U.S. Treasury Secretary Janet Yellen has warned that despite some human rights concerns that need to be addressed, ceasing trade with China would be a “big mistake” for the U.S. “De-risk? Yes. Decouple? Absolutely not,” she stressed, adding that the outcome of decoupling from China would be “disastrous.”
Yellen Advises Against Severing Ties with China
During her testimony before the House Financial Services Committee, U.S. Treasury Secretary Janet Yellen emphasized the importance of maintaining relations with China, cautioning against the idea of decoupling. While acknowledging the need to address concerns, Yellen argued that severing economic ties with China would be a significant mistake.
Yellen pointed out the mutual benefits derived from trade between the United States and China. Americans benefit from affordable goods produced in China, while China benefits from U.S. exports. Despite differing opinions, Yellen clarified that there are existing sanctions in place to address human rights violations, preventing American businesses from engaging with implicated entities.
In response to calls for decoupling from certain industries, Yellen firmly stated that cutting off trade with China would have disastrous consequences. Instead, she urged lawmakers to mitigate risks and increase lending to developing countries to counter China’s expanding influence. Yellen highlighted the Biden Administration’s commitment to bolster participation in programs offered by international organizations like the IMF, IDB, and ADF. These investments serve as a crucial counterweight to nontransparent and unsustainable lending practices observed in China and contribute to geopolitical competition.
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