During a recent visit to Beijing, US officials were assured that Chinese banks remained stable amidst a turbulent period in China’s economy.
Trip to China
Janet Yellen, the U.S. Treasury Secretary, revealed that a working group of Treasury officials had visited China on January 19. During their trip, they were assured that Chinese banks were “doing well” in the face of ongoing turmoil in Chinese financial and real estate markets.
Economic Discussions
Prior to the visit, during an appearance at a Milwaukee job training center, Yellen discussed the upcoming trip and told reporters that the group intended to discuss China’s current economic situation.
China Reassures the US Treasury
After their return to the US, Yellen confirmed that the Treasury officials, who were part of the U.S.-China Economic Working Group, had been given reassurances about the stability of the country’s banks and its overall economy.
A Rundown of the Meeting
According to Yellen, the officials “focused on pressures in the financial sector, in the banking sector, stemming from debt problems of local governments and the real estate sector.”
Money Laundering Defense
During conversations with representatives of the People’s Bank of China, they also discussed China’s intentions to combat money laundering.
“Banks Are Doing Well”
She explained that “they received assurances that banks in China are doing well,” and Yellen did not see any signs that the financial turbulence in China was having any knock-on effects on the US economy.
Ongoing Economic Issues
The visit comes during an ongoing financial crisis in the country, a result of debt pressure and myriad issues in the real estate sector.
Investors Lose Their Patience
International and domestic investors have expressed continual frustration at Beijing’s failure to bolster the economy.
Potential to Affect US
Despite claiming that there are no signs of spillover into the US, Yellen admitted that economic turmoil in China could eventually have an effect on the States.
“We May See Some Spillover”
“If growth slows to Asian countries that are important trade partners, we may see some spillovers,” she said. “But I don’t think they’re going to be very large.”
Evergrande Compounds the Problems
However, Hong Kong’s recent order to liquidate China Evergrande Group, one of China’s largest real estate companies with more than $300 billion in liabilities, has only added another problem to China’s laundry list of economic issues.
Stoking Fears Across China
Though Beijing has not yet decided on whether to recognize the order, the situation has stoked further fears about the flagging real estate market, and how it will affect the nation’s economy at large.
“Nobody Believes It’s Going to Get Better”
“Nobody believes the economic situation is going to get any better,” said Alicia García Herrero, the chief Asia-Pacific economist for Corporate & Investment Banking group Natixis.
Easing Tensions Between US and China
The US visit to Beijing was the third in a series of meetings between the working group and Chinese officials, aiming to ease tensions between the countries and facilitate economic cooperation.
Meeting With the Vice Premier
They then met with Vice Premier He Lifeng and suggested that the Treasury Secretary herself would be planning another trip to Beijing, after her previous visit in July 2023.
Preparing for Presidential Meetings
Yellen also met with Lifeng in November for a two-day meeting, when he came to San Francisco to prepare for a meeting between President Joe Biden and China’s President Xi Jinping.
Pivoting to Russia and Ukraine
During conversations about the recent treasury department visit, Yellen also discussed recent international calls to confiscate billions of dollars worth of frozen Russian assets and divert them to Ukraine.
Unfreezing Russian Assets ?
She told reporters that G7 finance ministers were going to receive reports on the issue that would weigh up the legal ramifications of and justifications for using frozen assets as part of a military aid package.
Reports Coming Soon
“We’re working to do it quickly,” she added, saying that the report should be ready to send to finance ministers by the end of February 2024.
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