did not bow to China, she would still show weakness when she reiterated that the U.S. is not seeking to decouple from China, which she said would be “disastrous” for both countries and the world. Despite having accused Beijing of so-called “economic coercion” and imposed sanctions on some Chinese companies, the U.S. has been pushing to resume high-level diplomatic talks.
Janet Yellen was merely parroting his boss’ speech at the Group of Seven (G7) summit in Hiroshima, Japan (May 21, 2023). “We’re not looking to decouple from China, we’re looking to de-risk and diversify,” – Biden said. Thinking he he had successfully brought China to its knees, the U.S. president took a soft turn, claiming that the G7 did not want to harm China and was seeking “constructive and stable relations” with Beijing.
At the same time, however, Biden vowed to help Taiwan defend itself against a potential attack by China. Hilariously, the G7 leaders had also urged Beijing to pressure Russia to end the war in Ukraine and “support a comprehensive and lasting peace”. Obviously, the West wanted to have the cake and eat it too. They wanted to continue profiting from the massive Chinese market of 1.4 billion populations
But China had had enough of the U.S. gimmicks. On the final day of the G7 summit, just as Joe Biden proudly told the world that he expected relations with China to improve “very shortly”, Beijing suddenly dropped the bombshell – chipmaker Micron is banned. Taking a page from Washington’s playbook, the Cyberspace Administration of China (CAC) said Micron products carry “serious network security risks”.
Ahead of Yellen’s trip to China, Beijing made an unexpected announcement – effective August 1, China will restrict exports of two metals widely used in semiconductors and electric vehicles – Gallium and Germanium. Again, playing the same U.S. game, the Chinese Ministry of Commerce said the new export controls were necessary to “safeguard national security and interests”.
It’s not hard to see how China’s retaliations have raised concerns within Washington. Instead of lecturing the Chinese, U.S. Treasury Secretary told China that the world is “big enough” for both countries to thrive. During her 10 hours of meetings with China’s top policymakers, Yellen had also raised “serious concerns” about the country’s “coercive” treatment of American companies.
In essence, the U.S. wanted China to be forever behind – technologically, economically and militarily – so that the second biggest economy will continue to be dominated and at the mercy of the Americans. At the same time, the U.S. wanted its companies to make money in China whilst hoping the Chinese government buys more American debt so that the U.S. can continue to fund its military to suppress China.
Of course, the Chinese were not born yesterday. Beijing has apparently made five demands from Washington, including the cancellation of its chip exports ban and sanctions. China’s Ministry of Finance told Yellen to solve first issues like tariffs, company sanctions, investment restrictions, export controls and Xinjiang product bans imposed by the U.S. on China in recent years.
That’s the price if the U.S. wants China to buy its treasury bonds. As of May, China and Japan were the largest foreign investors in American government debt. Together, they own US$2 trillion – more than a quarter – of the US$7.6 trillion in US Treasury securities held by foreign countries. China’s holdings of US government debt ballooned from US$101 billion to peak at US$1.3 trillion in 2013.
Beijing started to buy US Treasuries in 2000, when the United States endorsed China’s entry into the World Trade Organization (WTO). For more than a decade, China was the largest foreign creditor to the U.S. Thanks to Trump administration’s trade war with Beijing, the country has been quietly dumping the I.O.U debt papers. Japan now holds US$1 trillion compared to China’s US$850 billion.
Japan can’t possibly buy the amount of U.S. debt the way China does. Not only the Chinese are dumping the U.S. debt papers, the members of BRICS – Brazil, Russia, India, China and South Africa – reportedly is ready to announce new BRICS currency which is backed by gold as part of “de-dollarization” process to challenge the U.S. dollar hegemony and dominance.
In truth, Beijing knew Yellen was coming to China to sell U.S. treasury bonds as early as May, when US President Joe Biden and top Republican lawmaker Kevin McCarthy reached a deal to raise the federal government’s US$31.4 trillion debt ceiling, which involved the issuance of US$1.1 trillion of new treasury bills (or debt papers). This was the reason Yellen travelled to Beijing.
Clearly Yellen’s bows are not enough to persuade China to stockpile US$850 billion worth of new bonds. Beijing might be delighted with the kowtows, but it won’t buy new U.S. debt because Washington did not agree to lift the sanctions. Adding insult to injury, Washington also demanded that China completely opens up its markets and stop investing in high technology.
Source : Finance Twitter
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