U.S. Treasury Secretary Janet Yellen Seeks Cooperation, Airs Complaints In Major Speech On China

The U.S. and China need to work together on “urgent global challenges” despite tension and differences between the two countries, U.S. Treasury Secretary Janet Yellen said in a major address at Johns Hopkins University’s School of Advanced International Studies.

Since last year’s meeting between Presidents Joe Biden and Xi Jinping, “both countries have agreed to enhance communication around the macroeconomy and cooperation on issues like climate and debt distress. But more needs to be done,” Yellen said.

“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,” Yellen said. “Tackling these issues together will also advance the national interests of both of our countries.”

Yellen also highlighted U.S. complaints ranging from intellectual property theft to labor practices. Relations have additionally been strained by Beijing’s close relationship with Russia, its suspected sending of a spy balloon over militarily sensitive parts of the U.S. this year, differences over Taiwan, and worries about data security for users of China’s popular TikTok platform, among other issues.

Yellen spoke against a backdrop of overwhelmingly negative U.S. public opinion toward China. Unfavorable views held by Americans have worsened in the past year, according to a poll released this month by the Pew Research Center. Some 83% of U.S. adults have negative views of China, up from 82% a year ago, Pew said.

A majority of Americans also lack confidence about Biden’s leadership of ties between the two countries. About two-thirds – 65% — of Americans say they are either “not too confident” or “not at all confident” in U.S. President Joe Biden’s ability to deal effectively with China, Pew also reported in a survey published this month.

Yellen reviewed the more than four decades since the U.S. and China formed diplomatic relations, beginning a period of reproachment after decades of silence. Today, she said, Beijing is pursuing a more state-driven role in its development than earlier, and the U.S.-China relationship has reached a “tense moment.”

Addressing concerns that the U.S. is in decline, Yellen noted: “In recent years, many have seen conflict between the United States and China as increasingly inevitable. This was driven by fears, shared by some Americans, that the United States was in decline. And that China would imminently leapfrog us as the world’s top economic power – leading to a clash between nations.”

“It’s important to know this: pronouncements of U.S. decline have been around for decades,” said the 76-year-old cabinet official. “But they have always been proven wrong. The United States has repeatedly demonstrated its ability to adapt and reinvent to face new challenges. This time will be no different.”

“Since the end of the Cold War, the American economy has grown faster than most other advanced economies,” Yellen noted. “Our unemployment rate is near historic lows. Real GDP per capita has reached an all-time high,” she said.

“Of course, an economy’s size is not the sole determinant of its strength,” Yellen said. “America is the largest economy in the world, but it also remains an unparalleled leader on a broad set of economic metrics – from wealth to technological innovation.” U.S. GDP per capita is over five times as large as China’s, a nation that faces many of its own economic challenges, she noted.

“More than resources or geography, our country’s success can be attributed to our people, values, and institutions. American democracy, while not perfect, protects the free exchange of ideas and rule of law that is at the bedrock of sustainable growth. Our educational and scientific institutions lead the world. Our innovative culture is enriched by new immigrants, including those from China – enabling us to continue to generate world-class, cutting-edge products and industries,” Yellen added.

Nevertheless, she also continued, the U.S. remains firm in its conviction to defend national security. “As in all of our foreign relations, national security is of paramount importance in our relationship with China. For example, we have made clear that safeguarding certain technologies from (China’s) military and security apparatus is of vital national interest,” Yellen said.

“These national security actions are not designed for us to gain a competitive economic advantage, or stifle China’s economic and technological modernization. Even though these policies may have economic impacts, they are driven by straightforward national security considerations. We will not compromise on these concerns, even when they force trade-offs with our economic interests,” she said.

Yellen was critical of government support in China to help its firms gain market share at the expense of foreign competitors. “In recent years, its industrial policy has become more ambitious and complex. China has expanded support for its state-owned enterprises and domestic private firms to dominate foreign competitors,” she said. “It has done so in traditional industrial sectors as well as emerging technologies. This strategy has been coupled with aggressive efforts to acquire new technological know-how and intellectual property – including through IP theft and other illicit means.”

Nevertheless, she said, “a full separation of our economies would be disastrous for both countries, and would be destabilizing for the rest of the world. We know that the health of the Chinese and U.S. economies is closely link. A growing China that plays by the rules can be beneficial to the United States. For instance, it can mean rising demand for U.S. products and services and more dynamic U.S. industries.” Just this month, Tesla announced plans for a new factory in China, the world’s largest auto market; American businesses such as Starbucks have benefitted from growth in consumer spending.

Looking ahead, the U.S. will seek cooperation with China on major global challenges. “It is important that we make progress on global issues regardless of our other disagreements,” Yellen said. “That’s what the world needs from its two largest economies.”

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