WASHINGTON — The U.S. seeks healthy economic competition with China whilst the country pursues mental property to achieve an economic edge, Treasury Secretary Janet Yellen said Thursday.
Yellen stressed the importance of fairness between the U.S. and China, while outlining a three-tiered approach to strengthen a roughly $700 billion trade relationship, she said in remarks on the Johns Hopkins University’s School of Advanced International Studies on Thursday. Yellen also announced a planned visit to China “at the suitable time.”
Her comments come as Washington, and the Republican-held House specifically, increase pressure on Beijing as a part of a sustained U.S. backlash against China’s economic tactics.
China has pivoted away from market reforms “toward a more state-driven approach that has undercut its neighbors and countries internationally,” Yellen said. “This has come as China is striking a more confrontational posture toward the USA and our allies and partners – not only within the Indo-Pacific but additionally in Europe and other regions.”
The world’s two largest economies can only compete through impartial rulemaking, she said.
“There’s a world through which, as corporations within the U.S. and China challenge one another, our economies can grow, standards of living can rise, and latest innovations can bear fruit,” Yellen said. “But this kind of healthy competition is barely sustainable whether it is fair to each side.”
Janet Yellen, US Treasury secretary, speaks on the Johns Hopkins Universitys School of Advanced International Studies (SAIS) in Washington, DC, US, on Thursday, April 20, 2023.
Ting Shen | Bloomberg | Getty Images
The Treasury chief said the U.S. trades more with China than “with any countries apart from Canada and Mexico.”
“American firms have extensive operations in China. Tons of of Chinese firms are listed on our stock exchanges, that are a part of the deepest and most liquid capital markets on this planet,” Yellen said.
But she contended China has pursued market share for its domestic firms through illegal means and on the expense of foreign competitors.
“It has done so in traditional industrial sectors in addition to emerging technologies,” Yellen said of the Chinese government’s efforts. “This strategy has been coupled with aggressive efforts to accumulate latest technological know-how and mental property – including through IP theft and other illicit means.”
The Biden administration’s three-pronged proposal to develop economic rapport with China emphasizes national security and human rights protections.
“We are going to clearly communicate to [China] our concerns about its behavior. And we won’t hesitate to defend our vital interests,” Yellen said. “Whilst our targeted actions could have economic impacts, they’re motivated solely by our concerns about our security and values. Our goal just isn’t to make use of these tools to achieve competitive economic advantage.”
Safeguarding certain technologies from China’s military and security networks is “of important national interest,” especially in light of China’s “no limit” partnership with Russia amid its continued invasion of Ukraine, Yellen said. Ukraine’s allies have watched closely whether China will offer military support to Moscow.
“We won’t compromise on these concerns, even once they force trade-offs with our economic interests,” she said, adding that the Treasury Department and other agencies will employ their sanctions authorities to counter encroaching threats.
The agency issued a round of sanctions after a Chinese spycraft flew over parts of the U.S. in February, while the Commerce Department placed trading limits on five Chinese firms for allegedly attempting to evade U.S. export controls on Russia.
Yellen vowed to partner with U.S. allies in countering China’s “unfair economic practices” while advancing “our vision for an open, fair, and rules-based global economic order.” She also called on Chinese President Xi Jinping to follow through on his promise to cooperate on global issues like climate change and debt distress.
“We call on China to follow through on its promise to work with us on these issues – not as a favor to us, but out of our joint duty and obligation to the world,” she said. “Tackling these issues together may also advance the national interests of each of our countries.”
The Chinese Embassy in Washington D.C. didn’t immediately reply to a request to comment.
Lawmakers have focused on the rivalry between the 2 powers throughout the ongoing debate over raising the $31.4 trillion debt ceiling. If the U.S. fails to accomplish that, it could default on its debt for the primary time this summer. Yellen and her colleagues have repeatedly warned in regards to the catastrophic consequences of default, including economic damage and international apprehension in regards to the full faith and credit of the USA.
On Wednesday, House Speaker Kevin McCarthy, R-Calif., promised that a GOP bill to temporarily raise the debt ceiling in exchange for spending cuts would also reduce U.S. dependence on China.
