Daily Management Review

Allies In The Indo-Pacific Shouldn't Have To Decide Between The US And China - US Treasury Secretary


Allies In The Indo-Pacific Shouldn't Have To Decide Between The US And China - US Treasury Secretary
The US Treasury Secretary Janet Yellen made an effort to reassure Asian nations that America's strategy towards China would not result in a "disastrous" split of the world economy that would compel them to choose sides.
Yellen stated in a speech prior to the Asia Pacific Economic Cooperation Summit, which the United States is hosting in San Francisco later this month, that a complete decoupling of the American and Chinese economies was "simply not practical," particularly in light of the intricacy of Asian supply chains and the region's close economic ties to China.
Her remarks aimed to allay rising worries about the geopolitical division of the world economy into factions led by the United States and China, as well as escalating export and technology restrictions motivated by national security between the two biggest economies in the world.
"A full separation of our economies, or an approach in which countries including those in the Indo-Pacific are forced to take sides, would have significant negative global repercussions," Yellen said. "We have no interest in such a divided world and its disastrous effects."
In its place, according to Yellen, the United States is "de-risking and diversifying" its economic links to China by making domestic manufacturing investments and fortifying relationships with friends and partners across the globe, particularly those in the Indo-Pacific region.
Yellen stated that while the United States would not back down from national security measures, they would try to keep them focused and not be used to "choke off growth in China."
As the United States gets ready to welcome leaders and other high officials from APEC countries to San Francisco from November 11–17, she made these statements at an Asia Society event. Alongside the summit, the White House hopes to arrange a meeting between Chinese President Xi Jinping and American President Joe Biden.
Prior to the APEC meeting, Yellen emphasised the strategic significance of the Indo-Pacific region and stated that the Biden administration was dedicated to growing trade and investment with these nations.
According to her, stronger economic ties with nations in the Indo-Pacific region will increase the resilience of US supply chains and provide access to a vibrant and expanding market for US exports.
"As we look toward APEC later this month, let me state unequivocally: Claims that America is turning away from the Indo-Pacific are wholly unfounded," Yellen said in the excerpts. "We are deepening our economic ties across the region, with tremendous potential benefits for the U.S. economy and for the Indo-Pacific."
In an effort to obtain some agreements in time for the APEC conference, the Biden administration has also scheduled a seventh round of negotiations for its Indo-Pacific Economic Framework for Prosperity (IPEF) programme, which will take place in San Francisco next week.
IPEF is the flagship project of the Biden administration to engage economically with Asian nations and give them a trade and investment option to China, even if it falls well short of a standard free trade deal.
According to Yellen, the United States and the Indo-Pacific area would both gain from greater integration. She mentioned that over a quarter of U.S. exports are received by the region, and that two-way trade between the United States and the region reached a value of $2.28 trillion in 2022, up 25% from 2019.
"The economic case for our expanding trade and investment is clear. The Indo-Pacific is a dynamic and rapidly growing region. As it grows, we gain a fast-expanding customer base for U.S. firms and workers," Yellen said.
The movement of American supply chains away from China, which began with tariffs imposed by former President Donald Trump in 2018 and has intensified since the COVID-19 epidemic, has contributed to an increase in trade with the region.
In order to prevent bottlenecks and shortages that happened while the world recovered from the pandemic, Yellen stated that economic cooperation with Indo-Pacific nations, especially Vietnam, is "crucial to bolstering our supply chain security". She reiterated her goal of "friend-shoring," or sourcing supplies from reliable allies, in order to diversify supply chains to nations in the region.
"And achieving resilience through partnering with Indo-Pacific countries means gains for Indo-Pacific economies as well," Yellen said.