Treasury Secretary Janet Yellen expressed concerns about Chinese business practices during her visit to Beijing on Friday. She emphasized the importance of an economic relationship between the U.S. and China that benefits American workers and businesses. Yellen also warned that the U.S. would respond to any unfair economic practices.
During a roundtable discussion with representatives from major U.S. companies operating in China, including Boeing, Bank of America, and Cargill, Yellen expressed her distress over recent punitive actions taken against American firms. This visit comes at a time of escalating tensions between the two largest economies in the world.
During the roundtable discussion, Yellen also criticized China’s new export controls on the crucial semiconductor minerals gallium and germanium. These controls were announced amidst ongoing trade disputes between the two countries.
Gallium is an essential component in electronics, used for chips in mobile and satellite communications, LED displays, and sensors in space and defense systems. The Critical Raw Materials Alliance states that China holds 80% of the world’s gallium. Germanium, on the other hand, is used in fiber optics, infrared optics, electronics, and solar cells, with China producing 60% of the world’s germanium.
The U.S. has taken measures to restrict Chinese access to certain technologies. Yellen stated that the impact of the export controls is still being evaluated.
Addressing the U.S. businesses present at the roundtable, Yellen assured them that she will advocate for their interests and ensure a level playing field. She also emphasized the importance of coordinating with allies to respond to China’s unfair economic practices. However, Yellen clarified that the U.S. does not seek to completely separate the economies nor decouple from China. She highlighted that a complete decoupling would be destabilizing for the global economy and virtually impossible to achieve.
Yellen is discussing areas of concern, such as China’s expanded subsidies for state-owned enterprises and domestic firms, as well as barriers to market access, with her Chinese counterparts. These discussions form part of her visit, which also includes meetings with Premier Li Qiang and Vice Premier He Lifeng, among others.
During her meeting with Li, Yellen stressed that the U.S. may take targeted actions to protect national security, even if disagreements arise. However, she emphasized the importance of avoiding misunderstandings that could harm the bilateral economic and financial relationship between the two countries.
Yellen conveyed to Li that the U.S. seeks healthy economic competition with China that benefits both nations. The meeting was described as “very candid and constructive” by a senior Treasury official. Yellen’s visit follows Secretary of State Antony Blinken’s trip to Beijing last month, where he had direct discussions with President Xi Jinping.
Yellen has a second day of meetings scheduled in Beijing, including one with women economists. However, a meeting with President Xi is not anticipated.
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