US Treasury Secretary Advocates Market Reforms in China
Starting her four-day visit to Beijing, US Treasury Secretary Janet Yellen has urged China to adopt market reforms. She also warned that the United States, along with its allies, is prepared to counteract China's "unfair economic practices." These statements were made at a meeting with US companies operating in China, following her meeting with Liu He, a close confidant of President Xi Jinping.
Mitigating Tensions between Washington and Beijing
Yellen's visit is part of a series of diplomatic maneuvers intended to ease escalating tensions between Washington and Beijing. These tensions were stoked when a Chinese government balloon was shot down over the United States by the US military. Previous visits by officials such as Secretary of State Antony Blinken and a planned visit by climate envoy John Kerry aim to keep the rivalry from escalating into conflict. These diplomatic efforts are set against the backdrop of potential meetings between President Joe Biden and Xi at forthcoming international gatherings.
Striving for a Stable and Constructive Relationship
In her prepared speech, Yellen stated her purpose in China was to foster "a stable and constructive relationship" between the two economic superpowers. She clarified that while the US aims to protect its national security interests and human rights, it was not seeking a "wholesale separation" of the economies. She also stressed the importance of direct and clear communication at senior levels to monitor global economic and financial risks.
Addressing Unfair Practices and Concerns
Secretary Yellen expressed her concerns about China's expanded subsidies for state-owned enterprises and domestic firms, barriers to market access for foreign firms, and recent "punitive actions" against US firms. Additionally, she showed concern over new Chinese export controls on critical technology minerals like gallium and germanium, emphasizing the need for "resilient and diversified supply chains."
Push for Return to Market-oriented Practices
A major aspect of Yellen's address was her call for China to return to the market-oriented practices that previously fueled its rapid growth. She emphasized the benefits of a market-based approach in reducing poverty and spurring growth, citing China's growing middle class as a significant market for American goods and services.
'Diversify, Not Decouple' – Yellen's Message
In a bid to calm fears of an economic separation, Yellen reassured that the US aimed to "diversify, not to decouple." She warned that decoupling the world’s two largest economies would cause global instability and would be virtually impossible to carry out. US officials also anticipate Yellen to raise concerns about China's new counterespionage law and possible aid to Russia.
China's Concerns and Response
Chinese officials are expected to voice their concerns about the Biden administration's plans to limit US companies' investments in China, especially given the current slow recovery from COVID lockdowns and a challenging job market.