Global EditionASIA 中文双语Français
Home / World / Americas

US Treasury boss treads careful path

By HENG WEILI in New York | CHINA DAILY | Updated: 2021-02-05 10:31
Share - WeChat
Janet Yellen holds a news conference after a two-day Federal Open Market Committee (FOMC) meeting in Washington, Dec 13, 2017. [Photo/Agencies]

Yellen's no fan of tariffs, favoring talks to ease trade conflicts, but politics looms

US Treasury Secretary Janet Yellen has generally not supported her country's use of tariffs in competing with China, believing that the levies disrupt international trade.

"I believe we should try to address unfair trade practices, and the best way to do that is to work with our allies rather than unilaterally," Yellen said when asked about tariffs on Jan 19 during her confirmation hearing.

But trade will remain a major issue between the two countries. Despite all the punitive economic measures undertaken by the administration of Donald Trump, the US still runs a large trade deficit with China.

Senator Maria Cantwell, a Democrat from Washington state, which relies on China as a major market for its exports, criticized the tariffs during Yellen's hearing. She cited a US-China Business Council study by Oxford University economists that found the trade war led to a loss of 245,000 jobs in the US. She also pointed to a study by the Federal Reserve Bank of New York and Columbia University that concluded that the trade conflict slashed the market capitalization of US companies by $1.7 trillion.

US President Joe Biden told The New York Times last month that he wouldn't immediately lift tariffs on roughly $360 billion worth of Chinese goods and also would keep the phase one trade agreement for now.

"I'm not going to make any immediate moves, and the same applies to the tariffs," he said.

Yellen, who was confirmed by the Senate on Jan 25 by an 84-15 vote, also was critical of China during the hearing before the Senate Finance Committee, perhaps as a way of not signaling an abrupt change in policy that the Biden administration has not yet determined.

The first woman to serve as US treasury secretary, Yellen stressed climate change as a priority, describing it as an existential threat and a risk to the financial system. "We cannot solve the climate crisis without effective carbon pricing," she said, adding that Biden "supports an enforcement mechanism that requires polluters to bear the full cost of the carbon pollution they are emitting".

China and the US are the world's top two emitters of carbon dioxide.

On Jan 20, Biden's first day as president, he reentered the US into the 2015 Paris Agreement on the climate, reversing Trump's withdrawal of the country from the pact.

On Tuesday, Yellen and International Monetary Fund Managing Director Kristalina Georgieva agreed on the need for multilateral solutions to address debt vulnerabilities and other issues facing the global economy, the Treasury Department said.

Working on priorities

"Secretary Yellen conveyed her intention to work closely with the IMF on the priorities of continuing to respond effectively to the COVID-19 pandemic, reinvigorating economic growth to support a strong global recovery, fighting inequality, and forcefully addressing the threat of climate change," the Treasury said in a statement.

Yellen plans to hire David Lipton, an economist who served as Georgieva's deputy until February 2020, as a senior adviser, Reuters reported, citing sources.

Yellen, 74, who served as Federal Reserve chair during the administration of Barack Obama and briefly under Trump's administration, said in the confirmation hearing that she believes in "market-determined" exchange rates. "The value of the US dollar and other currency should be determined by markets," she said.

Hedge fund manager Ray Dalio, in an interview with The Washington Post on Jan 29, said: "China is also opening up its financial markets, and the world is underweighted in its financial markets.... And because the world is overweight in US dollars, the flow into that, to rebalance, is strengthening the renminbi."

The billionaire added: "China is now the largest country in trade. ...And yet, virtually none of its transactions are done in its currency, about 2 percent. ... There will naturally, increasingly be the internationalization (of renminbi) and it will represent an alternative (to the US).

"That's why then we have the issues of capital wars. Traditionally this has happened through cycles, the Dutch and the Dutch guilder, the British and the British pound, the American cycle, and now the Chinese, and as a result of that, we're going to see more of that kind of movement."

Yellen, unlike many previous Treasury secretaries, has worked only as an academic and for the government, not at a bank or trading firm.

Yellen, along with Defense Secretary Lloyd Austin and the Treasury and Defense departments at large, has been named in a lawsuit filed by Xiaomi, one of the world's largest smartphone manufacturers.

The Trump administration added Xiaomi and eight other Chinese companies to a Pentagon restricted list on Jan 15, five days before Biden's inauguration.

Under Trump, the Defense Department restricted US companies from doing business with firms it viewed as connected to the Chinese military. It also said it would block US citizens from investing in the companies and ordered any with holdings in them to sell them within a year.

Biden pushed back the start date for the investment ban from Jan 28 to May 27, giving his administration time to review the policy, as well as companies on the list.

Agencies contributed to this story.

Most Viewed in 24 Hours
Copyright 1995 - . All rights reserved. The content (including but not limited to text, photo, multimedia information, etc) published in this site belongs to China Daily Information Co (CDIC). Without written authorization from CDIC, such content shall not be republished or used in any form. Note: Browsers with 1024*768 or higher resolution are suggested for this site.
License for publishing multimedia online 0108263

Registration Number: 130349