Treasury Secretary Janet L. Yellen on Friday criticized the Chinese government’s harsh treatment of companies with foreign ties and its recent decision to impose export controls on certain critical minerals, suggesting that such actions justify the Biden administration’s efforts to make U.S. manufacturers less reliant on China.
Ms. Yellen delivered the forceful defense of American industry on her first day of meetings in Beijing during a high-stakes trip to ease tension between the United States and China. Her comments, to a group of executives from American businesses operating in China, underscored challenges that the world’s two largest economies face as they look to move beyond their deep differences.
“During meetings with my counterparts, I am communicating the concerns that I’ve heard from the U.S. business community — including China’s use of nonmarket tools like expanded subsidies for its state-owned enterprises and domestic firms, as well as barriers to market access for foreign firms,” Ms. Yellen told members of the American Chamber of Commerce in China at a round-table event. “I’ve been particularly troubled by punitive actions that have been taken against U.S. firms in recent months.” Representatives of Boeing, Bank of America and the agriculture giant Cargill were among those in attendance.
In March, the Chinese authorities detained five Chinese nationals working in Beijing for the Mintz Group, an American consulting company with 18 offices around the world, and closed the branch. The next month, the authorities questioned employees in the Shanghai office of Bain & Company, the U.S. management consulting firm.
Scrutiny of American businesses operating in China followed restrictions that the Biden administration imposed on China’s access to critical semiconductor-making technology and tools.
The Biden administration is preparing additional restrictions on U.S. technology trade with China, including potential limits on advanced chips and U.S. investment in the country. The administration is also preparing to restrict Chinese companies’ access to U.S. cloud computing services, in an effort to close a loophole in earlier restrictions on China’s access to advanced chips used for artificial intelligence.
The tit-for-tat continued this week when Beijing retaliated against the Biden administration’s limits on semiconductors, announcing that it would restrict the export of certain critical minerals used in the production of some chips.
An official from China’s ministry of finance expressed hope on Friday that the meetings with Ms. Yellen would improve economic relations and suggested that the United States needs to take steps to make that happen. The official added that neither country benefits from “decoupling” and disrupting supply chains.
Ms. Yellen said on Friday that she was “concerned” by China’s decision to enact the export controls.
“We are still evaluating the impact of these actions, but they remind us of the importance of building resilient and diversified supply chains,” Ms. Yellen said. She suggested that additional responses from the United States could be looming to ensure that American businesses and workers were treated fairly.
“I will always champion your interests and work to make sure there is a level playing field,” Ms. Yellen added. “This includes coordinating with our allies to respond to China’s unfair economic practices.”
Businesses are also alarmed by China’s ever-tightening national security laws, which include a stringent counterespionage law that took effect on Saturday. The U.S. State Department issued a warning this week advising Americans to reconsider traveling to China because of the possibility of wrongful detention.
The Treasury secretary planned to raise these issues during a blitz of meetings with top Chinese officials over the next two days.
Besides the business leaders, Ms. Yellen was also meeting on Friday with Liu He, China’s former vice premier, and Yi Gang, the outgoing governor of the People’s Bank of China. A Treasury Department official said that Ms. Yellen discussed the outlook for the economy in an informal discussion with her former counterparts that lasted more than an hour.
Later on Friday afternoon, she will meet with Premier Li Qiang at the Great Hall of the People.
Claire Fu contributed reporting.
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