[Business] Can 'good cop' Janet Yellen help fix US-China relations?

US Treasury Secretary Janet Yellen is due to arrive in China as part of high-stakes attempts to rebuild bridges between the world's two biggest economies.

It is the second visit to Beijing by a senior Washington official in as many months and comes after the countries' relationship nose-dived this year.

The list of points of contention between the US and China ranges from Taiwan and Ukraine to national security and an ongoing trade dispute.

The visit also comes just days after Beijing said it would curb exports of two key materials used to make computer chips.

Ms Yellen's recent comments that the two economies can work together could be crucial to the trip, which will include her first talks with China's new Vice Premier He Lifeng.

Ahead of the visit, the US emphasised the importance for the countries "to responsibly manage our relationship, communicate directly about areas of concern, and work together to address global challenges".

As part of the ongoing efforts to ease tensions, Ms Yellen also met China's ambassador to the US Xie Feng on Monday for what was described by both sides as a "frank and productive discussion".

However, "expectations should be kept low for the Yellen visit," Wendy Cutler, vice president at US-based think tank the Asia Society Policy Institute, told the BBC. "She is not in a position to repair ties nor respond to Chinese requests to lift export controls or tariffs."

This latest trip to China comes just weeks after US Secretary of State Antony Blinken's visit to Beijing, when he met President Xi Jinping and foreign minister Qin Gang.

Mr Blinken was the highest-ranking Washington official to visit the Chinese capital in almost half a decade.

The meetings were seen as a key test of whether the two countries could stop their relationship deteriorating further.

At the end of his trip Mr Blinken said that, although there were still major issues between the US and China, his "hope and expectation is we will have better communications, better engagement going forward."

However, the next day President Joe Biden referred to Mr Xi as a "dictator", which triggered protests from Beijing. While analysts said Mr Biden's comment was unlikely to have a major negative effect, it was also widely seen as not helping matters.

In another sign that the trade dispute between the two countries is far from being resolved, China this week announced it was tightening controls over exports of two materials crucial to producing computer chips. From next month, special licences will be needed to export gallium and germanium from China, which is the world's biggest producer of the metals.

The move follows Washington's efforts in the past year to curb Chinese access to some advanced computer chips. In October, Washington announced it would require licences for companies exporting chips to China using US tools or software, no matter where they are made in the world.

The US and China face a complex set of issues, said Priyanka Kishore from the business forum IMA Asia.

"The official rhetoric and visits by senior diplomats indicate a desire to establish a working political relationship between the two countries," she added. "But the actions suggest otherwise, with the tit-for-tat policies dominating."

During meetings with her counterparts in Beijing Ms Yellen is expected to make clear that the US will continue to defend human rights and its national security interests.

However, she is also expected to emphasise Washington's willingness to work with Beijing on issues, including climate change and the problems faced by heavily-indebted countries.

While some high-profile figures have called for the US to completely break economic ties with China, Ms Yellen will take a more placatory approach. She is expected to tell her counterparts in Beijing that Washington does not intend to decouple the two economies.

This is in line with her worldview, which is more globalist than some of her predecessors, as she outlined in a speech earlier this year: "A full separation of our economies would be disastrous for both countries. It would be destabilising for the rest of the world."

She is also likely to be seen as a "good cop" compared to Mr Blinken, former International Monetary Fund chief economist Ken Rogoff told the BBC.

In his role as secretary of state, Mr Blinken had to raise some hard issues, such as Taiwan and Ukraine, Mr Rogoff said.

However, Mr Rogoff cautioned that this should not be taken as a sign that Ms Yellen will be soft on Beijing as she is likely to press Chinese officials on a number of issues, including intellectual property laws and access to markets.

Also, while some figures on both sides of the US-China divide talk of splitting away from one another, the reality of the interdependence can be seen in trading figures.

Trade between the two countries grew in 2022 for the third year in a row, with official figures showing China exported more than $536bn worth of goods to the US last year, while $154bn of goods went in the other direction.

But even as Washington and Beijing try to resolve their differences, the spectre of the US presidential election looms.

"If there is a second Biden administration beginning after 2024, on the economic front I expect loosening of many of the Trump-era trade sanctions and tariffs, in particular ones less related to high technology sectors," Professor Eric Harwit of the Department of Asian Studies at the University of Hawaii said.

"However, if Donald Trump wins the 2024 election, all bets are off."