US Treasury Secretary Janet Yellen calls for better economic relations with China
- ‘China and the United States can and need to find a way to live together and share in global prosperity,’ she says at Johns Hopkins University
- She adds that Washington remains committed to defend its interests but has no intention of using trade tools to stifle China’s rise
Washington seeks a “constructive and fair” economic relationship with Beijing, US Treasury Secretary Janet Yellen said on Thursday, striking a conciliatory tone amid fierce political tensions between the world’s two largest economies.
“China and the United States can and need to find a way to live together and share in global prosperity,” she said in a speech at Johns Hopkins University’s School of Advanced International Studies.
Washington remained committed to use trade constraints to defend its national security and protect human rights from challenges posed by Beijing, she said, but the Biden administration had no intention of using those tools to stifle China’s rise.
She said that the US was still the largest and most dynamic economy in the world, remaining firm in its conviction to defend its values and national security.
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“Within that context, we seek a constructive and fair economic relationship with China,” Yellen said.
Her speech laid out the Biden administration’s agenda for the US-China economic relationship.
In a Twitter thread posted after her speech concluded, Yellen condensed the principal objectives in the US economic relationship with China: to protect US national security interests and to protect human rights; to seek a healthy relationship that “fosters growth and innovation in both countries”; and to cooperate on the “urgent global challenges of our day”.
She rejected the premise of looking at the US-China relations through the lens of a zero-sum contest where one must fall for the other to rise.
“The world is big enough for both of us,” Yellen said, adding that US President Joe Biden shared her view.
That take also echoed a long-held argument of Chinese President Xi Jinping, who said that “the world is big enough for the two countries to develop themselves and prosper together” during his meeting with Biden in Indonesia in November.
Yellen reaffirmed on Thursday that she still plans to travel to China “at the appropriate time” to talk economic issues with her new Chinese government counterpart.
“I believe this dialogue can help lay the groundwork for responsibly managing our bilateral relationship and cooperating on areas of shared challenge to our nations and the world,” she said.
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Meetings between US officials and their Chinese counterparts have been harder to hold lately, as tensions between the two nations have increased this year.
With the rift widening between the US and China on a range of issues, investors and businesses have grown concerned about a lasting split between the world’s two largest economies.
Washington has blacklisted more Chinese companies from doing business with US suppliers over alleged abuses of human rights, or because their products might have military end-uses.
A growing China that plays by the rules can be beneficial for the United States
A recent study has also showed that Beijing is turning away from US imports and that the two economies’ trade is “becoming less directly interdependent”.
Still, Yellen said that the US didn’t seek to decouple from China as it would be “disastrous” and that she believed the country’s growth could coexist with continued US economic leadership.
“We know that the health of the Chinese and US economies is closely linked,” she said. “A growing China that plays by the rules can be beneficial for the United States.”
The US would “not compromise” on its national security concerns, Yellen said, noting that the administration would continue to take narrowly targeted actions on China like export controls, entity list additions, foreign investment reviews and scrutiny of potential outbound investments in specific technologies – regardless of the economic costs.
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Chinese officials have have said these measures amount to a containment strategy, and Xi has directly accused the US of urging other Western nations to help suppress China’s development.
“These national security actions are not designed for us to gain a competitive economic advantage, or stifle China’s economic and technological modernisation,” she said.
“Even though these policies may have economic impacts, they are driven by straightforward national security considerations,” she added.
Yellen’s speech offered a reality-based sustainable foundation for a strategy that was neither a crusade nor a fantasy, said Adam Posen, president of the Peterson Institute for International Economics.
“If it truly states the principles behind the Biden administration’s economic approach – meaning that all parts of the cabinet agree to this intent – the world is a better place today than it seemed to be before this speech,” he wrote in a note on Thursday.
Yellen argued that Beijing’s industrial policy has become “more ambitious and complex” and the country’s “unfair” economic practices were hurting itself, while she defended America’s “friend-shoring” strategy after criticism from Beijing and international organisations.
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She said that Washington would continue to work closely with allies and partners to press China for “an open, fair and rules-based global economic order”.
In her speech, Yellen said “There is a world in which, as companies in the US and China challenge each other, our economies can grow, standards of living can rise, and new innovations can bear fruit,” Yellen said, adding that Washington did not look to a “winner-take-all” competition.
Yellen also said that the US remained committed to cooperating with China on global issues such as climate change and debt distress in poor nations. “More needs to be done,” she underscored.
She urged China to fully engage in debt relief for urgent cases like Zambia and Ghana, repeating the appeal she made during the IMF and World Bank meetings last week.
When asked for Beijing’s position on alleviating Sri Lanka’s debt burden, Chinese central bank governor Yi Gang said on Saturday in Washington that “if we can cooperate, if we can equally and fairly share the burden, I think we can solve the problem”.
