Yellen urges China to adopt market reforms, insists U.S. not decoupling

Yellen urges China to adopt market reforms, insists U.S. not decoupling

U.S. Treasury Secretary Janet Yellen began her four-day visit to Beijing by emphasizing the need for market reforms in China and warning against what she perceives as China’s “unfair economic practices.” She made these remarks during a meeting with U.S. companies operating in China, following a previous meeting with Liu He, a close associate of President Xi Jinping. Yellen is also scheduled to meet with Premier Li Qiang.

Yellen’s visit is part of a series of visits aimed at easing tensions between the United States and China. This comes after the U.S. military shot down a Chinese government balloon over U.S. territory. Secretary of State Antony Blinken visited China last month and agreed with President Xi that the rivalry between the two countries should not escalate into conflict. Additionally, John Kerry, Biden’s climate envoy, is expected to visit China later this month.

The United States is making diplomatic efforts ahead of a potential meeting between President Joe Biden and President Xi Jinping. This meeting could take place as early as the Group of 20 Summit in New Delhi in September or the Asia-Pacific Economic Cooperation gathering in San Francisco in November.

Yellen stated that her purpose in visiting China is to enhance communication and work towards a “stable and constructive relationship” between the two countries. However, she also made it clear that the United States will take action to protect its national security interests and human rights.

Yellen emphasized the importance of maintaining regular exchanges between the two countries to monitor economic and financial risks. She mentioned the challenges posed by Russia’s actions in Ukraine and the ongoing effects of the pandemic on the global economy.

Yellen assured Chinese officials that the United States is not seeking a complete separation of the two economies. However, she expressed concerns about China’s expanded subsidies for state-owned enterprises and domestic firms, barriers to market access for foreign companies, and recent punitive actions against U.S. firms. Yellen also raised concerns about China’s new export controls on critical minerals used in technologies like semiconductors, highlighting the need for resilient and diversified supply chains.

In addition to market reforms, Yellen urged China to return to more market-oriented practices that have contributed to its rapid growth and poverty reduction. She acknowledged the significant market provided by China’s growing middle class for American goods and services. Yellen emphasized that the United States’ targeted actions against China are driven by national security concerns and stated that decoupling the world’s two largest economies would be destabilizing and virtually impossible.

During her visit, Yellen is expected to address the impact of China’s new counterespionage law on U.S. companies and caution Beijing about supplying lethal aid to Russia. Chinese officials, on the other hand, are likely to express concerns about the Biden administration’s plans to limit U.S. companies’ investments in China, especially considering China’s slower-than-expected economic recovery from COVID lockdowns and the challenging job market.

The article was reported by Andrea Shalal and edited by Michael Perry, adhering to the Thomson RushHourDaily Trust Principles.

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