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Yellen will make the comments in a major policy speech in Seoul
after touring the facilities of South Korean tech heavyweight LG
Corp during the final leg of her 11-day visit to the
Indo-Pacific region.
"We cannot allow countries like China to use their market
position in key raw materials, technologies or products to
disrupt our economy and exercise unwanted geopolitical
leverage," Yellen will say, according to excerpts released by
the Treasury Department.
Instead, Yellen will say, the United States and allies like
South Korea should focus on "friend-shoring", or diversifying
their supply chains to rely more on trusted trading partners,
strengthening economic resilience and lowering risks.
According to the excerpts of her comments, Yellen will say doing
so would sustain the dynamism and productivity growth that comes
with economic integration, while helping to insulate citizens in
the United States and South Korea from price increases caused by
geopolitical risks.
Western powers have raced to end their over-dependence on China
as a key supplier since the start of the COVID-19 pandemic,
which exposed the fragility of global supply chains and laid
bare gaps in domestic capacities in key sectors.
Yellen will say the pandemic and Russia's war in Ukraine -
actions Moscow calls "a special military operation" - made clear
the necessity of addressing supply chain vulnerabilities and
working to reduce logjams and shortages that have driven prices
higher around the world.
Friend-shoring offered the United States and its allies a way to
preserve the best features of the rules-based global order,
while addressing unfair Chinese trade practices and ensuring
access to vital inputs and products - from medicine to
semiconductors and electric vehicle batteries, she will say.
In her comments Yellen was set to highlight a series of
investments that LG has recently made to expand the
manufacturing of electric vehicle batteries in the United
States.
She will say the key to the new approach on trade required
countries to properly account for and factor in the costs of
overly concentrated supply chains , geopolitical concerns and
value - rather than "overly focusing on costs".
(Reporting by Andrea Shalal; Editing by Kenneth Maxwell)
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