Treasury Secretary calls for a ‘constructive, fair and equitable’ economic relationship in Washington as it moves to repair frayed relationsUS Treasury secretary Janet Yellen has warned any effort to decouple from China would be “disastrous”, saying national security measures targeted at Beijing were not designed to “stifle” the Chinese economy.
In a major address on Thursday, Yellen urged a “constructive” and “fair” economic relation between China and the US as Washington sought to repair the badly fraying relationships between the two economic powerhouses.
The Treasury Secretary said, “The US will assert itself when our vital interest is at stake.” “But we don’t want to ‘decouple our economy’ from China’s.” It would be disastrous to both countries if we completely separated our economies. “It would destabilise the rest of world.”
After two months of efforts to reduce tensions, a suspected Chinese spies balloon was seen flying over the US.
Beijing claims Washington is limiting Beijing’s ability to develop an advanced semiconductor industry. The US, it claims, is also helping Taiwan resist the long-term US plan to control the island.
Chinese officials are privately annoyed that their US counterparts use critical language in speeches purporting to improve relations.
Yellen, however, said that both countries should be able discuss “difficult topics” in a candid manner.
She added that “negotiating engagement contours between great powers can be difficult.” “But if China also wants to do its part, we can find the way forward.”
The Treasury Secretary called for a healthy economic relationship and cooperation on macroeconomics, climate change and other issues. She also said that the US would work with its allies to oppose Beijing’s unfair economic policies.
She said China’s recent decision to shift from market reforms towards a more government-driven approach “undermined its neighbours and other countries around the world”.
She added that, “Even though our targeted actions may have an economic impact, they are solely motivated by our concerns about security and our values,” she said, maintaining the US wasn’t trying to undermine China. “Our goal isn’t to use these tools in order to gain a competitive economic advantage.”
Yellen referred to controls on semiconductor exports as an example of a step that was “vital”, but not “designed”. She argued the need to protect certain technologies against the Chinese military. . . “to stifle China’s economic and technology modernisation”.
She also indicated that the US was preparing additional measures likely to anger Beijing. She stated that the administration was examining a program to “restrict certain US investments in sensitive technologies with important national security implications”.
The tensions between the US, China, and Taiwan have increased sharply in recent years, especially over Taiwan. Washington is becoming more concerned with assertive Chinese military activities.
The two presidents met in November at the G20 and agreed to establish a “floor” for the relationship. They discussed high-level meetings that would begin with Antony Blinken visiting Beijing, Secretary of State, in February.
The plan was thrown off course after the spy balloon appeared above the US, and Blinken cancelled the visit.
Beijing has refused to reschedule the trip, citing fears that the FBI could soon publish a report about the balloon. In a rare sign of optimism, two senior officials from the Commerce Department, including China expert Elizabeth Economy travelled to Beijing this month for discussions about a possible later-in-the year visit by Gina Raimondo.
Yellen, despite her criticisms, said that she would travel to China at the “appropriate time”.
She also urged China to join Washington in helping emerging markets and developing countries with debt problems. She said that China’s involvement is crucial for meaningful debt relief. “But it has been too long since China moved comprehensively and in a timely manner.” It was a roadblock for necessary action.”
The Chinese Embassy in Washington stated that economic cooperation was mutually beneficial, and “shouldn’t be a zero sum game”.
“China is not afraid of competition or shrinks from it.” We oppose, however, the definition of all China-US relations as competition. We oppose the generalisation concept of national safety.