Yellen Warns Against Decoupling From China
U.S. Treasury Secretary Janet Yellen told the House Financial Services Committee on Tuesday that it is in the best interest of the United States to maintain ties with China. She emphasized during her congressional testimony:
While we surely have concerns that need to be addressed, decoupling would be a big mistake.
Yellen explained that Americans benefit from purchasing goods that are more affordable to produce in China, while China benefits from the exports it receives from the United States.
Some lawmakers disagreed with Yellen. For example, Congresswoman Ann Wagner (R-MO), Chair of the Financial Services Subcommittee on Capital Markets, opined: “I think it’s appropriate, and in fact, essential, that we decouple from Chinese industries and entities that are actively participating in unthinkable human rights abuses.” In response, Yellen clarified that there are currently sanctions in effect, prohibiting Americans from engaging in business with entities involved in China’s alleged human rights violations.
Reiterating that it would be “disastrous” for the U.S. to cease trading with China, the Treasury Secretary stated:
De-risk? Yes. Decouple? Absolutely not.
The Secretary of the Treasury also urged lawmakers to increase lending to developing countries to counter China’s growing influence. She emphasized that the Biden Administration aims to enhance participation in various programs, including those offered by the International Monetary Fund (IMF), the Inter-American Development Bank (IDB), and the African Development Fund (ADF).
“These investments will bolster our engagement in these regions at a time of geopolitical competition,” Yellen stressed, noting that they serve as “an important counterweight to nontransparent, unsustainable lending from others like China.”
Do you agree with Treasury Secretary Janet Yellen that the U.S. should not decouple from China? Let us know in the comments section below.
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