Daily Management Review

Yellen Pushes Market Reforms And Criticises China's 'Punitive' Tactics Against US Businesses


Yellen Pushes Market Reforms And Criticises China's 'Punitive' Tactics Against US Businesses
China's leader urged her to "meet China halfway" and restart bilateral relations as U.S. Treasury Secretary Janet Yellen advocated for market reforms and criticised China's recent harsh moves against American businesses and mineral export limits on Friday.
In an effort to mend strained economic ties between the United States and China, Yellen met with Premier Li Qiang on Friday while in Beijing. However, she made it clear in her public statements that Washington and its allies in the West will continue to push back against what she called China's "unfair economic practises."
The world's two largest economies remain closely intertwined, with two-way commerce reaching a record $690 billion last year, despite talk of a decoupling of their economies.
"We seek healthy economic competition that is not winner-take-all but that, with a fair set of rules, can benefit both countries over time," Yellen told Chinese Premier Li Qiang in a meeting on Friday that the Treasury said was "candid and constructive."
In a statement made public by China, Li called for improved coordination, agreement on economic matters, and "candid in-depth and pragmatic exchanges, so as to inject stability and positive energy into Sino-U.S. economic ties."
"China hopes the U.S. will uphold a rational and pragmatic attitude, meet China halfway, and push China-U.S. relations back on track soon," Li's statement said.
Recent mineral export restrictions from both countries relating to semiconductors were not mentioned.
On Saturday, according to a U.S. Treasury official, Yellen will meet with her immediate counterpart as China's top economic official, Vice Premier He Lifeng of China.
Following what a Treasury source described as "substantive" discussions with former Chinese economy czar Liu He, who succeeded He Lifeng and is still a close confidante of President Xi Jinping, Yellen also addressed the American Chamber of Commerce in China (AmCham). Yellen also met with Yi Gang, the leaving head of the Chinese central bank.
Yellen and other American officials are balancing their efforts to mend fences with China after the U.S. military shot down a Chinese government balloon over the country with calls for Beijing to stop actions they see as detrimental to American and Western businesses.
Any specific actions taken by Washington to safeguard its national security should not "needlessly" jeopardise the overall relationship, according to Yellen, who expressed the hope that her visit would encourage more frequent contact between the two rivals.
U.S. officials have played down the likelihood of any huge discoveries while emphasising the value of more frequent dialogue between the two largest economies in the world.
According to a statement released by the finance ministry on Friday, China hopes that the United States will take "concrete actions" to foster an atmosphere that is favourable for the healthy growth of economic and trade relations.
"No winners emerge from a trade war or from decoupling and 'breaking chains'," the statement added.
A rainbow that rose as Li's plane touched down in Washington on Thursday offered hope for the future of U.S.-China relations, Li told Yellen.
"I think there is more to China-U.S. relations than just wind and rain. We will surely see more rainbows," he said.
Regardless of the level of geopolitical tensions, U.S. businesses in China are hoping that Yellen's visit would ensure that trade and commercial channels between the two countries remain open.
AmCham President Michael Hart applauded Yellen's "extra firepower" in pressuring China to alter its policies and suggested that her visit would open the door to more low-level interactions between the two sides.
"I think if there was another year of no visits by top U.S. government leaders, the market would get colder," he added.
Prior to a potential meeting between President Joe Biden and Xi at the Group of 20 Summit in New Delhi in September or the Asia-Pacific Economic Cooperation summit set for November in San Francisco, the United States is stepping up its diplomatic efforts.
Last month, Secretary of State Antony Blinken visited Beijing and concurred with Xi that the two countries' rivalry should not escalate into hostilities. John Kerry, Biden's climate envoy, is scheduled to visit later this month, and the US Treasury thinks Beijing and Washington can work together on climate finance.
A "stable and constructive relationship" would be advantageous to American businesses and employees, according to Yellen, but Washington also needed to safeguard its interests in national security and human rights.
At a time when the global economy was dealing with "headwinds like Russia's illegal war in Ukraine and the lingering effects of the pandemic," Yellen wrote, regular contacts might aid both nations in monitoring economic and financial threats.
She also stated that she will express her concerns to Chinese officials on Beijing's use of increased subsidies for local and state-owned businesses, as well as its recent "punitive actions" against American companies.
She added that the new Chinese export restrictions on germanium and gallium, vital minerals used in technology like semiconductors, were troubling and that they highlighted the need for "resilient and diversified supply chains."
Yellen also targeted China's planned economy, pleading with Beijing to adopt more market-oriented policies once again, which had supported the country's explosive growth in previous years.
"A shift toward market reforms would be in China's interests," she told the AmCham event.
"A market-based approach helped spur rapid growth in China and helped lift hundreds of millions of people out of poverty. This is a remarkable economic success story."
Yellen rejected the notion of uncoupling the economies of the United States and China, despite the fact that China's sizable and expanding middle class offered a sizable market for American goods and services. and emphasised that national security concerns were the basis for Washington's specific moves against China.
The thriving American business community in China, according to a Treasury official, is "a living embodiment that we are not decoupling."
"We have no interest in decoupling. We've got lots of leading American firms who have had a very long history and are deeply enmeshed into the Chinese economy," the official told reporters.