As China’s economy hits turbulence, a top Treasury official heads to Hong Kong to deepen ties with Beijing

By Matt Egan, CNN

New York (CNN) — A top US Treasury official is heading to Hong Kong as the White House continues its quest to ease tensions with Beijing and avoid a destabilizing crisis.

Joining a growing list of US officials visiting the region, Assistant US Treasury Secretary Brent Neiman is traveling to Hong Kong on Wednesday as part of an effort to “deepen ties between the world’s two largest economies,” a Treasury official tells CNN.

During the trip, Neiman — the highest-ranking Treasury official to visit Hong Kong since 2019 — plans to meet with government officials, private sector economists and executives from the financial and legal sectors. He is also set to meet with US companies that are members of the American Chamber of Commerce in Hong Kong as well as with students.

According to the US official, Neiman will discuss the “financial ties behind the US-China relationship and the importance of communicating on financial and regulatory matters as well as macroeconomic and financial developments in Hong Kong and China.”

Notably, the Treasury official also plans to address hot-button issues, including human rights, a thorny subject given Beijing’s history of human rights abuses and its complicated relationship with Hong Kong.

“Neiman will stress the United States’ focus on securing and advancing our economic and national security interests, along with those of our allies, and protecting human rights,” the Treasury official told CNN.

Hong Kong is a semi-autonomous Chinese territory that is also the country’s international financial center.

The visit comes at a delicate time. China is experiencing a slump that is casting a shadow over the world economy. Beijing is struggling to turn the page on high youth unemployment, tepid export demand and a crisis-hit property sector.

“This could be dangerous for the global economy because China is such an important contributor to world growth,” said Ilaria Mazzocco, senior fellow in Chinese business and economics at the Center for Strategic & International Studies in Washington.

iPhone ban, advanced tech battle

US-China relations hit a low early this year after President Joe Biden ordered the shootdown of a Chinese spy balloon. That incident further complicated what is already the most important and complicated bilateral relationship on the planet.

Despite criticism from some Republicans, the administration has tried to cool temperatures with Beijing by sending a flurry of officials to mainland China in the past few months, including Secretary of State Antony Blinken, climate envoy John Kerry, Treasury Secretary Janet Yellen and Commerce Secretary Gina Raimondo.

Even after the visits by US officials, Washington and Beijing have continued to throw punches at each other’s economies. Following Yellen’s visit last month, the Biden administration detailed new rules limiting US investments in advanced technology industries in China.

Days after Raimondo’s visit in August, Beijing reportedly banned the use of iPhones by government officials and state-backed firms.

The apparent iPhone ban drove down shares of Apple, America’s most valuable company, raising the difficult question: If Apple, which has deep ties to China, can’t succeed there, who can?

During Raimondo’s trip, China’s Huawei unveiled a new smartphone powered by an advanced chip. The rollout set off alarm bells in the West because the smartphone relies on US technology that American officials had tried to block China from accessing.

Treasury declined to comment on whether Neiman will raise either the iPhone ban or the Huawei smartphone issue with officials during his trip to Hong Kong.

“There are some big issues that are just not going to get resolved anytime soon,” said Mazzocco, the CSIC expert.

‘Avoiding shocks to the system’

Experts say the recent trips by Yellen and Raimondo represented accomplishments, given that the bar for success was set quite low.

“This is more about creating channels of communication and a mutual understanding to avoid crises and unpredictability. It’s about avoiding shocks to the system,” said Mazzocco. “We hit a low earlier this year in US-China relations. But I wouldn’t say it was the bottom. You could always go lower. And there is always a risk of war implicit in any decline in US-China relations.”

Indeed, during a press conference in Beijing in July, Yellen said US officials’ talks with Chinese officials are part of a “broader concerted effort to stabilize the relationship, reduce the risk of misunderstanding.”

Clayton Allen, director for the United States at the Eurasia Group, expects US-China relations will continue to decline. However, he is encouraged that policymakers have been able to manage that decline.

“If US-China relations dropped off a cliff and everything broke off, it would shift to a permanent crisis response,” Allen said. “That would create a situation where everything is demonstrably worse than it is now.”

Nikki Haley: China is the ‘enemy’

Still, some China hawks argue the Biden administration is taking too gentle of an approach toward China.

“China has been practically preparing for war with us for years. Yes, I view China as an enemy,” Republican presidential candidate Nikki Haley told CNN’s Jake Tapper over the weekend. “They keep sending different cabinet officials over, Jake, and it’s embarrassing.”

In response to Haley’s criticism, Deputy Treasury Secretary Wally Adeyemo said it’s “important” for US officials to engage with China because it has the second-biggest economy in the world.

“We’re looking forward to working with China when that is America’s national interest, but also holding them accountable when they take actions that hurt our economy,” Adeyemo told CNN’s Poppy Harlow on Monday.

Andrew King, a venture capitalist and executive director of Future Union, a new bipartisan group that is calling for the private sector to pick democracy over autocracy, said the focus on cabinet officials is misplaced.

“The real issue is the vacillating approach of the American private sector and that of our allies,” said King. “By continuing to invest in China, the private sector is bankrolling a country that poses an existential threat to our system of democratic capitalism.”

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