US Treasury secretary Janet Yellen is poised to call for a “constructive and fair” economic relationship between China and the US, as Washington seeks to salvage fraying ties between the two nations.
In a speech on Thursday, Yellen is expected to warn Beijing that the US will keep resisting its “unfair” economic policies, but will add that Washington is not trying to “stifle” the Chinese economy with national security measures.
Her comments come as links between the powers are mired in their worst state in decades, having been derailed two months ago when a suspected Chinese spy balloon flew over the US.
Yet while Yellen will call for a “healthy economic relationship” with China and describe the need to co-operate on issues from macroeconomics to climate change, her address will have a strong focus on Washington’s areas of concern.
She will say that the US will continue to secure its national security interests and those of its allies and protect human rights, and will push back against the People’s Republic of China when necessary.
“We will clearly communicate to the PRC our concerns,” Yellen plans to say, adding: “Our targeted actions may have economic impacts [but] they are motivated solely by our concerns about our security and values. Our goal is not to use these tools to gain competitive economic advantage.”
Referring to semiconductor-related export controls and other measures the Biden administration has taken, Yellen will say that safeguarding certain technologies from the Chinese military is of “vital national interest”.
“[But] let me be clear, these national security actions are not designed . . . to stifle China’s economic and technological modernisation,” she will say.
US and Chinese officials agree that the relationship has deteriorated to its lowest level since they were normalised in 1979, with tensions rising sharply over Taiwan as the US becomes more concerned about assertive Chinese military activity around the country.
More recently, the US has grown anxious about apparent Chinese moves to target companies including Micron, the Idaho-based memory chipmaker.
Beijing believes that Washington is trying to contain its rise by limiting its ability to develop a high-end semiconductor industry, and claims the US is helping Taiwan to resist its long-term plan to bring it under control.
Chinese officials are also privately frustrated that their US counterparts weave critical language into speeches that are ostensibly about improving relations. In her remarks, however, Yellen will say that both countries “need to be able to frankly discuss difficult issues”.
When Joe Biden and Xi Jinping met at the G20 in November, the presidents agreed to efforts to set a “floor” under the relationship. They discussed a series of high-level exchanges that would start with Antony Blinken, secretary of state, visiting Beijing in February.
But that plan was knocked off course when the spy balloon appeared over the US and Blinken abruptly cancelled what would have been the first visit to China by a Biden administration cabinet official in several years.
Beijing has resisted rescheduling the visit over concerns that the FBI may soon release a report into the balloon. But in a rare positive sign, two senior commerce department officials, including China expert Elizabeth Economy, this month travelled to Beijing for talks about a possible visit later this year by Gina Raimondo, commerce secretary.
In her speech, Yellen will also reject suggestions that the US is in decline, in an apparent indirect reference to statements by officials in China that, “the east is rising, while the west is declining”.
“Pronouncements of US decline have been around for decades. But they have always proved wrong,” Yellen is expected to say.
The former Federal Reserve chair will also stress that the countries need to work together on critical global issues despite their differences.
“That’s what the world needs from its two largest economies”.
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