By Andrea Shalal
BEIJING (Reuters) – U.S. Treasury Secretary Janet Yellen kicked off a four-day visit to Beijing on Friday calling for market reforms in the world’s second-largest economy and warning that the United States and its allies will retaliate against this which she called China. “unfair economic practices”.
Yellen made the remarks during a meeting with American companies doing business in China after an early morning meeting with former Chinese economic czar Liu He, a close confidant of President Xi Jinping. She is to meet Premier Li Qiang later.
Yellen’s trip is part of a wave of visits aimed at easing tensions between Washington and Beijing after the US military shot down a Chinese government balloon over the United States.
Secretary of State Antony Blinken visited last month and agreed with Xi that mutual rivalry should not escalate into conflict, and Biden’s climate envoy John Kerry is expected to visit later this month .
The American diplomatic push precedes a possible meeting between President Joe Biden and Xi as soon as the G20 summit in September in New Delhi or the Asia-Pacific economic cooperation meeting scheduled for November in San Francisco.
Yellen said she came to China to deepen communication and work towards a “stable and constructive relationship” between the two countries, while stressing that Washington will act to protect its national security interests and human rights.
“We believe it is in the interest of both countries to ensure that we have direct and clear lines of communication at senior levels,” Yellen said in prepared text.
Regular exchanges could help the two countries monitor economic and financial risks at a time when the global economy was facing “headwinds like Russia’s illegal war in Ukraine and the lingering effects of the pandemic”, added Yelen.
Yellen said she would make it clear to Chinese officials that Washington was not seeking “a total separation of our economies,” but that she would be concerned about their use of increased subsidies for state-owned enterprises and national enterprises, barriers to market access for foreign companies, and recent “punitive actions” against US companies.
Yellen also expressed concern about new Chinese export controls on gallium and germanium, critical minerals used in technologies such as semiconductors. She said Washington is still assessing the impact of the move, but stresses the need for “resilient and diverse supply chains.”
MARKET REFORMS
Yellen also took aim at China’s planned economy, urging Beijing to return to more market-oriented practices that had supported its rapid growth in recent years.
“A move towards market reforms would be in China’s interest,” the former top US central banker told US business executives.
“A market-based approach has helped spur rapid growth in China and lift hundreds of millions of people out of poverty. This is a remarkable economic success.
Yellen noted that China’s huge and growing middle class provided a large market for American goods and services, and pointed out that Washington’s targeted actions against China were based on national security concerns.
“We seek to diversify, not decouple,” she said. “A decoupling of the world’s two largest economies would be destabilizing for the global economy, and it would be virtually impossible to undertake.”
U.S. officials say they also expect Yellen to raise concerns about the impact of China’s new counterintelligence law on U.S. businesses and warn Beijing of the consequences of the murderous aid to Russia.
Chinese officials, meanwhile, are expected to express concern over the Biden administration’s plans to limit U.S. business investment in China at a time when China’s economy is recovering more slowly than expected from COVID shutdowns and when the labor market is difficult.
(Reporting by Andrea Shalal; Editing by Michael Perry)