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Yellen Says U.S. Wants ‘Healthy’ Economic Ties With China


The United States and China agreed on Friday that they would not seek to “decouple” their economies and pledged to take steps to improve the business climates for American and Chinese companies operating in both countries, a significant step toward thawing relations between the world’s largest economies.

Treasury Secretary Janet L. Yellen said after two days of meetings with Vice Premier He Lifeng in San Francisco that they had concluded they should strive for a “healthy economic relationship” and try to work more constructively together.

“We do not seek to decouple our economy from China’s,” Ms. Yellen said. “This would be damaging to both the U.S. and China and destabilizing for the world.”

She and Mr. He met at a delicate moment for the world economy, which is grappling with sluggish growth and wars in Ukraine and the Middle East. While economic strength in the United States has been a bright spot, China’s economy continues to sputter. Official statistics this week showed that prices in China are falling as households and businesses remain wary of spending even as state-controlled banks invest in the construction of more factories.

The talks between Ms. Yellen and Mr. He, China’s top economic official since March, were held before the Asia-Pacific Economic Cooperation summit begins in San Francisco on Saturday, and set the stage for a widely anticipated meeting next week between President Biden and China’s top leader, Xi Jinping.

After years of growing acrimony between the two countries, the Biden administration has given priority to stabilizing relations, and this year sent several senior officials to Beijing in hopes of reopening lines of communication. After Ms. Yellen’s visit in July, the Treasury Department initiated economic and financial working groups with China to give both countries a new forum to air grievances and look for ways to collaborate.

Many contentious economic issues continue to cloud the relationship. Biden administration officials have raised concerns about mistreatment of American companies operating in China, and there is continuing frustration about theft of American intellectual property and China’s dominance of the electric vehicle market.

“A healthy economic relationship requires American workers and firms to be treated fairly,” Ms. Yellen said.

China also has grievances and has expressed frustration about measures that the United States has taken to restrict American investment in certain Chinese sectors, tariffs on Chinese imports into the United States and backlash that Chinese companies face when investing in America. The Chinese government has also bristled at Biden administration rules aimed at blocking China’s access to advanced technologies that the United States worries could be used for military purposes.

Ms. Yellen said she had raised concerns about the scale of China’s nonmarket policies, which the Biden administration believes unfairly subsidize Chinese exports, and their impact on U.S. workers and firms. The Treasury secretary also expressed concerns about China’s recent export controls on graphite and other critical minerals and urged China not to provide Russia’s defense industrial sector.

The Treasury secretary said that the United States had seen evidence that Chinese companies were supporting Russia’s defense sector and that she had asked Mr. He to do more to crack down on actions by Chinese companies that violated American sanctions.

Ms. Yellen has said face-to-face contact with China’s new economic team is important as the Biden administration tries to better understand how China intends to steer its economy out of a difficult postpandemic recovery. On Friday, she said Chinese officials had expressed confidence in their plans and wanted to avoid enacting short-term measures to boost the economy that could lead to longer term problems.

Ms. Yellen said that she and Mr. He had also discussed the fiscal outlook in the United States and that she had reassured him that the Biden administration had been taking steps to raise more tax revenue and reduce budget deficits. China is one of the biggest holders of U.S. Treasury securities.

The high-level meetings this week are taking place at a moment when the politics of trying to improve relations with China are growing more complicated. During a Republican presidential debate this week, several candidates struck a confrontational tone and called for severing economic ties with China.

But Ms. Yellen has taken a much different approach. She has explained to her Chinese counterparts that the United States wants to diversify its supply chains while arguing that the consequences of further deterioration of economic ties between the two countries would have dire consequences for the world economy.

Although no specific policy breakthroughs were announced on Friday, Ms. Yellen expressed hope that more dialogue would help avoid the kind of tit-for-tat retaliatory actions that had frayed the U.S. relationship with China over the years.

“This is not just communication for communication’s sake,” she said. “It allows us to avoid misunderstandings and unintended escalation, make informed decisions and work toward specific policy outcomes.”

Ms. Yellen said the two sides agreed to work together on efforts to combat climate change and to provide debt relief to low-income countries that were facing the prospect of default. The Treasury secretary added that she and Mr. He had agreed to have more regular communication and that she expected to travel to China again next year.


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