The two days of bilateral meetings kicked off in San Francisco, where the Asia-Pacific Economic Cooperation (APEC) summit is set to begin this weekend.
The gathering is due to be the backdrop for a long-anticipated meeting between US President Joe Biden and Chinese leader Xi Jinping, expected to take place on November 15, sources have told AFP.
On the agenda for the Treasury secretary and He, Beijing's lead for US-China economic and trade affairs, are concerns about a level playing field for businesses, cooperation on climate change and debt distress, alongside "the use of economic tools for national security purposes," Yellen said in opening remarks.
"The United States will continue to take targeted actions to protect our and our allies' national security," she added ahead of the bilateral talks.
"But we are also committed to communicating clearly about these actions to prevent any misunderstandings or miscalculations," she added.
"And we welcome more clarity on China's thinking and actions."
- 'Mutual understanding' -
In opening remarks, He told Yellen that Xi has had multiple meetings with US representatives visiting China, charting the course for bilateral relations.
"Maintaining frequent exchanges and interactions between China and the United States is of great significance to deepening our mutual understanding," he added.
He also lauded progress made by economic and financial working groups set up shortly after Yellen's visit to Beijing in July.
He expressed hopes for in-depth discussions on economic issues involving both countries, and the global economy, adding he also planned to communicate China's "key economic concerns."
While the governments of both countries have not yet publicly confirmed the Xi-Biden meeting, they have given wide indications that they expect it to take place.
White House Press Secretary Karine Jean-Pierre said on October 31 that Washington hoped for a "constructive conversation in San Francisco" between the two presidents.
A Chinese foreign ministry spokesman told reporters Wednesday that both sides "have agreed to work together for the meeting between the two Presidents in San Francisco."
This would mark the first meeting between Biden and Xi since talks in November 2022 in Bali.
- 'Show of goodwill' -
Analysts expect few breakthroughs from this week's meetings between the finance chiefs.
"We're sort of in the aftermath of a tit-for-tat exercise," said Thibault Denamiel, associate fellow at the Center for Strategic and International Studies.
He noted a recent US extension of semiconductor export control rules, alongside Chinese restrictions on graphite exports, among other issues.
"I'm expecting a rhetorical show of goodwill between the Chinese and the United States, including between Xi and Biden," he added.
But this will come with an "underlying understanding that economic security policies are here to stay," he told AFP.
Chinese foreign ministry spokesman Wang Wenbin warned Wednesday the "road to San Francisco is not smooth," saying both sides should "eliminate interference and overcome obstacles" and seek consensus.
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