More Yellen About China

Treasury Secretary Janet Yellen is hoping for better communication with China next year in order to avoid major disputes, but also to make sure Beijing is aware of US concerns about its unfair economic practices.

In remarks on the US-China economic relationship delivered at the US-China Business Council, Ms. Yellen laid out her three main priorities for the bilateral relationship.

“First, over the next year, the United States will aim to continue to responsibly manage the US-China bilateral economic relationship,” she said. “We know that this relationship will face continued challenges. There are many areas on which the U.S. and China strongly disagree. There is also always the risk of shocks that impact both of our countries.

“We seek not to resolve all our disagreements nor avoid all shocks. This is in no way realistic. But we aim to make our communication resilient so that when we disagree, when shocks occur, we prevent misunderstanding from leading to escalation and causing harm.”

Establishing “durable communication channels” will include Ms. Yellen traveling to China for the second time since becoming Treasury Secretary. Her agenda for that trip will be to discuss “difficult areas of concern,” she said.

“The United States will maintain our commitment to clear communication on our actions, from our outbound investment regime, to the rollout of additional Inflation Reduction Act provisions, to our sanctions. And we will keep pressing the PRC on its national security actions.”

Economic Policies

At nearly 20 percent of the global economy, “China is too large to export its way to growth, and its economic policy choices have far-reaching consequences,” she said.

“As we learn more, we will continue to raise concerns on areas where the US and China disagree, from the possible global spillovers of China's industrial policies to actions China has taken that can disadvantage the private sector, the secretary continued. “We will also ask for greater transparency on China's non-market practices and foreign exchange practices. We will reinforce – alongside our partners and allies – that for a healthy economic relationship to be sustainable, it is essential that there is a level playing field for our firms and workers. More clarity will allow us to make better decisions on behalf of our citizens. And it also helps policymakers in the many other economies that could be affected by the choices China makes.”

The third priority will be to accelerate work with China on areas where the two countries would benefit from collaboration and joint leadership. The United States and China will facilitate exchanges between our financial regulators, as the United States does regularly with major financial centers such as the European Union and the United Kingdom.

There also is scope for collaboration on anti-money laundering and countering the financing of terrorism, including addressing illicit finance risks associated with cryptocurrency, she said.