Treasury Secretary Janet Yellen said Thursday that the U.S. wants “constructive and fair” commercial relations with China but will defend its national security and oppose Chinese attempts to dominate international competitors.
Yellen spoke at Johns Hopkins University’s School of Advanced International Studies about the Biden administration’s goals for an “essential” economic relationship between the world’s two largest economies as China becomes more antagonistic toward the U.S. and its allies.
“Our relationship is clearly at a tense moment,” Yellen stated. “My goal is to be clear and honest, cut through the noise, and speak to this essential relationship, based on sober realities.”
She said she would fly to Beijing “at the appropriate time” to meet with her new Chinese counterparts to “responsibly” handle the relationship, but Treasury provided no details.
Yellen spoke amid rising tensions and pessimism in the U.S.-China relationship over national security issues like Taiwan, Russia’s war in Ukraine, U.S. export limits on advanced technologies, and China’s state-led industrial policy.
Last week, IMF Managing Director Kristalina Georgieva warned that supply chain “friend-shoring” might lead to a new Cold War that would slow the global economy.
Yellen argued that the U.S. would remain the world’s economic leader in wealth and technology despite China’s decreasing GDP output. She said a developing China that obeyed global rules was good for both countries.
She called China’s “no limits” partnership with Russia “a worrisome indication that it is not serious” about ending Russia’s war against Ukraine.
She warned that “severe” consequences would follow if China and other countries helped Russia evade sanctions.
Scott Kennedy, a China expert at the Center for Strategic and International Studies in Washington, said Yellen’s remarks were the most comprehensive articulation of the Biden administration’s China strategy, marking a shift from “fatalism” and “great power competition” that has characterized the relationship.
“This is no call to return to the previous policies of unconditional engagement,” Kennedy stated. “It was quite tough and unapologetic about U.S. efforts to defend national security and human rights.”
Yellen said the government wanted “healthy competition” and cooperation on global issues, including climate change, debt relief, and macroeconomic stability. Still, China was a “roadblock” to debt restructuring for impoverished nations.
Yellen said Washington would explicitly express its worries about China’s expanding backing for state-owned companies and domestic corporations to dominate global competitors and “aggressive” efforts to steal American technology, particularly intellectual property.
She stressed that Washington’s measures against China were for national security, not commercial benefit.
She added that the Biden administration did not want a “winner-take-all” rivalry and believed that fair economic competition might benefit both countries over time.
Sports teams do better against top opponents. “Competition makes companies make better, cheaper products,” she remarked.
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