Yellen Criticizes China’s ‘Punitive’ Actions against US Companies, Urges Market Reforms

US Treasury Secretary Janet Yellen called on Friday for market reforms in China and criticized its recent tough actions against US companies and mineral export controls, while China's premier called on her to "meet China halfway" and put bilateral relations back on track.

Yellen met with Premier Li Qiang on Friday during a visit to Beijing aimed at repairing fractious US-Chinese economic relations, but made clear in her public remarks that Washington and its Western allies will continue to hit back at what she called China's "unfair economic practices."

Despite talk of US-China economic decoupling, recent data show that the world's two largest economies remain deeply linked, with two-way trade hitting a record $690 billion last year.

"We seek healthy economic competition that is not winner-take-all but that, with a fair set of rules, can benefit both countries over time," Yellen told Chinese Premier Li Qiang in a meeting on Friday that the Treasury said was "candid and constructive."

China released a statement from Li calling for strengthened communication, consensus on economic issues and "candid in-depth and pragmatic exchanges, so as to inject stability and positive energy into Sino-US economic ties."

"China hopes the US will uphold a rational and pragmatic attitude, meet China halfway, and push China-US relations back on track soon," Li's statement said.

It made no mention of recent semiconductor-related mineral export controls from both countries.

Yellen is due to meet with Chinese Vice Premier He Lifeng -- her direct counterpart as China's top economic official -- on Saturday, a US Treasury official said.

Yellen also spoke to the American Chamber of Commerce in China (AmCham) after what a Treasury official called "substantive" talks with former Chinese economy czar Liu He -- He Lifeng's predecessor -- who remains a close confidante of President Xi Jinping. Yellen also met with departing top Chinese central banker Yi Gang.

Yellen and other US officials are walking a diplomatic tightrope, trying to repair ties with China after the US military shot down a Chinese government balloon over the United States while continuing to push Beijing to halt practices they view as harmful to US and Western companies.

Yellen said she hoped her visit would spur more regular communication between the two rivals, and said any targeted actions by Washington to protect its national security should not "needlessly" jeopardize the broader relationship.

US officials have downplayed the prospects for any major breakthroughs, while highlighting the importance of more regular communications between the world's two biggest economies.

China hopes the United States will take "concrete actions" to create a favorable environment for the healthy development of economic and trade ties, its finance ministry said in a statement on Friday.

"No winners emerge from a trade war or from decoupling and 'breaking chains'," the statement added.

Li told Yellen a rainbow that appeared as her plane landed from Washington on Thursday offered hope for the future of US-China ties.

"I think there is more to China-US relations than just wind and rain. We will surely see more rainbows," he said.

US companies in China hope Yellen's visit will ensure trade and commercial lanes between the two economies remain open, regardless of the temperature of geopolitical tensions.

AmCham President Michael Hart welcomed Yellen's "extra firepower" in pressing for changes in China's policies, and said her visit could pave the way for more exchanges at lower levels between the two sides.

"I think if there was another year of no visits by top U.S. government leaders, the market would get colder," he added.

Possible Biden-Xi Meeting

The US diplomatic push comes ahead of a possible meeting between President Joe Biden and Xi as soon as September's Group of 20 Summit in New Delhi or the Asia-Pacific Economic Cooperation gathering scheduled for November in San Francisco.

Secretary of State Antony Blinken traveled to Beijing last month and agreed with Xi that the mutual rivalry should not veer into conflict. Biden's climate envoy John Kerry is expected to visit later this month, and the US Treasury believes climate finance is an area where Beijing and Washington can cooperate.

Yellen told the US business executives a "stable and constructive relationship" between the two countries would benefit US companies and workers, but Washington also needed to protect its national security interests and human rights.

Regular exchanges could help both 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," Yellen added.

At the same time, she said she would raise concerns with Chinese officials about Beijing's use of expanded subsidies for state-owned enterprises and domestic firms, barriers to market access for foreign firms, and its recent "punitive actions" against US firms.

New Chinese export controls on gallium and germanium, critical minerals used in technologies like semiconductors, were also concerning, she said, adding the move underscored the need for "resilient and diversified supply chains."

Market reforms

Yellen also took aim at China's planned economy, urging Beijing to return to more market-oriented practices that had underpinned its rapid growth in past years.

"A shift toward market reforms would be in China's interests," she told the AmCham event.

"A market-based approach helped spur rapid growth in China and helped lift hundreds of millions of people out of poverty. This is a remarkable economic success story."

Yellen dismissed the idea of decoupling the US and Chinese economies, nothing that China's enormous and growing middle-class provided a big market for American goods and services. and stressed that Washington's targeted actions against China were based on national security concerns.

A Treasury official said the vibrant US business community in China was "a living embodiment that we are not decoupling."

"We have no interest in decoupling. We've got lots of leading American firms who have had a very long history and are deeply enmeshed into the Chinese economy," the official told reporters.

Military junta leaders of Niger, Mali and Burkina Faso on Saturday ruled out returning their nations to the West Africa regional bloc whose division could further jeopardize efforts to undo coups and curb violence spreading across the region.
The leaders of the three countries announced that position during their first summit in Niamey, the capital of Niger, after their withdrawal from the West Africa bloc known as ECOWAS in January, The Associated Press said.
They also accused the bloc of failing its mandate and pledged to consolidate their own union — the Alliance of Sahel States — created last year amid fractured relations with neighbors.
The nearly 50-year-old ECOWAS has become “a threat to our states,” said Niger’s military leader, Gen. Abdourahmane Tchiani.
"We are going to create an AES of the peoples, instead of an ECOWAS whose directives and instructions are dictated to it by powers that are foreign to Africa,” he said.
The meeting of the three countries that border one another came a day before an ECOWAS summit being held in Nigeria by other heads of state in the region.
Analysts said the two meetings show the deep division in ECOWAS, which had emerged as the top political authority for its 15 member states before the unprecedented decision of the three countries to withdraw their membership.
Despite efforts by ECOWAS to keep its house united, the alliance between the three military junta-led countries will most likely remain outside the regional bloc as tensions continue to grow, said Karim Manuel, an analyst for the Middle East and Africa with the Economist Intelligence Unit.
“Attempts at mediation will likely continue nonetheless, notably led by Senegal’s new administration, but it will not be fruitful anytime soon,” said Manuel.
Formed last September, the Alliance of Sahel States has been touted by the three junta-led countries as a tool to seek new partnerships with countries like Russia and cement their independence from former colonial ruler France , which they accuse of interfering with ECOWAS.
At the meeting in Niamey, Burkina Faso's leader, Capt. Ibrahim Traoré, reaffirmed those concerns and accused foreign countries of exploiting Africa.
“Westerners consider that we belong to them and our wealth also belongs to them. They think that they are the ones who must continue to tell us what is good for our states. This era is gone forever; our resources will remain for us and our populations,” Traoré said.
“The attack on one of us will be an attack on all the other members,” said Mali’s leader, Col. Assimi Goïta.
With Goïta elected as the new alliance's leader, the three leaders signed a pact in committing their countries to creating a regional parliament and a bank similar to those operated by ECOWAS. They also committed to pooling their military resources to fight insecurity in their countries.
At a meeting of regional ministers on Thursday, Omar Alieu Touray, the president of the ECOWAS Commission, said it had not received "the right signals” about any possible return of the three states despite ECOWAS lifting coup-related sanctions that the three nations blamed for their decision to quit the bloc.
It is not only the three countries that are angry at ECOWAS, observers say. The bloc has lost goodwill and support from West African citizens so much that some celebrated the recent spate of coups in the region where citizens have complained of not benefitting from rich natural resources in their countries.
For the most part, ECOWAS is seen as representing only the interests of its members' leaders and not that of the masses, said Oge Onubogu, director of the Africa Program at the Washington-based Wilson Center think tank.

Yellen Criticizes China’s ‘Punitive’ Actions against US Companies, Urges Market Reforms