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Chinese Premier Li Qiang, right, shakes hands with Treasury Secretary Janet Yellen, left, during a meeting at the Great Hall of the People in Beijing. Image Credit: AP

Beijing: US Treasury Secretary Janet Yellen said competition between the world’s biggest economies is not a “winner-take-all” situation, and called for both sides to manage their rivalry with a fair set of rules.

Yellen’s comments were delivered Friday during a meeting with Chinese Premier Li Qiang as she made a long-anticipated trip to Beijing, aimed at finding some common ground between the two superpowers sparring on everything from trade to Taiwan’s security.

“We seek healthy economic competition that is not winner-take-all but that, with a fair set of rules, can benefit both countries over time,” the Treasury chief told China’s No. 2 official, adding that US actions to protect national security should be “targeted.”

Li also struck a note of optimism, telling Yellen he believed bilateral ties would eventually see a “rainbow,” after going through a period of “wind and rain.” He also urged Chinese entrepreneurs to brace themselves for “hardships” and “look further to the horizon.”

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Yellen’s high-stakes visit comes as the US and China are locked in a tit-for-tat trade war that ramped up last year with US export controls on semiconductors and chipmaking equipment.

Yellen’s trip is aimed at building longer-term communication channels with the Chinese government’s new economic team rather achieving any substantive breakthroughs. Despite that, her talks began with two old guards of China’s economy policy: retired Vice Premier Liu He and the People’s Bank of China Governor Yi Gang.

The Treasury’s readout of Yellen and Li’s meeting described it as “candid and constructive.” Besides discussing competition issues, Yellen emphasized the importance of Washington and Beijing “closely communicating on global macroeconomic and financial issues and working together on global challenges, including debt distress in low-income and emerging economies and climate finance,” it said.

The meeting lasted just more than an hour, according to a Treasury official.

Yellen will use her time in Beijing to discuss with her counterparts the importance of responsibly managing the US-China relationship, communicating directly about areas of concern, and working together to address global challenges, the Treasury said earlier. She is expected to sit down with more Chinese officials on Saturday, before departing on Sunday after giving a press conference.

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The trip marks the first major test of a policy Yellen outlined in April that’s geared toward defending and securing US national security without trying to hold China back economically.

Responsible relationship

During her roundtable with executives from companies including Boeing, Bank of America and Cargill, Yellen spoke of the opportunity China’s enormous middle class held for American businesses. But she also warned she was “troubled” by “punitive actions” China had taken against US firms in recent months.

Yellen said that US business leaders in Beijing had expressed concerns over China’s “non-market tools,” such as subsidies for state-owned enterprises and domestic firms. Despite all that, she reiterated her message that the US does not seek a wholesale separation of the two economies, stressing that it seeks to “diversify” rather than decouple from China.

“A decoupling of the world’s two largest economies would be destabilizing for the global economy, and it would be virtually impossible to undertake,” she said. “We seek to diversify, not to decouple.”