Yellen pulls back the curtain on U.S. approach to China

WASHINGTON, DC – MARCH 29: U.S. Secretary of the Treasury Janet Yellen speaks during a hearing before the House Appropriations Committee. Photo by Nathan Howard/Getty Images

Treasury Secretary Janet Yellen will clarify the Biden administration's economic approach to China, offering Beijing fresh guidelines on where the United States is prepared to cooperate — and where it won’t compromise.

Why it matters: Direct diplomacy with China is on ice. Yellen’s speech today is an attempt to achieve President Biden’s goal of improved communications with China, which he announced next to President Xi Jinping at the G20 last year, by other means.

  • Yellen and Secretary of State Tony Blinken postponed separate trips to China earlier this year after China flew a spy balloon across the U.S. before the U.S. shot it down off the South Carolina coast ahead of Biden's State of the Union Address.
  • They haven’t been rescheduled, but Yellen said last week that she still hopes to visit Beijing for meetings with her new counterparts.

Driving the news: Yellen will use her speech Thursday at John Hopkins University's School of Advanced International Studies to outline three principal objectives behind the U.S.'s economic approach to China.

  • “The United States does not seek competition that is winner-take-all,” Yellen will say, according to remarks prepared for delivery.
  • Yellen will pledge to “clearly communicate to the PRC (People’s Republic of China) our concerns about its behavior,” while also noting that U.S. actions could have “economic impacts.”
  • But she will emphasize that “our goal is not to use these tools to gain competitive economic advantage.”
  • She will also acknowledge the possibility that any potential U.S. action, which she won't specify, could cause “trade-offs with our economic interests.”

Flashback: The Biden administration, under pressure from labor unions, has kept the Trump tariffs on the books and has announced new export controls on sensitive technologies to China.

The big picture: Both Washington and Beijing appear to be struggling to get the relationship back on track after a largely successful G20 summit in Bali last November.

  • Yellen was front and center in trying to improve communication, meeting with her Chinese counterpart in Geneva in January before embarking on a 10-day Africa tour.
  • But the Chinese spy balloon incident has delayed any of the planned Cabinet-level trips to China.
  • One of China's top diplomats warned in March that the two countries are heading towards "conflict and confrontation" unless the U.S. changes course.

Go deeper: Inside Yellen's rare meeting with China's vice premier.

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