Targeted Actions Against China: The US Stance on National Security
Jay Shambaugh, the US Treasury Undersecretary, has asserted the Biden administration's readiness to confront China through targeted actions. The goal is to protect national security and human rights while maintaining critical collaboration on global challenges. Shambaugh, leading the Treasury's international affairs, emphasized the importance of clear communication with China to prevent misunderstandings while safeguarding American citizens from national security threats.
The Perils of Economic Decoupling
According to Shambaugh, complete economic decoupling from China would be catastrophic for both nations and essentially unattainable. The Biden administration, he revealed, is contemplating new constraints on private outbound investment towards China and other nations of concern. Such regulations would mandate U.S. firms to notify federal authorities about proposed investments in critical Chinese technologies, including semiconductors and artificial intelligence.
Defining Economic Relationships and Supply Chains
Shambaugh clarified that seeking diversified supply chains or initiating targeted national security actions does not amount to decoupling. Instead, the goal is to establish a fair and beneficial economic relationship that caters to the interests of both nations, American workers, and businesses.
Renewed Communications Amid Unresolved Disagreements
Despite Treasury Secretary Janet Yellen's recent visit to Beijing to revive dialogue, multiple disagreements persist between the two largest global economies. Disparities include US disapproval of Chinese "non-market" economic practices, excessive government support that puts U.S. firms at a disadvantage, and China's "economic coercion" impacting diplomatic actions.
Building Resilient and Diversified Supply Chains
The US has expressed concern over China's punitive actions against US companies and export controls on vital minerals for semiconductors. Shambaugh stressed the significance of building robust and diversified supply chains in light of these actions.
Collaboration on Global Challenges
Despite the disagreements, Shambaugh underlined the need for US-China cooperation on urgent global matters such as climate change and mounting debt distress in developing nations. The Treasury's engagement with China has yielded positive outcomes like debt restructurings for Zambia, Ghana, and Sri Lanka, but much more needs to be done.
The Necessity for Strong US International Leadership
According to Shambaugh, defending US economic interests necessitates "strong and reliable international leadership". He advocated for stronger engagement with allies and partners, especially lower- and middle-income nations, and emphasized the need for adequate funding of international financial institutions such as the International Monetary Fund and the World Bank. Providing ample "high-standards" lending to low-income countries will help prevent dependency on Chinese loans.
