Yellen criticizes China’s ‘punishments’ against US companies – 07/07/2023 – Market

US Treasury Secretary Janet Yellen on Friday called for market reforms in China and criticized the world’s second-largest economy for its recent tough actions against US companies and new export controls on some critical minerals. .

Yellen arrived in Beijing on Thursday to try to mend the strained relations between the United States and China, but made it clear in her public remarks that Washington and its Western allies will continue to lash out at what she called China’s “uneven economic practices.”

Yellen spoke at AmCham (the American Chamber of Commerce in China) after what a Treasury official called “substantial” talks with the former head of the Chinese economy, Liu He, a close confidant of President Xi Jinping, and the central banker Chinese, Yi Gang.

The United States is seeking healthy competition with China based on fair rules that benefit both countries, not a “winner takes all” approach, Yellen told Chinese Premier Li Qiang at a later meeting on Friday. fair.

She said she hoped her visit would spur more regular communication between the two rivals and that any actions by Washington aimed at protecting national security should not “unnecessarily” jeopardize the broader relationship.

“We are looking for healthy economic competition that is not ‘winner takes all’ but which, with a fair set of rules, can benefit both countries over time,” she said.

Yellen and other US officials are walking a difficult tightrope to try to repair strained ties with China after US military forces brought down a Chinese government balloon over the United States, as they continue to press Beijing to stop practices they consider harmful to business. American and western.

US officials downplayed the prospects for major breakthroughs, highlighting the importance of more regular communications between the world’s two largest economies.

China expects the US to take “concrete actions” to create a favorable environment for the healthy development of economic and trade ties, its finance ministry said in a statement on Friday.

“There is no winner in a war of trade or decoupling and ‘breaking chains,'” the statement added.

Li told Yellen that a rainbow that appeared when his plane landed from Washington on Thursday offered hope for the future of US-China ties.

“I think there is more to China-US relations than just wind and rain. We will certainly see more rainbows,” he said.

US companies in China hope the visit will ensure that trade routes between the two economies remain open, regardless of the temperature of geopolitical tensions.

AmCham President Michael Hart welcomed Yellen’s “extra firepower” in pushing for changes in China’s policies, and said her visit could pave the way for more exchanges at lower levels between the two sides. .

“I think if there was one more year without visits by top US government leaders, the market would get colder,” he added.

Preparing possible meeting between Biden and Xi

The US diplomatic push comes ahead of a possible meeting between Presidents Biden and Xi, still at the Group of 20 Summit in September in New Delhi or at the Asia-Pacific Economic Cooperation meeting scheduled for November in San Francisco.

Secretary of State Antony Blinken traveled to Beijing last month and agreed with Xi that their mutual rivalry should not escalate into conflict, and Biden’s climate envoy John Kerry is due to visit later this month.

Yellen told American executives that a “stable and constructive relationship” between the two countries would benefit American companies and workers, but Washington also needs to protect its national security interests and human rights.

Regular exchanges could help the two countries monitor economic and financial risks at a time when the global economy faces “headwinds such as Russia’s illegal war in Ukraine and the lingering effects of the pandemic,” added Yellen.

At the same time, she said she would raise concerns with Chinese officials about Beijing’s use of expanded subsidies for state-owned and domestic companies, which bar foreign companies from entering the market, and its recent “punitive actions” against US companies.

New Chinese export controls on gallium and germanium, critical minerals used in technologies such as semiconductors, are also concerning, she said, adding that the move underscores the need for “resilient and diverse supply chains”.

market reforms

Yellen also took aim at China’s planned economy, urging Beijing to return to the more market-oriented practices that underpinned its rapid growth in recent years.

“A shift towards market reforms would be in China’s interest,” she said at the AmCham event.

“A market-based approach has helped spur China’s rapid growth and helped lift hundreds of millions of people out of poverty. This is a remarkable economic success story.”

Yellen noted that China’s huge and growing middle class provided a large market for American goods and services, and emphasized that Washington’s targeted actions against China were based on national security concerns.

“We seek to diversify, not dissociate,” she said. “A decoupling of the world’s two largest economies would be destabilizing for the global economy and virtually impossible to accomplish.”

Translated by Luiz Roberto Gonçalves