Treasury Secretary Janet Yellen said on Thursday during a pivotal meeting with her Chinese counterpart that a full separation of the world’s two largest economies would be “disastrous” for both countries.
“The United States has no desire to decouple from China,” Yellen said in remarks prepared for delivery in San Francisco. “A full separation of our economies would be economically disastrous for both our countries, and for the world.”
Yellen also touted the “significant progress” made between the U.S. and China in their communication lines, despite recent tension between the powers amid Beijing’s refusal to condemn the Russian war in Ukraine, the rising threat of a crisis in the Taiwan Strait and ongoing economic competitiveness.
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“When we have concerns about specific economic practices, such as those that prevent American firms and workers from competing on a level playing field, we will communicate them directly,” she said.
Yellen said that both China and the U.S. have an “obligation” to lead on issues facing the global economy, including climate change, debt distress in low-income nations and emerging markets. The U.S., she said, will continue to use its status as an economic powerhouse for national security purposes, including taking “targeted actions to protect our and our allies’ national security.”
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“We are also committed to communicating clearly about these actions to prevent any misunderstandings or miscalculations,” she said. “And we welcome more clarity on China’s thinking and actions.”
The talks on Thursday precede a high-stakes meeting next week between President Biden and Chinese President Xi Jinping during the Asia-Pacific Economic Cooperation forum in San Francisco, which begins on Saturday.
Xi is also expected to speak to top U.S. business executives at a dinner following the meeting with Biden.
Beijing laid out some of its concerns about Washington policy ahead of the meeting between Yellen and He, underscoring the fragile nature of the U.S.-China relationship. The list of grievances includes the Biden administration’s policy on China, efforts to exclude Beijing from the supply chain system, restrictions on technology products like advanced semiconductor chips, tariffs imposed on Chinese goods and restrictions on the operation of Chinese companies within the U.S.
“The United States has so far included more than 1,300 Chinese companies on various sanctions lists,” state-run media company China Central Television wrote in a social media post. “If it wants to cooperate with China, the United States also needs to slim down this list.”
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