On Thursday, December 14, Secretary of the Treasury Janet L. Yellen will deliver remarks on the U.S.-China economic relationship at the U.S-China Business Council’s 50th Anniversary Dinner in Washington, DC. The following are excerpts from the Secretary’s remarks as prepared for delivery.
“The Biden Administration strategy towards China begins with investing at home and rebuilding alliances abroad. When President Biden took office, considerable work was needed both domestically and internationally. The Trump Administration had failed to make investments at home in critical areas like infrastructure and advanced technology, while also neglecting relationships with our partners and allies that had been forged and strengthened over decades. This left America more vulnerable and more isolated in a competitive global economy that demands that nations take exactly the opposite approach. It damaged our global standing and meant significant missed economic opportunities for American firms and workers.
“Over the past three years, the Biden Administration has course corrected. We’re investing at home through President Biden’s Investing in America agenda. The Administration’s economic plan helped power a historically fast recovery from the pandemic. The Bipartisan Infrastructure Law, the CHIPS and Science Act, and the Inflation Reduction Act—together with the private sector investments they’re driving—are fueling economic growth, building the clean energy industries of the future, and increasing opportunity for people and places in America that have historically been left behind.
“We’re also deepening our economic ties with countries around the world, including those in the Indo-Pacific. In my trips to India, Indonesia, Japan, South Korea, and Vietnam, I saw the region’s dynamism firsthand. Greater economic integration with the region—when pursued strategically—can be immensely beneficial. We can boost production at home to serve expanding markets, creating jobs for American workers. And we can partner to bolster our economic security, including through building more secure supply chains, increasing America’s resilience while enabling more growth in Indo-Pacific economies.
“As I’ve said before, America’s fundamental economic strength means that we have nothing to fear from healthy economic competition, with China or any other country. Our strength positions us to seek new opportunities while navigating challenges. It’s within this context that we’ve shaped our economic approach to China.
“I and other U.S. officials have repeatedly stated that the United States does not seek to decouple from China. This would be damaging to both our economies and would have negative global repercussions. In my speech on the U.S.-China economic relationship in April, I made this clear. I also laid out three objectives for our relationship. The United States will pursue a healthy economic relationship with China, one that benefits both sides. We will seek to cooperate with China on global challenges. And because our national security must remain our foremost priority, we will deploy our economic tools when needed to secure our country’s national security interests and protect human rights.”
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“This progress will serve us in the year ahead. Let me provide an overview of three main priorities for the U.S.-China economic relationship in 2024.
“First, over the next year, the United States will aim to continue to responsibly manage the U.S.-China bilateral economic relationship. We know that this relationship will face continued challenges. There are many areas on which the U.S. and China strongly disagree. There is also always the risk of shocks that impact both of our countries. We seek not to resolve all our disagreements nor avoid all shocks. This is in no way realistic. But we aim to make our communication resilient so that when we disagree, when shocks occur, we prevent misunderstanding from leading to escalation and causing harm.
“Our work began by establishing durable communication channels that can withstand challenging circumstances. Next year, the Working Groups will continue to meet regularly. And I plan to take my second trip to China as Treasury Secretary, where a significant portion of the agenda will focus on discussing difficult areas of concern with my counterpart. The United States will maintain our commitment to clear communication on our actions, from our outbound investment regime, to the rollout of additional Inflation Reduction Act provisions, to our sanctions. And we will keep pressing the PRC on its national security actions. Continuing to stabilize our relationship to prevent escalation won’t make news. But our economies, our people—and, again, also economies and people around the world—will be safer and more secure. This is what it means for the U.S. and China to build and responsibly manage our relationship.
“Second, over the next year, we will continue pressing for clarity on China’s economic policies and policymaking to better inform our own decision-making. Fifty years ago, when China was less than 3 percent of the global economy, excess supply or changes in demand in China—in fact, Chinese economic policy more broadly—mattered far less to the rest of the world. Now, at nearly 20 percent of the global economy, China is too large to export its way to growth, and its economic policy choices have far-reaching consequences. The same is true for financial stability. Financial shocks in China—and China’s response to them—do not occur in isolation. Understanding China’s plans, especially how China intends to respond to challenges with local government debt and the real estate market or how it might react if unexpected weaknesses in its economy should arise, is crucial for those of us charged with policymaking in the United States. As we learn more, we will continue to raise concerns on areas where the U.S. and China disagree, from the possible global spillovers of China’s industrial policies to actions China has taken that can disadvantage the private sector. We will also ask for greater transparency on China’s non-market practices and foreign exchange practices. We will reinforce—alongside our partners and allies—that for a healthy economic relationship to be sustainable, it is essential that there is a level playing field for our firms and workers. More clarity will allow us to make better decisions on behalf of our citizens. And it also helps policymakers in the many other economies that could be affected by the choices China makes.
“Third, over the next year, we will aim to accelerate our work with China on areas where our countries and many others would benefit from our collaboration and joint leadership. It is often well-understood that military leaders need to have quick and reliable means of communication to keep a crisis from spiraling out of control. For economic policymakers responding to financial stress, it is also critical to know the counterpart on the other end of the line and be able to make a quick call. To enable this, the United States and China will facilitate exchanges between our financial regulators, as the United States does regularly with major financial centers such as the European Union and the United Kingdom. We already have efforts underway to exchange information about modeling climate stress scenarios, which is crucial to understanding and preparing ourselves for the threat climate change poses to our financial systems. And we are facilitating a similar technical exchange on how each jurisdiction handles—and how we’d best coordinate—if there were a failure of a global systemically important bank, or G-SIB, in the U.S. or China.
“There is also scope for collaboration on anti-money laundering and countering the financing of terrorism, including addressing illicit finance risks associated with cryptocurrency. We are particularly focused on illicit finance and fentanyl, which has become the leading cause of death for Americans aged 18 to 49. In November, President Biden and President Xi agreed to resume “bilateral cooperation on counternarcotics, with a focus on disrupting the flow of precursor chemicals used to make fentanyl. We are already seeing progress, and the Treasury Department and Chinese economic policymakers have a key role to play in taking aspects of this cooperation forward.
“We will also continue pushing to jointly address global challenges. This could include pursuing coordination on issues like nature and biodiversity as well as adaptation and resilience, or developing common principles to achieve net zero, building on Treasury’s domestic work on net-zero principles for U.S. financial institutions. We will continue to seek faster progress on sovereign debt restructurings in outstanding cases and advocate for needed changes to the debt architecture. We see opportunities for collaboration at the intersection of debt and climate as well, as it is crucial that debt distress not block low-income countries from investing in their sustainable development and taking climate action. And we will look for ways to continue partnering with China on strengthening the international financial architecture, including through evolving the multilateral development banks.”
