Yellen says trying to secede from China would be “disastrous”

Treasury Secretary Janet L. Yellen said on Tuesday it would be a mistake for the United States to try to “decouple” from China and called for deepening economic ties between the world’s two largest economies.

The comments came as the Biden administration seeks to improve relations with China, which faced a setback this year when a Chinese surveillance balloon was found flying across the United States. Secretary of State Anthony J. Blinken is to travel to Beijing next week, and Ms. Yellin hopes to take a trip there soon.

speaks in a Session of the Financial Services Committee in the House of Representatives On Tuesday, Yellen made clear that she believes the economic relationship with China is important.

“I think we gain and China gains from as open trade and investment as possible, and it would be disastrous for us to try to separate from China,” Yellen said.

The US is maintaining tariffs imposed by the Trump administration on billions of dollars worth of Chinese imports, and the Biden administration is putting new limits on how US companies can invest in China. But Ms. Yellen said the US only intends to “de-risk” the relationship and has no intention of doing economic harm to China.

“I certainly don’t think it is in our interests to stifle the economic progress of the Chinese people,” Ms. Yellen said. “China has lifted hundreds of millions of people out of poverty, and I think that’s something we should pay tribute to.”

Although she struck an appropriate tone, Ms. Yelin also voiced concerns likely to arise in meetings with her Chinese counterparts.

She said that because of national security concerns, the administration is considering restrictions on investments by US private equity firms in Chinese companies with ties to the Chinese military. It also said that the Treasury Department is considering additional sanctions against China in response to human rights abuses against Uyghurs in Xinjiang.

In recent months, the United States has stepped up pressure on China to offer debt forgiveness for Zambia and other developing countries. Ms. Yellen lamented that despite some signs of willingness to cooperate and help poor countries avoid default, China has not done enough. She stressed the growing need for international financial institutions such as the World Bank and the International Monetary Fund to help the most vulnerable economies.

“These institutions reflect American values,” Ms. Yellen said. “It serves as an important counterweight to opaque and unsustainable lending from other countries like China.”

Asked about Ms. Yelin’s comments on Tuesday, Wang Wenbin, a spokesperson for China’s foreign ministry, rejected the notion that the IMF or the World Bank are meant to advance US interests.

“The IMF is not the International Monetary Fund of the United States, nor the World Bank for that matter,” he said.