Yellen criticizes China's 'punitive' actions against US companies, urges
market reforms
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[July 07, 2023] By
Andrea Shalal and Joe Cash
BEIJING (Reuters) - U.S. Treasury Secretary Janet Yellen called on
Friday for market reforms in China and criticized the world's
second-largest economy for its recent harsh actions against U.S.
companies and new export controls on some critical minerals.
Yellen arrived in Beijing on Thursday to try to repair fractious
U.S.-Chinese relations, but made clear in her public remarks that
Washington and its Western allies will continue to hit back at what she
called China's "unfair economic practices."
Yellen spoke to the American Chamber of Commerce in China (AmCham) after
what a Treasury official called "substantive" talks with former Chinese
economy czar Liu He, a close confidante of President Xi Jinping, and
outgoing top Chinese central banker Yi Gang.
The United States is seeking healthy competition with China based on
fair rules that benefit both countries, not a "winner-take-all"
approach, Yellen told Chinese Premier Li Qiang in a subsequent meeting
on Friday.
She said she hoped her visit would spur more regular communication
between the two rivals, and said any targeted actions by Washington to
protect its national security should not "needlessly" jeopardize the
broader relationship.
"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,"
she said.
Yellen and other U.S. officials are walking a difficult tightrope of
trying to repair fractious ties with China after the U.S. military shot
down a Chinese government balloon over the United States, while
continuing to push Beijing to halt practices they view as harmful to
U.S. and Western companies.
U.S. officials have downplayed the prospects for any major
breakthroughs, while highlighting the importance of more regular
communications between the world's two largest economies.
China hopes the U.S. will take "concrete actions" to create a favourable
environment for the healthy development of economic and trade ties, its
finance ministry said in a statement on Friday.
"No winners emerge from a trade war or from decoupling and 'breaking
chains'," the statement added.
Li told Yellen a rainbow that appeared as her plane landed from
Washington on Thursday offered hope for the future of U.S.-China ties.
"I think there is more to China-U.S. relations than just wind and rain.
We will surely see more rainbows," he said.
U.S. companies in China hope Yellen's visit will ensure trade and
commercial lanes between the two economies remain open, regardless of
the temperature of geo-political tensions.
AmCham President Michael Hart welcomed Yellen's "extra firepower" in
pressing for changes in China's policies, and said her visit could pave
the way for more exchanges at lower levels 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.
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U.S. Treasury Secretary Janet Yellen
meets with representatives of the U.S. business community in China
in Beijing, July 7, 2023. REUTERS/Thomas Peter
TEEING UP POSSIBLE BIDEN-XI MEETING
The U.S. diplomatic push comes ahead of a possible meeting between
President Joe Biden and Xi as soon as September's Group of 20 Summit
in New Delhi or the Asia-Pacific Economic Cooperation gathering
scheduled for November in San Francisco.
Secretary of State Antony Blinken traveled to Beijing last month and
agreed with Xi that the mutual rivalry should not veer into
conflict, and Biden's climate envoy John Kerry is expected to visit
later this month.
Yellen told the U.S. business executives a "stable and constructive
relationship" between the two countries would benefit U.S. companies
and workers, but Washington also needed to protect its national
security interests and human rights.
Regular exchanges could help both countries monitor economic and
financial risks at a time when the global economy was facing
"headwinds like Russia’s illegal war in Ukraine and the lingering
effects of the pandemic," Yellen added.
At the same time, she said she would raise concerns with Chinese
officials about Beijing's use of expanded subsidies for state-owned
enterprises and domestic firms, barriers to market access for
foreign firms, and its recent "punitive actions" against U.S. firms.
New Chinese export controls on gallium and germanium, critical
minerals used in technologies like semiconductors, were also
concerning, she said, adding the move underscored the need for
"resilient and diversified supply chains."
MARKET REFORMS
Yellen also took aim at China's planned economy, urging Beijing to
return to more market-oriented practices that had underpinned its
rapid growth in past 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 noted that China's enormous and growing middle-class provided
a big market for American goods and services, and stressed that
Washington's targeted actions against China were based on national
security concerns.
"We seek to diversify, not to decouple," she said. "A decoupling of
the world’s two largest economies would be destabilizing for the
global economy, and it would be virtually impossible to undertake."
(Reporting by Andrea Shalal and Joe Cash; Editing by Michael Perry,
Toby Chopra and Kim Coghill)
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