The US seeks “constructive and fair” economic ties with China, but will protect its national security interests and push back against Chinese actions to dominate foreign competitors, Treasury Secretary Janet Yellen has said.
Speaking at Johns Hopkins University’s School of Advanced International Studies on Thursday, Yellen laid out the principal objectives of President Joe Biden’s administration for what she called an “essential” economic relationship between the world’s two largest economies, as China strikes a more confrontational posture toward the United States and its allies.
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“Our relationship is clearly at a tense moment,” Yellen said. “My goal is to be clear and honest, to cut through the noise and speak to this essential relationship, based on sober realities.”
She said she intended to travel to Beijing “at the appropriate time” to meet with her new Chinese counterparts to help “responsibly” manage the relationship, but Treasury offered no details on the timing of a trip.
Yellen made her remarks amid heightened tensions and pessimism in the US-China relationship over national security issues, including Taiwan, Russia’s war in Ukraine, growing US export bans on advanced technologies and China’s state-led industrial policies.
International Monetary Fund Managing Director Kristalina Georgieva warned last week that such tensions and supply chain “friend-shoring” could spill into a new Cold War that would stunt global growth.
Yellen on Thursday was unapologetic about the US position as the world’s largest and most dynamic economy, leading in areas ranging from wealth to technological innovation, but said a growing China was in the interest of both countries, as long as it followed global rules.
She took aim at China’s “no limits” partnership with Russia, calling it “a worrisome indication that it is not serious” about ending Russia’s war against Ukraine.
“It is essential that China and other countries do not provide Russia with material support or assistance with sanctions evasion,” she said, warning that the consequences of any violations would be “severe”.
Yellen said the Biden administration’s economic priorities on China included securing US national security interests, fostering “healthy” competition and cooperating, where possible, on global issues such as climate change, debt relief and macroeconomic stability.
But she said Washington would clearly communicate its concerns about China’s increased support for state-owned enterprises and domestic private firms to dominate foreign competitors, as well as its “aggressive” efforts to acquire new know-how, including through intellectual property theft and “other illicit means”.
Yellen also said the US would not compromise on national security interests and democratic values, even when they forced economic trade-offs. She underscored that Washington’s actions against China were motivated solely by these concerns, and the goal was not to gain a competitive economic advantage.
At the same time, she said the Biden administration was not seeking a “winner-take-all” competition, and believed that healthy economic competition with a fair set of rules could benefit both countries over time.
“Sports teams perform at a higher level when they consistently face top rivals. Firms produce better and cheaper goods when they compete for consumers,” she said.
She also urged China to make good on its vow to work with the US on macroeconomic issues and urgent global challenges such as climate change and debt distress.
“More needs to be done,” Yellen said. “We call on China to follow through on its promise to work with us on these issues – not as a favour to us, but out of our joint duty and obligation to the world.”