More Yellen About China

Treasury Secretary Janet Yellen outlined the United States' economic approach to China, emphasizing the importance of protecting national security interests, fostering healthy economic competition, and seeking cooperation on global challenges.

In a speech at John Hopkins Thursday, Yellen acknowledged China's impressive economic rise and the potential for both countries to benefit from fair economic competition.

"The US will assert ourselves when our vital interests are at stake, but we do not seek to ‘decouple’ our economy from China’s," said Ms. Yellen. "A full separation of our economies would be disastrous for both countries. It would be destabilizing for the rest of the world."

However, she stressed that the US will not hesitate to defend its vital interests, even when doing so may impact the economy.

She indicated the White House is "considering a program to restrict certain U.S. outbound investments in specific sensitive technologies with significant national security implications," the "reverse CFIUS" regime Washington has been anticipating.

Yellen outlined three principal objectives for the US's economic approach to China:

1. Secure national security interests and protect human rights: Yellen emphasized that the US will not compromise on these concerns and will use a range of tools, including targeted actions and close coordination with allies and partners, to address issues.

2. Foster a healthy economic relationship with China: Yellen stated that both countries can benefit from healthy competition, as long as it is fair. The US will continue to invest in itself and partner with allies to respond to China's unfair economic practices.

3. Seek cooperation on urgent global challenges: Yellen called on China to follow through on its promise to work with the US on issues such as climate change and debt distress. She highlighted the need for both countries to lead the way in tackling these challenges, emphasizing the importance of their joint responsibility.

Yellen also addressed concerns about the US economy's decline, arguing that America's ability to adapt and reinvent has always proven naysayers wrong. She further stated that the US has no reason to fear healthy economic competition with any country, including China.

On national security, Yellen mentioned the importance of safeguarding specific technologies from China's military and security apparatus. She emphasized that these actions are driven by national security considerations and not intended to gain a competitive economic advantage.

On the subject of human rights, Yellen expressed the US's concerns about China's abuses in Xinjiang, Hong Kong, Tibet, and other regions.

Yellen also discussed the importance of addressing global challenges such as debt overhang and climate change. She stressed that both countries must work together on these issues, with China taking on the same responsibilities as other official bilateral creditors.

Yellen emphasized that the world is big enough for both the US and China and that they can find a way to coexist and share in global prosperity. She announced plans to travel to China "at an appropriate time" to engage in substantive dialogue on economic issues with her Chinese counterpart.