Working on ‘healthy’ relations with China, says US Treasury

SAN FRANCISCO: US Treasury Secretary Janet Yellen insisted on Friday that Washington and Beijing had to reestablish “healthy economic relations” after a period of strained ties between the world’s two biggest economies.

SAN FRANCISCO: US Treasury Secretary Janet Yellen speaks during a news conference following her second day of meetings with China's Vice Premier He Lifeng, ahead of the Asia-Pacific Economic Cooperation (APEC), in San Francisco, California, on November 10, 2023. -- AFP.

But, she said, the United States would not shy away from taking unilateral action against Chinese firms supplying defense equipment to Russia for its invasion of Ukraine if Beijing failed to take preventative action. “We do not seek to decouple our economy from China’s,” Yellen told reporters after a two-day meeting with Chinese Vice Premier He Lifeng in San Francisco.

“This would be damaging to both the US and China and destabilizing to the world.” The meeting came just ahead of a sit-down between US President Joe Biden and Chinese Premier Xi Jinping, who will be in the California city next week for an APEC (Asia-Pacific Economic Cooperation) summit of leaders from around the Pacific. Ties between Washington and Beijing became particularly troubled under former US president Donald Trump, who used China as a domestic foil, imposing populist tariffs on Chinese imports as part of his drive to shore up US manufacturing.

The rhetoric did not improve under Biden, and relations have been further strained as Beijing boosts cooperation with Russia, part of an effort to counterbalance US global heft. But in recent months the Biden administration has made a number of small steps to take the heat off things, with visits to China by Secretary of State Antony Blinken, as well as by Yellen and Commerce Secretary Gina Raimondo.

“Over the past two days, Vice Premier He and I have built on this foundation, with candid, direct and productive engagements,” Yellen said. “There is no substitute for in-person diplomacy,” she said, adding the two had agreed she would return to China next year.

Yellen however cautioned her counterpart that Washington was aware that Chinese companies were aiding Russia’s invasion of Ukraine. “We are concerned that in spite of a sanctions programs that we’ve put in place, that equipment that is critical to Russia’s military effort is nevertheless evading sanctions and being delivered to Russia,” she said. Yellen said she was not accusing the Chinese government of complicity, but noted “some Chinese private firms... as well as some financial institutions” were involved in “facilitating that flow.”

“I stressed in our conversations... we would like to see China crack down,” she said, adding that in the absence of action Washington was “prepared to put in place further sanctions.”

Yellen opened talks with Chinese counterpart He Lifeng ahead of a key Asia-Pacific leaders’ summit, seeking to limit tensions despite looming national security concerns. The two days of bilateral meetings kicked off in San Francisco, where the Asia-Pacific Economic Cooperation (APEC) summit is set to begin this weekend. The gathering is due to be the backdrop for a long-anticipated meeting between US President Joe Biden and Chinese leader Xi Jinping, expected to take place on November 15, sources have told AFP.

On the agenda for the Treasury secretary and He, Beijing’s lead for US-China economic and trade affairs, are concerns about a level playing field for businesses, cooperation on climate change and debt distress, alongside “the use of economic tools for national security purposes,” Yellen said in opening remarks. He expressed hopes for in-depth discussions on economic issues involving both countries, and the global economy, adding he also planned to communicate China’s “key economic concerns.”

While the governments of both countries have not yet publicly confirmed the Xi-Biden meeting, they have given wide indications that they expect it to take place. White House Press Secretary Karine Jean-Pierre said on October 31 that Washington hoped for a “constructive conversation in San Francisco” between the two presidents. — AFP.