The Biden administration is sending a delegation of senior Treasury Department officials to Beijing this week for a round of economic talks, as the world's largest economies look to continue the engagement efforts that President Biden and his Chinese counterpart, Xi Jinping, agreed to last year were to strive for.

A Treasury official, speaking on condition of anonymity because the trip has not been publicly announced, said the two days of meetings would include “frank discussions” about China's use of non-market economic practices such as government subsidies. U.S. officials also plan to discuss concerns about industrial overcapacity, which could flood international markets with cheap products.

They will also discuss ways to solve public debt burdens that are weighing on low-income countries and preventing some of those countries from investing in sustainable development and climate initiatives. China is one of the world's largest creditors and has faced international pressure for concessions that would enable a global effort to restructure hundreds of billions of dollars of poor countries' debt.

More broadly, the two governments will discuss the macroeconomic prospects for their countries, whose economies are critical to the health of the overall global economy. The United States appears to be the most resilient economy in the world. China, meanwhile, continues to be plagued by a financial sector struggling to control vast amounts of local government debt, a volatile stock market and a real estate crisis.

Last week, the International Monetary Fund forecast in its latest economic outlook that China's economy would grow 4.6 percent in 2024, a faster pace than previous projections. But it also called on China to make longer-term structural changes to its economy, such as overhauling its pension program and reforming its state-owned enterprises, to prevent its output from slowing more dramatically.

“Without these reforms, there is a risk that Chinese growth would fall below 4 percent,” IMF Managing Director Kristalina Georgieva told reporters last Thursday.

The US and Chinese officials will also discuss mutual efforts to combat climate change and the mechanisms of investment screening programs that create new economic barriers between the two countries.

The revival of a formal economic dialogue structure is intended to prevent misunderstandings between the United States and China from turning into economic warfare.

The five-member Treasury Department group will be led by Jay Shambaugh, the department's assistant secretary for international affairs. It is the first such meeting in Beijing of the economic working group set up last September. In January, a group of Treasury Department officials with a focus on financial issues held talks in Beijing.

The visit could pave the way for a second trip to China by Treasury Secretary Janet L. Yellen, who traveled to Beijing last summer.

The Biden administration has sought to convince Chinese officials that President Biden's efforts to diversify U.S. supply chains outside China are not intended to harm Beijing's economic development.

The Treasury official declined to comment on specific concerns Mr. Shambaugh would raise with his colleagues during the trip. But Biden administration officials have continued to complain about China in recent months subsidies for its domestic industries And discrimination against foreign competitors.

In a speech to the US-China Business Council in December, Ms Yellen lamented that China continues to use unfair economic practices, restrict access to foreign companies and put pressure on US companies.

“For too long, American workers and companies have been unable to compete on a level playing field with those in China,” Ms. Yellen said.

While the increased engagement appears to have softened some of the public displays of tension between the United States and China, it is unclear how much progress is being made on the ground.

The Biden administration moved forward last August with plans to implement new rules to restrict U.S. investment in certain Chinese sectors that the United States considers national security risks. Two months later, China announced it would restrict exports of graphite, a key component of electric vehicle batteries.

But the two countries say they want to continue exploring areas of cooperation.

“These trips are of significant importance in preventing a further escalation of hostilities, especially as US election rhetoric increases,” said Eswar Prasad, a professor at Cornell University and former head of the International Monetary Fund's China division. “I think both sides are very keen to prevent any further escalation of hostilities.”

Treasury Secretary Janet L. Yellen will hold two days of high-level meetings this week with her Chinese counterpart, Vice Prime Minister He Lifeng, as the United States and China look to build on an effort begun earlier this year to improve communications between the the two largest economies in the world.

The meetings will take place on Thursday and Friday in San Francisco, ahead of the Asia-Pacific Economic Cooperation summit, which starts on Saturday. The meetings will help lay the groundwork for expected summit talks between President Biden and top Chinese leader Xi Jinping. The Treasury Department said the United States hoped Ms. Yellen’s meetings would “further stabilize the bilateral economic relationship” and make progress on key economic issues.

The revival of economic diplomacy between the two countries comes at a fraught time for the global economy, which is struggling with slow manufacturing and wars in Ukraine and the Middle East.

A senior Treasury official said the Biden administration continued to seek a better understanding of China’s economic policies. Ms. Yellen is expected to talk to Mr. He on issues such as debt relief for developing countries and financing international efforts to combat climate change. The discussions also aim to clear up any misunderstandings arising from recent national security actions taken by the Biden administration, such as restrictions on investments Americans can make in Chinese industries.

The talks in San Francisco follow Ms Yellen’s visit to Beijing in July. After that visit, the Treasury Department established financial and economic working groups to promote more regular dialogue between the United States and China.

As Treasury Secretary, Ms. Yellen has sought to help the United States diversify its supply chains so that it relies more on allies and domestic manufacturing and less on China, which has worked similarly over the past decade to become less dependent on imports .

In a speech to the Asia Society last week, Ms. Yellen said the United States would continue to respond to Chinese economic practices while seeking ways to cooperate where possible. But she also made clear that she opposed efforts to sever economic ties with China.

“A complete separation of our economies, or an approach that forces countries, including those in the Indo-Pacific, to take sides, would have significant negative global consequences,” Ms. Yellen said. “We have no interest in such a divided world and its disastrous consequences.”

Ford Motor and its battery manufacturing partner will receive a $9.2 billion loan to build three battery plants in Kentucky and Tennessee, the Department of Energy said Thursday. The loan would be the largest financial commitment the Biden administration has made in its effort to build an electric vehicle manufacturing network in the United States.

The loan will go to a joint venture set up by Ford and its partner SK On called BlueOval SK, which will supply batteries for Ford and Lincoln electric cars and trucks. The plants, one in Tennessee and two in Kentucky, will employ 7,500 people and will be among the largest such plants built by auto and battery companies nationwide, especially in the Southern states.

President Biden aims to have half of new cars sold in the United States be electric by the end of the decade, up from about 7 percent in the first three months of this year. By helping to fund battery factories, the government hopes to ensure that the United States does not become dependent on China for batteries and their components. The government also hopes that the new factories will compensate for the loss of jobs in conventional car manufacturing.

This is an evolving story. Check back later for updates.

Government bonds were at the heart of the debt ceiling drama.

For decades, they were seen as the ultimate safe asset – the foundation of the global financial system. But as the deadline approached for an agreement to avert a US debt burden, Treasury bills due in early June were priced as nearly the equivalent of junk bonds.

In the market for credit default swaps, government bonds were suddenly considered riskier than the government debt of countries such as Mexico, Bulgaria and Greece.

But in the nick of time, President Biden and Chairman Kevin McCarthy reached an agreement to suspend the debt ceiling. The Senate on Thursday gave final approval to legislation to ensure that the treasury does not run out of money.

So the United States has averted formal bankruptcy, after another wild, nerve-racking ride. What should wary investors take away from this disaster close call?

Paradoxically, the best answer may be exactly what it was before this crisis: buy Treasuries for safety.

That has been the tried and true solution for investment agita in the past. And it will probably – though not certainly – be the solid answer to some fundamental investment problems now and for the foreseeable future.

The Enduring Attraction of Treasury Bills

Numerous crises in the United States and abroad have seen investors flock to the $24 trillion Treasury market just about whenever they needed a refuge.

For starters, it’s the deepest market in the world. Even with the sanctions and tariffs and money laundering controls imposed by the United States over the past few decades, the U.S. Treasury market remains quite open and easily accessible by international standards. If you want to buy and sell securities quickly, painlessly and at a low cost, government bonds and the US dollar have been very good bets. No other global asset class offers the same benefits.

The most important feature of Treasuries is the one that was so obviously vulnerable during the debt crisis: security and stability. Treasury bonds have often been a balm. If all else seemed unsafe, you could count on getting your money back if you put it in a government bond and held it to maturity.

Even now, the “full faith and credit of the United States” has never been violated. It is guaranteed by the Constitutionby the country’s long history as a stable country governed by law and by the combination of economic, military, and political power that has made the United States unique.

The big caveat

If you can rely on anything on this planet since World War II, it’s the United States’ ability to pay its bills.

But every time the United States faced a debt-ceiling stalemate, that assumption seemed naive. It has never been a question of whether the country has sufficient resources. What is in doubt is whether the political system would function well enough for the US government to raise enough money to continue operating.

Whenever debt negotiations broke down, they were resolved without default—and eventually the Treasury market bounced back.

Such rallies are typically what happens when world crises upset the volatile stock market and investors seek refuge. Taking refuge in Treasuries makes sense when the crisis is abroad – as was the case in the early stages of the crisis BrexitFor example.

Putting money into Treasuries when the crisis comes from the United States may be counterintuitive, but it’s been done many times before. It’s “Ghostbusters” logic: where else do you go?

In 2011, for example, a protracted debt limit dispute nearly ended in bankruptcy and led to Standard & Poor’s downgrading the original AAA rating of US debt. Nevertheless, Treasuries recovered, even though they were the cause of the problems in the financial markets.

Now that the threat of default has passed, Treasuries are likely to resume their role as a haven in a storm this time around.

This may have the air of inevitability, but it was not certain.

The cracks that emerged in May in the Treasury and credit default swap markets were real, and many contingency financial plans contained a small probability of a major event: a US default. There could be further downgrades of US debt as the country’s politics become increasingly unmanageable and dysfunctional, and skepticism about the soundness of Treasuries could further diminish their luster. Financial services firms such as Goldman Sachs and MSCI included government bond bear markets in their low-probability, high-risk scenarios for the latest crisis.

The Bond prospects

For now, however, the outlook for the Treasury market looks quite rosy. Recall that on May 24, yields on Treasury bills due early June shot above 7 percent, a sign that traders were demanding a hefty risk premium to buy them. Those revenues fell below 6 percent after Memorial Day, according to data from FactSet. Prices, which are moving in the opposite direction to yields, soared. And in the credit default market, the price of Treasury underwriting has fallen to about one-seventh of its peak during this latest crisis.

Besides the debt ceiling, other factors dominate the bond market. The main ones are the Federal Reserve’s long struggle to control inflation through tightening monetary policy, the possibility of a recession and the pressure on regional banks from rising interest rates.

Will the Fed hike short-term rates at its next meeting in June? Traders are now bet that it won’t happen. In addition, many indicators indicate that a recession is imminent.

Those factors make the case for bonds – both high quality corporate bonds and government bonds – quite compelling. Bond yields have already risen sharply over the past year and those yields are a reasonably good predictor of bond market returns. Remember, if you hold Treasury bills for an entire year, you can count on a return of more than 5 percent, which is a high threshold for riskier investments. Compared to equities, short-dated government bonds are attractive.

The case is slightly less strong for longer-term bonds, as their yields are lower. In bond market jargon, the yield curve is inverted. That suggests traders are expecting a recession, in which the Fed would be forced to cut short-term interest rates to stimulate the economy.

Recessions are typically bad for most people — and for the stock market — but they’re usually great for government bonds, because investors will seek their old reserve-safe assets, and as market yields fall, Treasury prices rise.

In short, the past few weeks have threatened Treasuries. The risks of holding these supposedly risk-free assets have become all too apparent of late. But with any luck, government bonds will likely emerge from a debt crisis as they essentially always have been. In a world where nothing is completely safe, treasury bills remain a relatively safe place to park your money.

Treasury Secretary Janet L. Yellen said Friday that the United States could run out of money to pay its bills on time by June 5. debt limit.

The letter provided the most specific timeline yet for when the United States could run out of money and offers a little wiggle room from the June 1 date that many thought was the so-called X-date.

Ms. Yellen’s letter comes as the White House and House Republicans scramble to agree on a deal that would lift the country’s $31.4 trillion borrowing ceiling and prevent the United States from default on their debts. The Treasury Department reached the debt limit on Jan. 19 and has since employed accounting maneuvers to ensure the United States continues to pay its bills on time.

For months, Ms. Yellen warned lawmakers that the US could run out of cash to pay all its bills on time, starting in June and as early as June 1. more than $130 billion in scheduled payments during the first two days of June — including payments to veterans and Social Security and Medicare recipients — leaving the Treasury Department with “an extremely low level of resources.”

“The failure of Congress to raise the debt limit would cause serious problems for American families, damage our global leadership position and raise questions about our ability to defend our national security interests,” Ms. Yellen wrote.

Although negotiators are in talks 24 hours a day, no deal has yet been announced. Still, the contours of an agreement between the White House and Republicans are beginning to take shape. That deal would raise the two-year debt limit while imposing strict limits on discretionary spending not related to the military or veterans for the same time period.

While officials have been negotiating, the federal government is fuming. The cash balance of the Ministry of Finance fell to $38.8 billion on Thursday, when the United States was running out of cash to meet its financial obligations.

The tight deadline is warning lawmakers that a deal must be struck quickly.

“We have to be in the closing hours because of the timeline,” said Representative Patrick McHenry, a North Carolina Republican involved in the talks. “I don’t know if it’s in two or three days, but it has to come together.”

Biden administration officials continued to downplay the possibility that the Treasury Department could continue to avoid a default beyond the so-called X-date by prioritizing payments to bondholders. They also rejected provocative moves, such as invoking the 14th Amendment as a way to continue borrowing, and instead reiterated calls for Congress to lift the debt limit.

“Congress has the ability to do that, and the president is urging them to act on that as soon as possible,” Wally Adeyemo, the deputy secretary of the treasury, told CNN Friday.

Ms. Yellen said earlier this week that she would try to include more precision in her future updates on when a default might occur. Some House Republicans questioned whether bankruptcy could really be approaching that quickly, and they have called on the Treasury Secretary to appear before Congress and present her full analysis.

Luke Broadwater reporting contributed.

The Treasury Department’s cash balance fell to just under $49.5 billion on Wednesday, as the United States was running out of money to pay its bills.

That was significantly less than the $316 billion the division had in operating cash held at the Federal Reserve Bank of New York, at the beginning of the month.

How empty is the treasury really? By comparison, $49.5 billion is comparable to the gross national product of Azerbaijan and Tunisia and below the wealth of the two dozen richest people in the world. Of course, many of those billionaires’ assets are tied up in stocks, rather than cash.

Here’s a list of people with wealth in excess of US cash reserves, according to The Bloomberg News Billionaire Index starting Thursday. (According to the news agency’s editorial policy, the billionaire owner, Michael Bloomberg, is not eligible for the index. Forbes, however, estimate his ability for $94.5 billion.)

• Bernard Arnault, CEO of the luxury conglomerate LVMH: $189 billion

• Elon Musk, CEO of SpaceX, Tesla and Twitter: $179 billion

• Amazon founder and CEO Jeff Bezos: $139 billion

• Bill Gates, co-founder of Microsoft: $125 billion

• Larry Ellison, co-founder and executive chairman of Oracle: $116 billion

• Steve Ballmer, investor and former CEO of Microsoft: $113 billion

• Larry Page, co-founder of Google: $112 billion

• Warren Buffett, investor: $111 billion

• Sergey Brin, co-founder of Google: $106 billion

• Mark Zuckerberg, co-founder and CEO of Facebook: $92.3 billion

• Carlos Slim, investor: $90.3 billion

• Françoise Bettencourt Meyers, heiress to the L’Oréal fortune and board member of the company: $87.2 billion

• Mukesh Ambani, chairman of energy group Reliance Industries: $83.7 billion

• Amancio Ortega, founder of the fashion group Inditex: $67.1 billion

• Jim Walton, heir to the Wal-Mart fortune: $66.6 billion

• Rob Walton, heir to the Wal-Mart fortune: $64.9 billion

• Alice Walton, heir to the Wal-Mart fortune: $63.8 billion

• Gautam Adani, founder and chairman of conglomerate Adani Group: $63.4 billion

• Jacqueline Mars, heiress and co-owner of the candy maker Mars: $61.7 billion

• John Mars, heir and chairman of Mars: $61.7 billion

• Zhong Shanshan, founder and chairman of Nongfu Spring bottled water company: $61.6 billion

• Julia Flesher Koch and family, heirs of businessman David Koch: $60.6 billion

• Charles Koch, CEO of industrial conglomerate Koch Industries: $60.4 billion

• Michael Dell, CEO and Chairman of Dell Technologies: $53.4 billion