Washington | Treasury Secretary Janet Yellen said the Biden administration was prepared to accept economic costs as it sought to protect US national security interests from threats posed by China, even as she appealed to Beijing to cooperate on shared global concerns.
“National security is of paramount importance in our relationship with China,” Yellen said in a speech on Thursday (Friday AEST) in Washington. “We will not compromise on these concerns, even when they force trade-offs with our economic interests.”
Yellen repeated her view that China and the US, as the world’s two largest economies, had a responsibility to work together. AP
The remarks, set against a backdrop of deteriorating relations with Beijing, outline three priorities in dealing with China.
The administration will defend its national security interests and express concerns over China’s behaviour; seek healthy and fair economic competition; and aim to engage on issues like climate change and debt relief in the developing world.
Adam Posen, president of the Peterson Institute for International Economics, said Yellen’s comments on national security and economic costs, if they truly capture the Biden administration’s stance, were the most important passage in the speech.
“A US strategy that recognises China’s right to modernise and acknowledges that there are economic costs in the pursuit of worthy national security goals is a reality-based, sustainable starting point for a strategy that is neither a crusade nor a fantasy,” said Posen — who on Saturday hosted China’s central bank chief for an event in Washington.
China reaction
Another China watcher, Jeremy Mark, a senior fellow at the Atlantic Council, said Beijing’s reaction to the national security points will set the tone for US-China economic ties.
“It’ll be interesting to see how China responds to Secretary Yellen’s very clear assertion of the paramount importance of the US national security interests,” he said. “It’s not a new position, but it will resonate in Beijing because of who is saying it this time.”
Yellen repeated that she planned to travel to China “at the appropriate time”. Such a visit has been in the works for months, but has been complicated by the escalation in tensions earlier this year over China’s alleged spy balloon.
“My hope is to engage in an important and substantive dialogue on economic issues with my new Chinese government counterpart following the political transition in Beijing,” she said, referring to a recent government reshuffle under President Xi Jinping.
Championing US
Mark said he believed it’s up to China to decide whether the trip will take place. “The ball is in Beijing’s court.”
The Treasury chief set a defiant tone in some of her remarks, contesting predictions that China would eclipse the US as the world’s largest economic power and lead to a “clash between nations”.
“Pronouncements of US decline have been around for decades, but they have always been proven wrong,” she said in the address at Johns Hopkins University’s School of Advanced International Studies in Washington. “The United States has repeatedly demonstrated its ability to adapt and reinvent to face new challenges. This time will be no different.”
She also spoke about US grievances over China’s “expanded support for its state-owned enterprises and domestic private firms to dominate foreign competitors” and its alleged theft of intellectual property.
No containment
She tempered that by declaring the Biden administration wasn’t motivated in its actions by a desire to hold back China’s development. And she said the US wasn’t seeking any full-blown “decoupling” with China’s economy, something that would be “disastrous for both countries” and “destabilising for the rest of the world”.
“These national security actions are not designed for us to gain a competitive economic advantage, or stifle China’s economic and technological modernisation,” she said.
Posen was sceptical such reassurances would be believed in Beijing, but said they were more important for US allies and countries in the developing world to hear.
“It is essential that they believe that the US actions against China are not primarily a front for extending our commercial dominance by unfair means to selfish ends,” he said.
China’s Xi has made trying to match or beat the US in the technology sphere a major focus. Last month, he criticised Washington for what he called a strategy of “containment and suppression” — led by trade restrictions, blacklists and investment curbs — that has challenged China’s technological development.
Yellen repeated her view that China and the US, as the world’s two largest economies, had a responsibility to work together.
“It is important that we make progress on global issues regardless of our other disagreements,” she said. “That’s what the world needs from its two largest economies.”
Original Article: https://www.afr.com/world/asia/yellen-says-china-security-worries-eclipse-economy-interests-20230421-p5d25p
