US, China need ‘healthy economic relations’, Yellen says

United States Treasury Secretary Janet Yellen has stressed the need for “healthy economic relations” between China and the US, while pressing Beijing to crack down on Chinese firms assisting Russia’s war in Ukraine.

Yellen said Washington did not seek to decouple the US and Chinese economies, but President Joe Biden’s administration would not shy away from unilateral action against Chinese firms that supply defence equipment to Moscow.

“We do not seek to decouple our economy from China’s,” Yellen told reporters after a two-day meeting with Chinese Vice Premier He Lifeng in San Francisco.

“This would be damaging to both the US and China and destabilising to the world.”

Yellen said that Treasury has seen evidence of Chinese firms and banks “facilitating” the flow of equipment to Moscow and they would face “significant consequences”.

“We are concerned that in spite of a sanctions programmes that we’ve put in place, that equipment that is critical to Russia’s military effort is nevertheless evading sanctions and being delivered to Russia,” she said, adding that she was not accusing the Chinese government of complicity.

Yellen added that she had accepted an invitation from He to return to China next year as part of a “regular cadence of contact” between the economic leaders.

The meeting came ahead of sit-down talks between Biden and Chinese Premier Xi Jinping, who will travel to San Francisco next week for an Asia-Pacific Economic Cooperation summit of leaders from around the Pacific.

US-China relations nosedived under former US President Donald Trump, who rolled out tariffs and sanctions against Chinese firms to boost domestic manufacturing and punish Beijing over alleged rights abuses.

Ties have remained strained under Biden, who has continued his predecessor’s efforts to restore US manufacturing and throttle Chinese tech firms.

Biden has been taking steps to kick-start a thaw in recent months with a flurry of visits and diplomacy by senior officials.

In January, Yellen had her first face-to-face meeting with former Vice Premier Liu He, and in July she visited China to discuss economic policies and cooperation on climate change and other global challenges.