Yellen says bid to untie from China would be ‘disastrous’
Treasury Secretary Janet L. Yellen said on Tuesday it would be a mistake for the United States to try to “decouple” from China and called for deepening economic ties between the world’s two largest economies.
The comments came as the Biden administration attempted to improve relations with China, which suffered a setback this year when a Chinese surveillance balloon was found by the United States. Secretary of State Antony J. Blinken plans to travel to Beijing next week, and Ms. Yellen hopes to make a trip there soon.
Speak to one Hearing of the House Financial Services Committee on Tuesday, Ms Yellen made it clear that she believes the economic relationship with China is critical.
“I think we and China benefit from trade and investment being as open as possible, and it would be disastrous for us to try to disengage from China,” Ms Yellen said.
The United States is enforcing tariffs the Trump administration has imposed on billions of dollars in Chinese imports, and the Biden administration is developing new restrictions on how US companies can invest in China. But Ms Yellen said the United States only intended to “risk” the relationship and had no intention of causing economic harm to China.
“I certainly don’t think it is in our interest to suppress the economic progress of the Chinese people,” Ms Yellen said. “China has managed to lift hundreds of millions of people out of poverty, and I think we should applaud that.”
While striking a compliant tone, Ms. Yellen also expressed concerns that would likely arise during meetings with her Chinese counterparts.
Due to national security concerns, she said, the government is considering restrictions on investments by US private equity firms in Chinese companies linked to the Chinese military. She also said that the Ministry of Finance is looking into additional sanctions against China in response to human rights abuses against Uyghurs in Xinjiang.
In recent months, the United States has stepped up pressure on China to provide debt relief to Zambia and other developing countries. Ms Yellen lamented that despite some signs of willingness to cooperate and help poor countries avoid defaults, China had not done enough. She emphasized a growing need for international financial institutions such as the World Bank and International Monetary Fund to help the most fragile economies.
“These institutions reflect American values,” Ms. Yellen said. “It serves as an important counterweight to non-transparent, unsustainable lending from others, such as China.”
When asked about Ms Yellen’s comments on Tuesday, Wang Wenbin, a spokesman for China’s foreign ministry, rejected the idea that the IMF or World Bank is meant to advance US interests.
“The IMF is not the United States IMF, and neither is the World Bank for that matter,” he said.