US Treasury Secretary Janet Yellen has concluded a four-day state visit to Beijing to improve US-China relations during a continuing trade war. 

In a press conference on the final day (8th July) Yellen emphasised the need for “healthy economic competition” between the two countries. Yellen stressed that the US was not “decoupling” from China, but instead seeking to “diversify critical supply chains.”

However, GlobalData analyst Michael Orme remains sceptical that Yellen’s trip will “still the guns in an escalating chip war between the US and China.” 

Yellen’s visit comes during an ongoing trade war between the US and China, with the US passing its CHIPS Act in August 2022. The act prohibits US semiconductor manufacturers from expanding into China as well as limiting exports of Chinese-made semiconductors. The $53bn Act is an attempt to sever US dependence on foreign-made semiconductors that are vital for AI development. 

Despite the Treasury Secretary’s claims that the US and China share an “obligation to responsibly manage this relationship”, Orme explains the trip leaves the trade war with new battle lines being drawn up between “the global chip industry versus Washington and its political allies.” 

Just days before Yellen’s visit, China announced on the 3rd of July that it would restrict exports on gallium and germanium, critical minerals needed by the US to produce semiconductors. 

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By GlobalData

In a 2023 GlobalData survey, 25.3% of respondents cited potential shortages of critical parts arising from the semiconductor crisis as a major business concern. This concern is expected to grow as Orme cites the “weaponisation of US chip technology” leaves semiconductors at the front and centre of trade war. 

The US is also under growing scrutiny from the leaders of the tech industry. 

CEO and founder of NVIDIA, Jensen Huang, warned of the “enormous damage” the ongoing trade war could have the US tech in conversation with the Financial Times

Yellen’s visit will add mounting pressure on President Biden and Xi Jinping’s meetings at the upcoming 2023 G20 Leaders Summit.