Xi warns Blinken against 'vicious competition' between US, China

The U.S. is rallying the European Union to forge a common front against China’s industrial policy, with Treasury Chief Janet Yellen warning leaders in Beijing this month that its cheap exports were a concern for the world — a sentiment German Chancellor Olaf Scholz repeated on a trip to the Asian nation days later.

Yellen also raised the prospect of fresh sanctions on Chinese financial institutions that the U.S. says are helping to prop up Russia’s defense industrial base, with the U.S. reportedly already drafting such measures.

Blinken touted to Xi the progress made on military communication, after both nation’s defense ministers recently held their first call, as well as counter-narcotics cooperation. He also urged Beijing to use its influence to press Iran and limit conflict in Middle East during meetings with Chinese leaders.

Other flashpoints in the relationship such as peace around self-ruled Taiwan, which the Chinese Communist Party considers its territory, and Beijing’s “dangerous” military activity in the South China Sea also featured in talks, according to the U.S. readouts.

Blinken devoted half of his trip to more relaxed engagements in Shanghai on Thursday. Those included attending a basketball game, eating dinner at a dumpling restaurant, taking a stroll along the colonial-era riverfront and addressing U.S. and Chinese students at a local New York University campus.

Few concrete deliverables were expected from the U.S. diplomat’s trip. But overall it showed the two countries both want to avoid an escalation of conflict, said Allen Carlson, associate professor in Cornell University’s Department of Government.

“They have also tacitly acknowledged that as a result of their ongoing economic interdependence that they also still need each other,” he added. “But beyond such general points there is little that they agree on.”

—With assistance from Lucille Liu, Josh Xiao, Colum Murphy and Siuming Ho.