Finance
Here’s who Treasury Secretary Janet Yellen is going to meet in China
U.S. Treasury Secretary Janet Yellen, center, waits with others to receive Chinese President Xi Jinping at the San Francisco International Airport on Nov. 14, 2023, ahead of Xi’s meeting with U.S. President Joe Biden.
Bloomberg | Bloomberg | Getty Images
BEIJING — U.S. Treasury Secretary Janet Yellen was scheduled to arrive in China on Thursday ahead of four full days of meetings with Chinese officials.
It’s her second trip to the country since the summer, as the U.S. and China seek to increase high-level communication in an otherwise tense relationship. U.S. Secretary of State Antony Blinken is also due to visit China again later this year.
“I think our expectation is that we will at senior levels, and increasingly at all levels, continue to have ongoing and deepening dialogue. We went for too long with too little communication, and misunderstandings developed,” Yellen told reporters ahead of her arrival in China.
Her trip will cover the southern city of Guangzhou — the capital of China’s export-heavy province of Guangdong — and the national capital of Beijing, according to a press release.
Here’s her full itinerary of meetings:
- Friday, April 5 — meet with Vice Premier He Lifeng, Guangdong Governor Wang Weizhong, economic experts and AmCham China business representatives
- Saturday, April 6 — continue meetings with Vice Premier He Lifeng
- Sunday, April 7 — meet with Premier Li Qiang, Finance Minister Lan Fo’an, Beijing mayor Yin Yong, leading Chinese economists and Peking University students and professors
- Monday, April 8 — meet with former Vice Premier Liu He, People’s Bank of China Governor Pan Gongsheng
What will they talk about?
According to the Treasury, Yellen will discuss “unfair trade practices and underscoring the global economic consequences of Chinese industrial overcapacity.”
China has faced growing global scrutiny over how the country’s emphasis on building up its manufacturing capabilities, including the use of subsidies and policy support to do so, has helped Chinese companies to sell products such as solar panels at far lower prices than manufacturers in other countries.
In March, European Union Chamber of Commerce President Jens Eskelund said trade tensions between the EU and China will likely escalate as a result.
Guangdong is by far the top province in China by value of exports, according to Wind Information.
The province exported nearly 5.4 trillion yuan ($750 billion) in manufactured products last year, with equipment accounting for two thirds, according to Tu Gaokun, director of Guangdong’s industry and information technology department.
He told reporters last week the province was “committed” to improving productivity, and noted how it aimed to build up sectors such as new energy storage, biomanufacturing and commercial aviation.
Tackling ‘illicit finance’
During her meetings in China, Yellen will also “work to expand bilateral cooperation on countering illicit finance, which can drive important progress on shared efforts against criminal activity such as drug trafficking and fraud,” the Treasury said.
It added that Yellen would discuss work on bolstering financial stability, addressing climate change and resolving debt distress in developing nations.
The trip will mark Yellen’s third meeting with Vice Premier He Lifeng, whom the Treasury secretary is also set to meet later this month at the International Monetary Fund and World Bank Group spring meetings in Washington, D.C.
He Lifeng is also director of the office of the Central Commission for Financial and Economic Affairs, a role formerly held by Liu.
WASHINGTON – The Federal Reserve on Wednesday lowered its key interest rate by a quarter percentage point, the third consecutive reduction and one that came with a cautionary tone about additional reductions in coming years.
In a move widely anticipated by markets, the Federal Open Market Committee cut its overnight borrowing rate to a target range of 4.25%-4.5%, back to the level where it was in December 2022 when rates were on the move higher.
Though there was little intrigue over the decision itself, the main question had been over what the Fed would signal about its future intentions as inflation holds steadily above target and economic growth is fairly solid, conditions that don’t normally coincide with policy easing.
In delivering the 25 basis point cut, the Fed indicated that it probably would only lower twice more in 2025, according to the closely watched “dot plot” matrix of individual members’ future rate expectations. The two cuts indicated slice in half the committee’s intentions when the plot was last updated in September.
Assuming quarter-point increments, officials indicated two more cuts in 2026 and another in 2027. Over the longer term, the committee sees the “neutral” funds rate at 3%, 0.1 percentage point higher than the September update as the level has drifted gradually higher this year.
“With today’s action, we have lowered our policy rate by a full percentage point from its peak, and our policy stance is now significantly less restrictive,” Chair Jerome Powell said at his post-meeting news conference. “We can therefore be more cautious as we consider further adjustments to our policy rate.”
“Today was a closer call but we decided it was the right call,” he added.
Stocks sold off following the Fed announcement while Treasury yields jumped. Futures pricing pared back the outlook for cuts in 2025 to one quarter point reduction, according to the CME Group’s FedWatch measure.
“We moved pretty quickly to get to here, and I think going forward obviously we’re moving slower,” Powell said.
For the second consecutive meeting, one FOMC member dissented: Cleveland Fed President Beth Hammack wanted the Fed to maintain the previous rate. Governor Michelle Bowman voted no in November, the first time a governor voted against a rate decision since 2005.
The fed funds rate sets what banks charge each other for overnight lending but also influences a variety of consumer debt such as auto loans, credit cards and mortgages.
The post-meeting statement changed little except for a tweak regarding the “extent and timing” of further rate changes, a slight language change from the November meeting.
Change in economic outlook
The cut came even though the committee jacked up its projection for full-year gross domestic product growth to 2.5%, half a percentage point higher than September. However, in the ensuing years the officials expect GDP to slow down to its long-term projection of 1.8%.
Other changes to the Summary of Economic Projections saw the committee lower its expected unemployment rate this year to 4.2% while headline and core inflation according to the Fed’s preferred gauge also were pushed higher to respective estimates of 2.4% and 2.8%, slightly higher than the September estimate and above the Fed’s 2% goal.
The committee’s decision comes with inflation not only holding above the central bank’s target but also while the economy is projected by the Atlanta Fed to grow at a 3.2% rate in the fourth quarter and the unemployment rate has hovered around 4%.
Though those conditions would be most consistent with the Fed hiking or holding rates in place, officials are wary of keeping rates too high and risking an unnecessary slowdown in the economy. Despite macro data to the contrary, a Fed report earlier this month noted that economic growth had only risen “slightly” in recent weeks, with signs of inflation waning and hiring slowing.
Moreover, the Fed will have to deal with the impact of fiscal policy under President-elect Donald Trump, who has indicated plans for tariffs, tax cuts and mass deportations that all could be inflationary and complicate the central bank’s job.
“We need to take our time, not rush and make a very careful assessment, but only when we’ve actually seen what the policies are and how they’ve been implemented,” Powell said of the Trump plans. “We’re just not at that stage.”
Normalizing policy
Powell has indicated that the rate cuts are an effort to recalibrate policy as it does not need to be as restrictive under the current conditions.
“We think the economy is in really good place. We think policy is in a really good place,” he said Wednesday.
With Wednesday’s move, the Fed will have cut benchmark rates by a full percentage point since September, a month during which it took the unusual step of lowering by a half point. The Fed generally likes to move up or down in smaller quarter-point increments as its weighs the impact of its actions.
Despite the aggressive moves lower, markets have taken the opposite tack.
Mortgage rates and Treasury yields both have risen sharply during the period, possibly indicating that markets do not believe the Fed will be able to cut much more. The policy-sensitive 2-year Treasury yield jumped to 4.3%, putting it above the range of the Fed’s rate.
In related action, the Fed adjusted the rate it pays on its overnight repo facility to the bottom end of the fed funds rate. The so-called ON RPP rate is used as a floor for the funds rate, which had been drifting toward the lower end of the target range.
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