US not seeking ‘winner-take-all’ competition

US Treasury Secretary Janet Yellen yesterday called for market reforms in China and criticized the world’s second-largest economy for its recent tough actions against US companies and new export controls on some critical minerals.

Yellen arrived in Beijing on Thursday to try to repair fractious US-Chinese 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 a trade relationship that is fundamentally solid, 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 yesterday that the Treasury said was “candid and constructive.”

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, a close confidante of President Xi Jinping, and outgoing top Chinese central banker Yi Gang.

“Strengthening cooperation is the realistic need and correct choice of China and the United States … to inject stability and positive energy into China-US relations,” state media reported Li as saying.

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 favourable environment for the healthy development of economic and trade ties, its finance ministry said in a statement yesterday.

“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 US government leaders, the market would get colder,” he added.

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, and Biden’s climate envoy John Kerry is expected to visit later this month.

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.