Yellen criticises China’s punitive actions against U.S. companies

U.S. Treasury Secretary Janet Yellen has criticized China for its recent “punitive” actions against U.S. companies and new export controls on some critical minerals.

Yellen, who arrived in Beijing on Thursday said the moves underscored the need for “resilient” and diverse supply chains, and warned that the United States and its allies will fight back against what she called China’s “unfair economic practices.”

Yellen made the remarks 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. She is slated to meet later Friday with Premier Li Qiang.

Yellen’s trip is part of a flurry of visits aimed at calming tensions between Washington and Beijing that escalated after the U.S. military shot down a Chinese government balloon over the United States and amid increasing strains over export controls.

No major breakthroughs are expected, with officials from both sides accepting that safeguarding national security interests now trumps deepening economic ties.

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China hopes the U.S. will take “concrete actions” to create a favourable environment for the healthy development of bilateral economic and trade ties, China’s finance ministry said in a statement on Friday.

“No winners emerge from a trade war or from decoupling and ‘breaking chains’,” the statement added.

U.S. firms 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.

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.

Yellen said she came to work toward a “stable and constructive relationship” between the two countries, while making clear that Washington will act 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.

Yellen said Washington was still evaluating new Chinese export controls on gallium and germanium, critical minerals used in technologies like semiconductors, but said the move underscored the need for “resilient and diversified supply chains.”

 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.”