US Treasury’s Yellen, China’s Vice Premier Liu to meet for first in-person talks

US Treasury Secretary Janet Yellen will meet Chinese Vice Premier Liu He in Zurich on Wednesday for frank talks on the global economy, sovereign debt issues and climate change, as the world’s biggest economies work to repair frayed relations.

Yellen’s first in-person meeting with Liu is part of a broader Washington and Beijing push to increase bilateral communications following talks between US President Joe Biden and Chinese President Xi Jinping in Indonesia in November.

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

A Chinese official said Liu and Yellen would also touch on the possibility of a world recession.

Yellen and other top US officials say the US economy should be able to skip a recession in 2023, but acknowledge slower growth is likely.

China’s economic growth looks set to rebound from mid-2023 following relaxed COVID-19 curbs, after slumping to one of its worst levels in nearly half a century.

The International Monetary Fund (IMF) has warned against decoupling the global economy into two competing blocs, saying it could reduce global economic output by up to 7 percent - and even more in vulnerable countries.

Doug Barry, former spokesperson for the US-China Business Council, said it was imperative for the two countries to rebuild ties, even as Washington and other Western countries diversify their supply chains and reduce national security vulnerabilities on certain Chinese technologies.

“It’s essential that we have these high-level bilateral contacts,” he said. “But there’s no magic wand. It’s not going to be easy to rebuild trust.”

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 labor in China’s Xinjiang region and “non-market” economic practices.

Yellen has met virtually three times with Liu since taking office, and met in Bali, Indonesia, with Chinese central bank governor Yi Gang. 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.

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