China pledged as part of its Phase One trade deal with the US three years ago that it would not seek an advantage in trade by devaluing its currency. But the Biden administration’s options may be limited if China allows its currency to weaken anyway.
China has provided more than $500 billion to developing countries through its lending program, making it one of the world’s largest lenders. Many of those borrowers, including several African countries, have struggled economically since the pandemic and face the prospect of defaulting on their loans.
The United States, along with other Western countries, has been pressuring China to allow some of those countries to restructure their debt and reduce the amount they owe. But for more than two years, China has forced other lenders and multilateral lenders to absorb financial losses as part of any restructuring, stalling the debt relief process and threatening to push millions of people in developing countries deeper into poverty.
In June, international lenders including China agreed to a debt relief plan with Zambia that would give it a grace period on interest payments and extend the due dates on its debts. The arrangement does not require the World Bank or the International Monetary Fund to write off any debt, global policymakers Ms. People like Yellen hope for similar debt restructuring in poor countries.
Human rights and national security issues
Tensions over national security and human rights have created an environment of mutual mistrust and spilled over into economic relations. The flight of a Chinese surveillance balloon over the United States this year deeply unnerved the American public, and members of Congress are pressing the administration to reveal more about the balloon. Mr. Xi called Chinese President Xi Jinping a “dictator”. Biden’s recent branding has rankled Chinese officials and state-run media.
US officials remain concerned about China’s human rights abuses, including its crackdown on the pro-democracy movement in Hong Kong and its detention of mainly Muslim minorities in northwest China’s Xinjiang region. A senior Treasury Department official, Ms. Yellen, who spoke on condition of anonymity before her trip, said the US did not want to shy away from her views on human rights during meetings in China.
Chinese officials continue to protest various US sanctions against Chinese companies, organizations and individuals for national security threats and human rights abuses. Sanctions against Li Shangfu, China’s Defense Minister. The Chinese government has cited those sanctions as one reason for rejecting high-level military talks.
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