Next week, Treasury Secretary Janet Yellen will visit Vietnam and India in an effort to deepen ties with two strategically significant US allies and boost economic resilience through diversified supply chains.
According to a senior Treasury official, Yellen will first travel to Gandhinagar, India, for a meeting of the heads of the Group of 20 central banks and finance institutions. There, she will advocate for reforming international lending institutions to increase the size and scope of their firepower and for advancing discussions on easing the debt burden for poorer countries.
In an effort to improve trade and economic ties with China’s enormous neighbour, the US finance minister will travel to India for the third time in nine months.
The Treasury said in a statement that Yellen will use her G-20 participation “to help enhance our already strong partnership” and that she will “emphasise the necessity of deepening” ties with the nation.
The next stop for Yellen is Vietnam, where she will meet with top government officials and business leaders.
Increase ties
Although the G-20 summit is the main reason for the trip, both stops are part of Yellen’s larger “friend-shoring” initiative, which holds that the US should improve its trade ties with reliable allies in order to support global supply chains, lessen reliance on a small number of countries for essential components, and protect the economy from geopolitical risks.
Yellen’s most recent trip follows her historic trip to China last week, which was her first as Treasury secretary and aimed to restore communication channels and reduce tensions between the two largest economies in the world.
In Beijing, Yellen emphasised again and time again that the US is not looking to cut ties with China but rather to diversify supply chains in key sectors to safeguard its national security. Even while both sides characterised their discussions as fruitful, the two sides are still embroiled in a furious struggle that has led to both countries placing additional limits on access to vital technologies – or considering doing so.
Money Talks
The central bank governors and finance ministers of the Group of 20 meet in India on July 17–18 with the goal of advancing efforts to increase the funding of multilateral development banks. Additionally, they aim to promote increased financial flows to solve issues like climate change on a worldwide scale.
A initiative to broaden the mission of the World Bank has Yellen’s support. She wants all the multilateral development banks to support international initiatives that address global concerns like pandemics and climate change in addition to country-by-country projects.
According to US estimates, these lenders might collectively free up to $200 billion over the course of the next ten years by making changes, the Treasury source said.
Debt Trouble
According to the official, Yellen will also discuss financial distress during the talks and will call on all formal bilateral creditors, including China, to wrap up ongoing debt-restructuring issues.
The first significant relief achieved by a developing nation under the G-20’s Common Framework, which joins the traditional creditor nations of the Paris Club around the same bargaining table with China and India, was an agreement to restructure Zambia’s debt last month.
The fact that not all debtor nations will be present makes it unlikely that any specific pending matters will be resolved during these meetings.
More broadly, reaching consensus at the G-20 — which brings together geopolitical rivals — can be tricky.
India, which is leading the G-20 on a rotating basis this year, was unable to secure a joint statement or even a chair’s statement of summary at the most recent finance conference in April, reflecting the group’s severe differences in a group that also includes Russia.
The chair’s statement in February had reaffirmed G-20 language from the previous year and mentioned that a United Nations resolution had been passed condemning Russia’s invasion of Ukraine.
Vietnam Travel Route
On July 20, Yellen will meet with Nguyen Thi Hong, the governor of the central bank, in Hanoi. She intends to “express pleasure” over the work the two countries have done to address issues with Vietnam’s foreign exchange management.
Vietnam was labelled as a currency manipulator by the US under the Trump administration in 2020, a designation that the Biden team revoked.
The extensive economic ties between the US and Vietnam “help develop greater economic resilience” through friend-shoring, she would emphasise in a bilateral meeting with Prime Minister Pham Minh Chinh. On July 21, she had a meeting with Finance Minister Ho Duc Phoc.
The head of the US Treasury will also meet with Tran Tuan Anh, the chair of the Communist Party of Vietnam’s Central Economic Committee, and participate in a debate with female economists.
