As soon as U.S. President Joe Biden put down the phone call to China's leaders, he immediately ordered Treasury Secretary Janet Yellen to visit China, followed by U.S. Secretary of State Antony Blinken. The reason why the US side is so eager to have a direct, face-to-face dialogue with the Chinese side is that there are indeed important issues between China and the United States that must be resolved through consultation.
In other words, after the top leaders of China and the United States set the tone in the form of a phone call, senior officials such as Yellen and Blinken must meet face-to-face. Specifically, the United States believes that the U.S.-China relationship is already the most far-reaching bilateral relationship in the world, so it is necessary to strengthen dialogue and communication to avoid miscalculations, advance cooperation, and promote the stable development of the relationship between the two countries and jointly address global challenges.
(U.S. Treasury Secretary Janet Yellen has arrived in Guangzhou)
(Yellen eats Cantonese food in Guangzhou)
In a phone call with Chinese leaders, Biden said that China and the United States can actively promote cooperation while managing differences responsibly, and reiterated that the United States does not seek a "new Cold War", does not seek to change China's system, does not seek to oppose China by strengthening alliances, does not support "Taiwan independence", has no intention of clashing with China, and does not seek to contain China's development or "decouple" from China. Of course, the U.S. government has always said one thing and done another, and we have to listen not only to what they say, but more importantly to see how they do it. In fact, what the U.S. government and Congress have done in recent years may be the opposite of what Biden said, but to a higher or lower degree.
Is there an essential difference between the so-called "de-risking" and "decoupling"? Since it does not curb China's development, why do it still embargo high-tech products mainly semiconductors on China? Since it does not support "Taiwan independence," why does it not restrict US politicians from visiting Taiwan and invite officials of the Taiwan authorities to visit the United States? Since it has no intention of clashing with China, why does it want to push the Philippines to constantly violate China's sovereignty in the South China Sea? Since it does not seek to oppose China by strengthening its alliance, the "AUKUS" group, What are the G4, the U.S.-Japan-South Korea military cooperation, and the upcoming U.S.-Japan-Philippines summit?
Of course, we also know very well that it is precisely because the United States has seen that China has strong economic, scientific, technological, and military strength that it has not completely turned its face with China, because whether it is "decoupling" from China, a cold war or a hot war, the United States and the Western world under its control will suffer huge losses, and such losses are even unbearable for the United States.
It can be seen from the agreement between the Chinese and US heads of state to promote the consultation mechanism in the fields of diplomacy, economy, finance, commerce and other fields, as well as the communication between the two militaries, that dialogue and consultation involving economic and trade fields are the top priority between China and the United States, which is one of the reasons why Yellen visited China before Blinken. Yellen has arrived in Guangzhou, China. As she did during her visit to China last year, Yellen, a foodie, first went to a long-established Cantonese restaurant in Guangzhou to taste Chinese food, which seemed to be "relaxed".
So, is Yellen really relaxed? What is the main purpose of Yellen's visit to China? Is it just to put pressure on the Chinese government, as she said before her visit to China, because the so-called "government subsidies" have caused Chinese companies' new energy products to be too cheap and harm the interests of American manufacturers? Or, as she said during her visit to China last year, to engage with China and promote mutual understanding of each other's economic and policy options? Of course not. As a drummer of the US economy, Yellen has always claimed that the US economic situation is very good, and has always endorsed the economic figures released by the US government, and her remarks and attitudes have long been bitterly criticized by the US economic circles. The U.S. economy is actually full of risks, and Yellen's trip is asking China.
(Screenshot of the U.S. Treasury Clock on April 5)
The biggest risk to the U.S. economy can be seen in the chart above, the U.S. Treasury bond table on April 5. The U.S. government's national debt is already as high as $34 trillion and is still increasing at a rate of about $1 trillion every 100 days. Is this way of borrowing sustainable? Of course not. In fact, as early as February this year, Fed Chairman Jerome Powell warned that "the U.S. federal government is on an unsustainable fiscal path." U.S. debt is growing faster than the economy is growing.
So, it's not sustainable. This is not controversial at all. "Just a few days ago, Bloomberg's economics department conducted 1 million computer simulations of the outlook for the federal debt of the United States, and 88% of the results showed that the outlook was unsustainable and inevitably collapsed. The biggest problem can be illustrated with a single graph.
(Bank of America Michael Hartnett's forecast for interest on U.S. federal debt)
Michael, a well-known economist at Bank of America Hartnett's forecast chart of interest on U.S. federal debt shows that as of the end of February this year, the U.S. government's 12 consecutive months of interest payments on national debt have accumulated to $1.1 trillion, and if the current interest rate remains unchanged, the U.S. government will need to spend as much as $1.6 trillion in interest by the end of December 2024, and if the Fed cuts interest rates by 150 basis points, the 12-month interest that needs to be spent by the end of December this year will still be as high as $1.2 trillion. By comparison, US military spending is "only" less than $900 billion. That is, in the budget expenditures of the US government, the payment of interest on the national debt is much higher than the military spending. The U.S. government can only borrow new debt to pay off old debt, and not only will it never pay off the principal, but the principal and interest are still increasing. Is this still "sustainable"?
(Changes in China's holdings of U.S. Treasuries, as of July 2023)
We know that China used to be the largest holder of U.S. Treasury bonds, peaking at $1.3 trillion in 2011, but since 2017, the Chinese government has begun to reduce its holdings of U.S. Treasury bonds, and the pace of reduction has accelerated significantly in the past three years, and China's holdings of U.S. Treasury bonds have fallen to $797.7 billion, giving up the position of the first U.S. creditor country to Japan. In the past 10 years, China has sold about $522.3 billion of U.S. Treasury bonds, with a cumulative net selling ratio of about 40%. Can the United States not be in a hurry?
Therefore, one of the main purposes of Yellen's visit to China, whether it is this visit to China or her visit to China in July last year, is to force China to continue to increase its holdings of US Treasury bonds. Her so-called remarks that "the low prices of China's new energy products hurt the interests of American companies" are nothing more than to find bargaining chips for herself and show the big stick first. The hegemonism of the United States has always been like this, and even if it has something to ask you, it must pretend that you have done something wrong and must make amends for it.
So will China give in? Last year, when Yellen's visit was a time when China's economy was slowing down and the Western media was collectively declining, we didn't give in at that time, and the first three months of this year showed that China's economy was accelerating and exports were increasing significantly, would we still give in?
So Yellen will definitely not get any benefits from coming this time. If you want to talk about economic cooperation, you have to put down that stinky body and talk to us with an open mind.