Treasury Secretary Janet Yellen urged China to shift from a state-driven approach in economic policy to healthy competition with the United States, saying that their current approach is “unfair.”
“The PRC deploys unfair economic practices, from non-market tools, to barriers to access for foreign firms, to coercive actions against American companies,” Yellen said, at the US-China Business Council’s 50th anniversary dinner in Washington D.C on Thursday evening. “These policies harm American workers and firms.”
The treasury secretary said that China’s state-driven approach can discourage investors, urging the nation to “shift away” from their current economic policy.
“If the PRC were to shift away from its state-driven economic approach in industry and finance, I believe that would be better for the PRC as well,” Yellen said. “Too strong a role for state-owned enterprises can choke growth and an excessive role for the security apparatus can dissuade investment.”
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Citing a recent US-China Business Council member survey, Yellen noted that firms are reconsidering investment plans and said this should be concerning for the PRC.
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“These trends should be concerning to China, and point to the potential benefits to China of pursuing structural reforms and treating foreign firms fairly,” Yellen said. “Beyond attracting more foreign investment, this would help address the inefficiencies and vulnerabilities that have resulted from China’s economic practices, at a critical moment in its economic trajectory.”
The treasury secretary also reiterated her previous comments that the world’s two largest economies would not decouple, calling complete separation from China “damaging.”
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“I and other U.S. officials have repeatedly stated that the United States does not seek to decouple from China,” Yellen said. “This would be damaging to both our economies and would have negative global repercussions.”