Treasury Secretary Janet L. Yellen on Friday criticized the Chinese government’s harsh treatment of companies with overseas ties and its recent decision to impose export controls on certain key minerals, arguing that such measures could limit U.S. manufacturing. It suggested that it justifies the Biden administration’s efforts to reduce the dependence of traders on China.
During a high-stakes visit to de-escalate tensions between the United States and China, Yellen vigorously defended U.S. business on the first day of its meetings in Beijing. Her comments, addressed to a group of executives at US companies doing business in China, highlighted the challenges facing the world’s two largest economies as they try to bridge deep differences.
“In my meetings with my counterparts, I have shared the concerns I have heard from the U.S. business community, including China’s use of non-market tools, such as increased subsidies for state-owned and domestic firms, and China’s barriers to market access to,” Yellen told business leaders at an event organized by the American Chamber of Commerce in China. “We are particularly troubled by the punitive actions taken against US companies in recent months.” Representatives of Boeing, Bank of America and agricultural giant Cargill were also present.
In March, Chinese authorities detained five Chinese nationals working in Beijing for the Mintz Group, an American consulting firm with 18 offices around the world, and closed its branch. The following month, authorities questioned an employee at the Shanghai office of US management consulting firm Bain & Company.
The scrutiny of U.S. companies operating in China follows restrictions imposed by the Biden administration on China’s access to critical semiconductor manufacturing technology and tools.
The Biden administration is preparing additional restrictions on US technology trade with China, including potential restrictions on advanced chips and US investment in China. The administration is also preparing to limit Chinese companies’ access to U.S. cloud computing services in a bid to close loopholes in previous restrictions on China’s access to advanced chips used in artificial intelligence.
The retaliation continued this week, with the Chinese government retaliating against the Biden administration’s semiconductor restrictions by announcing restrictions on exports of certain key minerals used to make some chips.
A Chinese finance ministry official on Friday expressed hope that a meeting with Yellen would improve economic ties, suggesting the United States must take steps to make that happen. The official added that neither country would benefit from supply chain “decoupling” and disruption.
Yellen said on Friday she was “concerned” by China’s decision to impose export controls.
“While we are still assessing the impact of these measures, they are a reminder of the importance of building resilient and diverse supply chains,” Yellen said. He suggested additional steps from the United States may be imminent to ensure U.S. businesses and workers are treated fairly.
“I will always defend your interests and strive to ensure a level playing field,” Yellen added. “This includes working with allies to address China’s unfair economic practices.”
Companies are also wary of China’s increasingly stringent national security laws, including a tougher anti-espionage law that went into effect on Saturday. The US State Department issued a warning this week advising Americans to reconsider traveling to China due to possible wrongful detention.
The Chamber of Commerce President Michael Hart said American companies are looking to play a constructive role in China-U.S. economic relations.
“We will continue to support China’s peers by hiring, manufacturing, producing, buying, selling, paying taxes, and doing everything in a way that reflects our values, regardless of what happened at the political level. We’ve been trying to find common cause with our vendors, Hart, who sat next to Yellen, said: “And we believe it will also benefit the United States and China. ”
The Treasury secretary had planned to raise these issues during intensive talks with Chinese officials over the next two days.
Yellen was also meeting Friday with former Chinese vice premier Liu He and outgoing People’s Bank of China governor Yi Gang, as well as businesspeople. Yellen discussed the economic outlook in informal talks that lasted more than an hour with former prime ministers, Treasury officials said.
He is scheduled to meet with Premier Li Qiang at the Great Hall of the People late Friday afternoon.
Claire Who contributed to the report.