Yellen and Liu to enhance communication after ‘frank exchange’

US Treasury Secretary Janet Yellen shakes hands with China's Vice Premier Liu He during a bilateral meeting in Zurich on Wednesday © Keystone / Michael Buholzer

US Treasury Secretary Janet Yellen agreed with Chinese Vice Premier Liu He to enhance communication about macroeconomic and financial issues during a two-and-a-half hour meeting in Zurich on Wednesday.

The Treasury said the meeting – their first in person after three virtual conversations – was “candid, substantive and constructive”.

Both sides agreed to enhance cooperation on climate finance on a bilateral and multilateral basis, such as within the United Nations, the G20 group of economies and the Asia-Pacific Economic Cooperation (APEC), the Treasury said. It added that Yellen looked forward to travelling to China soon.

“While we have areas of disagreement, and we will convey them directly, we should not allow misunderstandings, particularly those stemming from a lack of communication, to unnecessarily worsen our bilateral economic and financial relationship,” Yellen said at the start of the meeting.

Liu said both countries need “serious communication” and coordination on issues including climate change and the economy, and that he was ready for an in-depth exchange.

“We do believe that we have to always bear in mind the bigger picture, try to manage our differences appropriately and seek common ground,” Liu said, speaking through an interpreter. “In this way, hopefully we can work together to maintain the overall stability of Chinese-US relations.”

US President Joe Biden and Chinese President Xi Jinping pledged to increase communication when they met in Indonesia in November.

“Both sides agreed it is important for the functioning of the global economy to further enhance communication around macroeconomic and financial issues,” the Treasury said after Yellen and Liu met.

‘Cold War mentality’

Liu, a confidante of Xi, on Tuesday urged global leaders gathered in the Swiss mountain resort of Davos for the annual gathering of the World Economic Forum (WEF) to abandon what he called a “Cold War mentality” and expand international cooperation on issues such as climate change.

Yellen’s meeting with Liu comes before a three-country visit to Africa, where she will push to expand US trade and business ties with the continent, which China has long dominated.

Yellen is also expected to repeat her criticism of Beijing – now the world’s largest creditor – for not moving more quickly to provide debt relief, as well as its use of forced labour in China’s Xinjiang region and “non-market” economic practices.

Liu will step down this year as part of an overhaul of China’s economic leadership disclosed in September.

In December, Yellen told reporters she was also open to visiting China and looked forward to more “intense interactions” with Chinese officials.