Yellen, an economist and former Federal Reserve chairwoman, repeated her call for China to “shift to a market-oriented system,” advice that is unlikely to sway Chinese leader Xi Jinping, who has lavished resources on companies state
The Treasury secretary used some of her strongest language yet to reject claims that US plans to reduce its reliance on Chinese suppliers reflected a wider campaign to divide the world into rival blocs. The Biden administration’s restrictions on the sale of advanced computer chips to China, and pending limitations on US investment in Chinese technology development, were “clearly articulated and narrowly targeted” measures designed to protect the national security and not for economic advantage, he said. .
“We know that a decoupling of the world’s two largest economies would be disastrous for both countries and destabilizing for the world. And it would be virtually impossible to undertake,” Yellen said in a roughly 30-minute news conference before beginning her journey home. “We want a dynamic and healthy global economy that is open and free and fair, not one that is fragmented or forces countries to take sides”.
Yellen presented her visit as proof that the Biden administration’s effort to develop a working relationship with China, after years of growing acrimony and drift, was paying off. But the finance chief said no further diplomatic negotiations or dialogue had been agreed.
“President Biden and I do not see the US-China relationship as one of great power conflict. We believe the world is big enough for our two countries to thrive,” Yellen said. “Our discussions are part of a wider concerted effort to stabilize the relationship, reduce the risk of misunderstandings and discuss areas of cooperation.”
Yellen’s talks with members of Xi’s new economic team, which lasted about 10 hours over two days, were “direct, substantive and productive,” he said.
After arriving in the Chinese capital on Thursday, Yellen engaged in talks with Chinese Premier Li Qiang and other senior officials, including Vice Premier He Lifeng, who is in charge of the economy and foreign trade.
He also spent time with a group of Chinese economists, climate activists and representatives of the American business community.
His visit came as the two governments try to stabilize an important trade relationship that has been strained a widespread lack of confidence. Yellen sought to reassure Beijing that while the United States is moving to reduce its reliance on Chinese suppliers for vital goods such as critical materials, electric vehicle batteries and semiconductors, it does not want an economic meltdown.
China is openly skeptical of Yellen’s argument for “de-risking,” which it sees as a polite term for a global economic decoupling it fears will add to its domestic economic woes.
After growing rapidly in the first months of the year after the easing of coronavirus controls, China’s economy has faltered in recent weeks. Consumers are not spending as freely as expected in the post-pandemic period, and export orders have disappointed.
While Yellen began to develop a rapport with He during approximately six hours of talks, there are additional disputes. The Biden administration is expected to unveil as soon as this month new restrictions on US investment in advanced Chinese technology sectors that Washington says could harm national security.
Chinese officials have complained that the restrictions, which would affect technologies such as artificial intelligence and quantum computing, would slow their economic progress.
“I want to allay their fears that we would do something that would have broad impacts on the Chinese economy. That’s not the case. That’s not the intent,” Yellen said.
Yellen said her visit succeeded in reviving direct economic dialogue between the two economies. More Biden cabinet officials, including the president’s special climate envoy John F. Kerry, are also expected to visit Beijing soon.
Even so, official interactions are below the levels reached in previous years. During the George W. Bush administration, the two nations engaged in a strategic economic dialogue involving dozens of senior officials meeting twice a year.
The Obama administration later renamed that effort, but routine high-level talks continued apace.
On Sunday, Yellen said only that her staff and those of their Chinese counterparts are expected to be in contact more regularly.
“No visit will solve our challenges overnight. But I hope this trip will help build a resilient and productive channel of communication with China’s new economic team,” Yellen said. “My hope is that we can move into a phase of our relationship where high-level diplomacy is simply taken as a natural element of managing one of the most important bilateral relationships in the world.”
