Yellen Calls For Stabilizing U S Relations With China Ahead Of G20

The Treasury secretary said in an interview that the United States was not trying to “paralyze China’s economy and stop its development.”

BALI, Indonesia — Treasury Secretary Janet L. Yellen on Saturday called for stabilizing the United States’ rocky relationship with China and reopening regular lines of communication between the world’s two largest economies ahead of a global gathering next week where their leaders are expected to meet.

Ms. Yellen’s comments came as she prepared to meet with Yi Gang, the governor of the People’s Bank of China, at the Group of 20 leaders summit on Monday in Bali, where President Biden is expected to meet with China’s leader, Xi Jinping. The meetings will be the first in-person interactions between top American and Chinese officials since Mr. Biden took office last year, a period in which ties between the nations further deteriorated.

“I think stabilizing the relationship and trying to get it on a better footing while recognizing that we have a whole range of concerns, and we would like to address those,” Ms. Yellen said on Saturday in an interview with The New York Times aboard her flight to Indonesia when asked how the relationship could be improved.

America’s relationship with China frayed considerably during the Trump administration, when President Donald J. Trump imposed tariffs on hundreds of billions of dollars’ worth of Chinese imports. Soon after a deal to end the impasse was struck in late 2019, the coronavirus started to spread around the world and Mr. Trump blamed China for its emergence.

Despite the Biden administration’s less outwardly confrontational tone, relations with China have worsened in the past two years. The White House in October unveiled sweeping export restrictions to block China from gaining access to critical technology on national security grounds, and it has declined to roll back the remaining tariffs that were enacted by Mr. Trump.

Hostilities were inflamed this year when Speaker Nancy Pelosi visited Taiwan amid concern in the United States that China was planning to forcibly reclaim the island, which operates independently. China insists that Taiwan is part of its territory and cannot exist as a sovereign nation.

White House officials said this week that Mr. Biden would discuss Taiwan, trade, human rights and North Korea when he meets with Mr. Xi.

Because of strict pandemic travel restrictions that China has put in place to contain the virus, the few meetings between American and Chinese officials since 2020 have been virtual. Ms. Yellen, who has publicly said that some of the tariffs were “not strategic” and should be rolled back, believes that the source of the tension between the two countries is rooted in the misconception in China that the United States is trying to hobble its economy.

“They need to understand, for example, why we take actions,” Ms. Yellen said. “I know their concern, for example, about our policies of banning sales of advanced semiconductors,” she said, referring to the new sweeping restrictions on exporting technology to China.

She added, “It’s important for us to explain why we’re doing things, how it’s delineated, that it’s not an attempt to completely paralyze China’s economy and stop its development.”

Despite Ms. Yellen’s hopes for better relations, she has in the past criticized China publicly.

In the spring, Ms. Yellen publicly urged China to pressure Russia to end its war in Ukraine and warned that its reputation as a global economic power could be eroded if it helped Russia evade sanctions. Ms. Yellen said that she was not certain if China had tried persuade Russia to retreat, but that she did not believe that China was evading U.S. sanctions.

This week, while traveling in India, Ms. Yellen promoted Biden administration’s policy of “friend-shoring” and urged India and other allied nations to diversify their supply chains away from China.

In a speech at Microsoft’s offices near New Delhi, the Treasury secretary highlighted China’s problematic human rights record and praised Apple for shifting some of its iPhone manufacturing from China to India. She also lauded investments that have allowed an American solar manufacturer to set up operations in India instead of China, noting that solar panel materials produced in China’s Xinjiang region are made with forced labor.

The Treasury Department has also been critical of China for obfuscating its foreign exchange practices. In a report on global foreign exchange practices this past week, the United States kept China on its list of countries that it watches closely.

“China’s failure to publish foreign exchange intervention and broader lack of transparency around key features of its exchange rate mechanism make it an outlier among major economies and warrants Treasury’s close monitoring,” the report said.

Ms. Yellen said that her meeting on Monday with Mr. Yi, the central bank governor, would be informal and that they would most likely discuss macroeconomic issues. She hopes that more communication about their mutual concerns will improve the bilateral relationship.

“We have national security concerns and if our policies are having unintended consequences more broadly for China, it’s important to be able to hear what their concerns are and potentially to respond to those,” Ms. Yellen said. “We have concerns about their economic practices as well.”

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