"WASHINGTON -- Treasury Secretary Janet Yellen said protecting national security would be the U.S. priority in its relationship with China even if it slows economic growth, taking a hawkish stance as she pushed for more collaboration with Beijing.
In a speech Thursday, Ms. Yellen laid out the Biden administration's vision for its economic relationship with China. The U.S. will remain the world's dominant economic power, Ms. Yellen said, curbing its ties with China in certain areas. But she said the U.S. isn't trying to prevent China's economic advancement, adding that many trading and scientific links should remain.
"The United States will assert ourselves when our vital interests are at stake. But we do not seek to decouple our economy from China's," Ms. Yellen said at the School of Advanced International Studies at Johns Hopkins University. "A full separation of our economies would be disastrous for both countries."
Finding the balance with China between defending national security and encouraging economic growth is a central task for Ms. Yellen and the Biden administration. China is the world's second-largest economy, behind the U.S., and the globe's largest exporter. Trade between the two countries reached a record last year.
But ties between the two countries have been deteriorating for years. Tensions escalated earlier this year when a Chinese surveillance balloon flew over the U.S. and was shot down, complicating a push to restore regular communications.
Beijing has ignored attempts to restart discussions on global-security issues and refused to engage with U.S. defense officials. Ms. Yellen, whose plans to travel to China earlier this year were delayed by the balloon incident, said during her speech she would visit "at the appropriate time."
A spokesman for the Chinese embassy in Washington said "a healthy and stable China-U.S. relationship is in the fundamental interest of both peoples."
As Washington tries to steady the relationship, the U.S. also is rallying close allies to reorient their economies away from China, warning that Beijing is a risky economic partner that could cut the world off from key exports. In a new step, the U.S. is preparing to restrict some investments into advanced technology in China after last year banning the export of advanced semiconductors and chip-making equipment there.
"Even though these policies may have economic impacts, they are driven by straightforward national-security considerations," Ms. Yellen said. "We will not compromise on these concerns, even when they force trade-offs with our economic interests."
Chinese leader Xi Jinping asked President Biden in November to remove the wide-ranging U.S. export controls designed to keep Beijing from acquiring or producing advanced semiconductors, people briefed on the discussion said. The restrictions remain.
"We oppose defining the entire China-US relations by competition, oppose the generalization of the concept of national security, oppose decoupling even at the expense of global industrial and supply chains," the Chinese embassy spokesman said.
While Ms. Yellen routinely criticizes China in public remarks, she was more forthright on Thursday about the U.S.'s willingness to make economic sacrifices for the sake of national security.
She had previously sounded more open to working with China on economic issues than others in the Biden administration, such as calling for lifting some tariffs on Chinese imports as other officials sought to keep them.
And she has worried that China could retaliate against the U.S. if Beijing views the Biden administration's policies as too punitive, people familiar with her thinking said.
Ms. Yellen discussed China with close allies last week on the sidelines of meetings of the International Monetary Fund and World Bank in Washington.
They discussed how depending on China, particularly for minerals used in electric-vehicle batteries, could make Western countries vulnerable if those supplies were cut off.
U.S. officials are particularly worried about the possibility of a conflict over Taiwan, a self-governing island that Beijing regards as part of China and aims to take control of.
The Biden administration's approach to pull much of the Western world away from China has fueled concerns from some foreign officials that the world economy might split into competing blocs, one led by the U.S. and the other by China, slowing trade and investment around the world." [1]
1. U.S. News: Yellen Assesses U.S.-China Ties, Risks --- National security tops economic growth, but full separation would be a disaster, she says
Duehren, Andrew. Wall Street Journal, Eastern edition; New York, N.Y. [New York, N.Y]. 21 Apr 2023: A.2.
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