Yellen urges China to adopt market reforms ‎

US Treasury Secretary Janet Yellen kicked off her four-day visit to Beijing on Friday by calling for market reforms in the world’s second-largest economy, and noting that the United States and its allies would resist what she called China’s “unfair economic practices”.

According to Reuters, Yellen made these remarks at a meeting with US companies that have activities in China, after a meeting she had in the morning with former Chinese chief economic officer Liu He, who is close to President Xi Jinping. She is scheduled to meet later with Premier Li Qiang

Yellen’s visit comes as part of a series of visits aimed at calming tensions between Washington and Beijing after the US military shot down a Chinese government balloon over the United States.

US Secretary of State Antony Blinken visited China last month and agreed with its president that competition between the two sides should not turn into conflict. John Kerry, US President Joe Biden’s climate envoy, is expected to visit China later this month.

US diplomatic push comes ahead of a possible meeting between Biden and Xi at the G20 summit in New Delhi in September or at the Asia-Pacific Economic Cooperation Organization meeting scheduled for November in San Francisco.

Yellen said that she was visiting China to enhance communication and work for a “stable and constructive relationship” between the two countries, while making it clear that Washington would work to protect its national security interests and human rights.

“We believe it is in the interest of both countries to ensure that we have direct and clear lines of communication at higher levels,” she added in a written statement.

She stated that the regular exchange of visits can help both countries monitor economic and financial risks at a time when the global economy is facing “obstacles such as Russia’s illegal war in Ukraine and the ongoing effects of the pandemic.”

It added that it would make it clear to Chinese officials that Washington is not seeking a “complete decoupling of our economies,” but it would raise concerns about their use of expanded subsidies for state-owned and domestic firms, barriers to market entry for foreign companies, and recent “punitive measures” against American companies.

Yellen also expressed concern about China’s new export controls on gallium and germanium, two important metals used in technologies such as semiconductors. She said Washington was still assessing the impact of this step, but stressed the need for “flexible and diversified supply chains”.

Yellen also addressed China’s centrally planned economy, calling on Beijing to return to the market-based practices that underpinned its rapid growth in the past years.

“The shift towards market reforms will be in China’s interest,” the former US central bank official told US businessmen

“The market-based approach has helped spur rapid growth in China and helped lift hundreds of millions of people out of poverty,” she added. It is a wonderful economic success story.”

Yellen indicated that China’s massive and growing middle class provides a large market for American goods and services, and stressed that the actions that Washington is targeting China with are based on national security concerns.

She said, “We seek diversification, not separation … Separating the two largest economies in the world would destabilize the global economy, and it would be practically impossible to deal with it.”

US officials also expressed their expectations that Yellen would raise concerns about the impact of the new Chinese anti-espionage law on American companies, and that she would warn Beijing of the consequences of providing Russia with lethal aid.

It is also expected that Chinese officials will express their concerns about the Biden administration’s plans to limit the investments of US companies in China at a time when the Chinese economy is recovering from the closure due to the Corona virus more slowly than expected, and the labor market is under pressure.