HomeTrading NewsJanet Yellen says U.S. economic competition with China must be ‘fair to both sides’

Janet Yellen says U.S. economic competition with China must be ‘fair to both sides’

WASHINGTON — The U.S. seeks healthy economic competition with China even as the country pursues intellectual property to gain an economic edge, Treasury Secretary Janet Yellen said Thursday.

Yellen stressed the importance of fairness between the U.S. and China, while outlining a three-tiered approach to economic relations between the nations during remarks at the Johns Hopkins University’s School of Advanced International Studies on Thursday. Her comments come as Washington, and the Republican-held House in particular, increase pressure on Beijing as part of a sustained U.S. backlash against China’s economic tactics.

Yellen said the world’s two largest economies can only compete through impartial rulemaking.

“There is a world in which, as companies in the U.S. and China challenge each other, our economies can grow, standards of living can rise, and new innovations can bear fruit,” Yellen said, according to pre-released remarks. “But this type of healthy competition is only sustainable if it is fair to both sides.”

Janet Yellen, US Treasury secretary, speaks at the Johns Hopkins Universitys School of Advanced International Studies (SAIS) in Washington, DC, US, on Thursday, April 20, 2023.
Ting Shen | Bloomberg | Getty Images

The Treasury chief also contended China has pursued market share for its domestic firms through illegal means and at the expense of foreign competitors.

“It has done so in traditional industrial sectors as well as emerging technologies,” Yellen said of the Chinese government’s efforts. “This strategy has been coupled with aggressive efforts to acquire new technological know-how and intellectual property – including through IP theft and other illicit means.”

The Biden administration’s three-pronged proposal to develop economic rapport with China emphasizes national security and human rights protections.

“We will clearly communicate to [China] our concerns about its behavior. And we will not hesitate to defend our vital interests,” Yellen said. “Even as our targeted actions may have economic impacts, they are motivated solely by our concerns about our security and values. Our goal is not to use these tools to gain competitive economic advantage.”

Safeguarding certain technologies from China’s military and security networks is “of vital national interest,” Yellen said.

“We will not compromise on these concerns, even when they force trade-offs with our economic interests,” she said.

Yellen vowed to partner with U.S. allies in countering China’s “unfair economic practices” while advancing “our vision for an open, fair, and rules-based global economic order.” She also called on Chinese President Xi Jinping to follow through on his promise to cooperate on global issues like climate change and debt distress.

“We call on China to follow through on its promise to work with us on these issues – not as a favor to us, but out of our joint duty and obligation to the world,” she said. “Tackling these issues together will also advance the national interests of both of our countries.”

Lawmakers have focused on the rivalry between the two powers during the ongoing debate over raising the $31.4 trillion debt ceiling. If the U.S. fails to do so, it could default on its debt for the first time this summer. Yellen and her colleagues have repeatedly warned about the catastrophic consequences of default, including economic damage and international apprehension about the full faith and credit of the United States.

On Wednesday, House Speaker Kevin McCarthy, R-Calif., promised that a GOP bill to temporarily raise the debt ceiling in exchange for spending cuts would also reduce U.S. dependence on China.

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