Mai 31. 2023

Treasury Secretary Yellen Remarks on US-China Economic Relationship


On April 20, 2023, Secretary of the Treasury Janet L. Yellen gave remarks on the US-China economic relationship at John Hopkins School of Advanced International Studies. Secretary Yellen began by recounting the history of the US-China relationship, starting in the 1970s when Nixon became the first President to visit Mainland China while in office. She commended the economic developments in China that followed, but cautioned that China has since “pivot[ed] away from market reforms toward a more state-driven approach.” She remarked that the world is at a “critical time,” as it is “confronting the largest land war in Europe since World War II . . . debt challenges . . . for low- and middle-income countries . . . [and] pressures on economic and financial systems.” She also flagged a U.N. report released in March of this year that indicated “that the Earth is likely to cross a critical global warming threshold within the next decade” unless “drastic action is taken.” Confronting these issues, she argued, will require “constructive engagement” between the US and China, but she acknowledged that the relationship between the two countries is “at a tense moment.”1

Secretary Yellen briefly discussed the state of the US and Chinese economies. She explained why predictions of “US [economic] decline” have been unfounded, pointing to the country’s economic growth since the Cold War, its strong post-pandemic recovery, and its all-time high real GDP per capita. She credited the “strength of [the United States’] economic fundamentals” for the recovery but acknowledged that there is still work to be done. She added that the United States’ economic strength is not solely determined by size but also by its role as an “unparalleled leader on a broad set of economic metrics[.]” Turning to China, she commented that the country “has experienced an economic rise” since 1980. However, she cautioned that today, “like many countries . . . [it] faces its share of near-term headwinds.” According to Secretary Yellen, these headwinds include “vulnerabilities in its property sector, high youth unemployment, and weak household consumption.” She also argued that in “the longer term, China faces structural challenges,” such as an aging population, a declining workforce, and “a sharp reduction in productivity growth.”2 Secretary Yellen concluded that “China’s economic growth need not be incompatible with US economic leadership,” as the United States’ economic power is “amplified” by its relationship with other countries.3

Secretary Yellen put forth three principal objectives for the United States’ economic approach to China: 1) securing national security interests of both the US and its allies and partners, and protecting human rights; 2) seeking “a healthy economic relationship with China” that “fosters growth and innovation in both countries,” the basis of which lies in fair, healthy competition; and 3) “cooperation on the urgent global challenges of our day,” which include enhancing “communication around the macroeconomy and cooperate[ng] on issues like climate and debt distress.”4

Principal Objective 1: Securing the United States’ National Security Interests and Protecting Human Rights

Secretary Yellen explained that to protect its national security, the US uses, and will continue to use, a “broad suite of tools,” and “[w]hen necessary . . . will take narrowly targeted actions.” These actions include export controls, issuing sanctions that “address threats related to cybersecurity and China’s military-civil fusion,” and reviews of foreign investments in the US. She also noted that the US is considering restrictions on “outbound investments in specific sensitive technologies[.]” She emphasized that the purpose of these actions is to achieve national security goals, and not to help the US “gain a competitive economic edge” or to “stifle China’s economic and technological modernization.”5

She laid out the following key principles that inform the country’s economic and national security actions:

  1. The actions that the US will take will be “narrowly scoped and targeted to clear objectives” to “mitigate spillovers into other areas.”
  2. The tools the US uses must be easily “understood and enforceable” and “readily adaptable.”
  3. The US will, “when possible . . . engage and coordinate with allies and partners in the design and execution of our policies.”6

Turning to human rights, she claimed that the Chinese government has “escalate[d] its repression” through “technology to surveil and control the Chinese people.” Secretary Yellen asserted that the US would continue to use tools to “disrupt and deter human rights abuses wherever they occur around the globe.” These tools include imposing sanctions and restricting imports of goods produced with forced labor.

Principal Objective 2: Healthy Economic Relationship with China

Secretary Yellen emphasized that the US is not seeking to “decouple” its economy from China’s, which has been a common refrain from the Biden administration.7 Instead, the US was focused on two areas: self-investment and healthy economic competition.8

Secretary Yellen asserted that the US economic strategy is focused on self-investment rather than limiting the economies of other countries. To accomplish this, the US has “pursued an economic agenda . . . to raise the ceiling for what” the US economy can produce. Secretary Yellen pointed to three bills that President Biden signed into law: the Bipartisan Infrastructure Law, the CHIPS and Science Act, and the Inflation Reduction Act, all of which “have fortified US strength in the industries of the future.”9

Secretary Yellen focused the majority of her discussion of the second principal objective on the United States’ “vision and conditions for healthy economic competition.” She explained that a “basic principal of economics is that sustained, repeated [and fair] competition can lead to mutual improvement.” She pointed to the example of China benefitting from American inventions like the computer and the MRI, and that “new scientific and medical developments from China can benefit” countries throughout the globe, including the US. She reiterated, however, that China has been using governmental interventions to “gain market share at the expense of foreign competitors.” She alleged that these interventions have become “more ambitious and complex,” with China “expand[ing] support for its state-owned enterprises and domestic private firms” both in “traditional industrial sectors” and “emerging technologies.” She further claimed that China has engaged in “aggressive efforts to acquire new technological know-how and intellectual property,” including through illegal means such as theft. China, she alleged, has used government intervention to place obstacles to “market access for American firms” operating in China—obstacles that she said do not exist for Chinese businesses operating in the US.10

Secretary Yellen also claimed that China has “exploited its economic power to retaliate against and coerce vulnerable trading partners.” She pointed to China boycotting certain goods “in response to diplomatic actions by other countries.” She explained that the US will “press China on its unfair economic practices” and work with its allies and partners to “coordinate actions . . . in response.” In particular, the US is focused on securing its critical supply chains and continuing to invest in international financial institutions to deepen its economic ties throughout the globe.11

Principal Objective 3: Cooperation On Global Challenges

Secretary Yellen expressed a desire to build on her “conversations with Vice Premier Liu He and China’s other senior officials” concerning macroeconomics. However, she focused this section of her speech on debt distress and climate change.12

The Secretary stated that the US and China must cooperate to help emerging markets and developing countries deal with debt distress. She argued that, due to its “status as the world’s largest official bilateral creditor,” China plays a key role in providing “meaningful debt relief.” She alleged that “for too long” China has instead “served as a roadblock” to such relief. However, she commended China’s “recent provision of specific and credible financing assurances for Sri Lanka,” which in turn allowed the IMF to provide funding to the country. Secretary Yellen urged China to take similar actions in other cases, including countries like Zambia and Ghana, where the need is most critical.13 Debt treatment, the Secretary argued, is in China’s best interest, and delaying such treatment “raises the costs both for borrowers and creditors.” She also asserted the need to improve the international debt restructuring process, and that, with “the IMF and World Bank, [the United States is] working with a range of stakeholders to improve the Common Framework process for low-income countries and the debt treatment process more generally.”14

Turning to climate change, the Secretary stated that the US and China have a “joint responsibility” to lead efforts to address this issue. Secretary Yellen highlighted the US domestic climate action, as well as steps it has taken to help other countries reduce their carbon emissions. She expressed the Biden Administration’s expectation that China will “deliver on its commitments in [the] Joint Glasgow Declaration,” including “meeting mitigation targets and ending overseas financing of unabated coal-fire power plants.” China, she said, should aid developing countries and emerging markets in their efforts to transition to clean energy. She concluded her remarks by urging China to “seriously engage” with the US and to “deliver on its commitments.”15


Secretary Yellen concluded her remarks by reiterating the Biden Administration’s view that China and the US can, and must, work together in the economic sphere. While the US will never “compromise on [its] security or principles . . . [it] can find a way forward” on economic issues if China is “also willing to play its part.” Secretary Yellen announced her plan to travel to China to engage in talks with her new Chinese government counterpart following the country’s governmental transition. She expressed the hope that these future conversations will “help lay the groundwork” for the two countries to “responsibly manag[e their] bilateral relationship” and work together to address the issues facing both countries and the world at large.16









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13 “The Common Framework for Debt Treatments beyond the DSSI is an agreement of the G20 and Paris Club countries to coordinate and cooperate on debt treatments for up to 73 low income countries that are eligible for the Debt Service Suspension Initiative (DSSI). Debt treatments under the Common Framework are initiated at the request of a debtor country on a case-by-case basis. The framework is designed to ensure broad participation of creditors with fair burden sharing. Importantly, it includes not only members of the Paris Club but also G20 official bilateral creditors such as China, India, Turkey or Saudi Arabia that are not members of the Paris Club.”




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