In China Visit, Yellen Confronts Communist Regime’s Treatment of US Companies

Chinese Premier Li Qiang (right) speaks with U.S. Treasury Secretary Janet Yellen during a meeting in Beijing on July 7, 2023. (Mark Schiefelbein/Pool/AFP via Getty Images)

U.S. Treasury Secretary Janet Yellen said China and the United States should compete based on a “fair set of rules,” defending Washington’s policies against the communist regime’s continued unfair trade practices on the second day of her diplomatic trip to Beijing.

Ms. Yellen made the comment during her first face-to-face meeting with China’s new Premier Li Qiang on Friday.

The Treasury chief, in a prepared speech, said that the United States is seeking “healthy economic competition” with communist China that is “not winner-take-all but that, with a fair set of rules, can benefit both countries over time,” according to a transcript released by her department.

Ms. Yellen defended the efforts by Washington to safeguard national security interests from threats posed by the Chinese regime, noting that these measures shouldn’t lead the bilateral ties to become worse.

“The United States will, in certain circumstances, need to pursue targeted actions to protect its national security,” she said. “And we may disagree in these instances.”

“However, we should not allow any disagreement to lead to misunderstandings that unnecessarily worsen our bilateral economic and financial relationship,” she said.

Ms. Yellen’s remark is expected to disappoint the Chinese regime. In a statement released earlier on Friday, an official from the finance ministry said Beijing hopes Washington will take “concrete steps” to improve the economic and trade ties and create a favorable environment for development. It added that there are “no winners from a trade war or decoupling and broken chains.”

The Chinese regime rolled out new export restrictions on gallium and germanium, two minerals that are critical to the manufacturing of semiconductors, ahead of Ms. Yellen’s arrival in Beijing, which experts viewed as a move in retaliation to the West’s restrictions on semiconductor technology to China.

Ms. Yellen criticized Beijing’s new export controls during a meeting with representatives from the U.S. business communities earlier on Friday. The Treasury chief also criticized the regime’s treatment of U.S. firms, telling the group that she was “particularly troubled” by Beijing’s “punitive actions” against American business.

Ms. Yellen also held talks with former Chinese Vice Premier Liu He and China’s central bank governor Yi Gang. Mr. Liu was formerly China’s top negotiator who signed the phase-one trade deal with the Trump administration.

U.S. Treasury Secretary Janet Yellen speaks during a meeting with Chinese Premier Li Qiang (not shown) in Beijing on July 7, 2023. (Mark Schiefelbein/Pool/AFP via Getty Images)

These discussions were part of the Treasury secretary’s four-day trip to Beijing that is aimed at spurring regular channels of communication with communist China.

After arriving in China on Thursday, Ms. Yellen stated on Twitter that her trip “presents an opportunity to communicate and avoid miscommunication or misunderstanding,” as she aimed to “deepen communication” with China “on a range of issues.”

However, her optimism for improving bilateral ties contrasts sharply with some Republicans, considering that just weeks earlier Secretary of State Antony Blinken was in China, but there was no major breakthrough coming out of that trip. The Chinese regime refused to entertain Mr. Blinken’s bid to resume direct military communication.

“After @SecBlinken left Beijing with little to show for his trip, doubling down by sending additional Cabinet-level officials like @SecYellen only perpetuates this vicious cycle—we self-censor while the CCP takes full advantage,” Rep. Mike Gallagher (R-Wis.), chair of the House select committee on China, said in a statement on Twitter on July 6.

Nikki Haley, former South Carolina governor who is seeking the GOP presidential nomination in 2024, questioned why President Joe Biden would send Mr. Blinken before and now Ms. Yellen to China.

“Biden is falling over himself to make nice with China, and Xi Jinping is laughing at us,” Ms. Haley wrote on Twitter on July 6. “We should believe our enemies when they tell us who they are.”

Rep. Michelle Steel (R-Calif.), who sits on the Congressional-Executive Commission on China (CECC), took to Twitter to ask Ms. Yellen to speak from a position of strength.

“During her trip to China, Secretary Yellen has an opportunity to course correct and demonstrate strength, rather than the weakness the Biden Administration has showcased so far,” Ms. Steel wrote on July 6. “I hope she will take that opportunity.”

‘Level Playing Field’

Before meeting with Mr. Qiang, Ms. Yellen spoke with American business executives, telling them that she was communicating their concerns to the Chinese side.

“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 non-market tools like expanded subsidies for its state-owned enterprises and domestic firms, as well as barriers to market access for foreign firms,” she said in prepared text.

Ms. Yellen added that she was “particularly troubled” by Chinese officials’ punitive actions against U.S. firms in recent months.

U.S. chipmaker Micron Technology recently warned that Chinese sanctions put a “low-double-digit percentage” of global revenue at risk. In May, China’s cybersecurity regulator said the Idaho-based chipmaker failed its security review, without elaborating what risks it had found. That move means Micron’s products would be banned from Chinese companies operating critical infrastructure projects.

U.S. Treasury Secretary Janet Yellen attends a business round table with members of the American Chamber of Commerce in China in Beijing on July 7, 2023. (Pedro Pardo/AFP via Getty Images)

She also expressed concerns about Beijing’s new export controls over gallium and germanium, two metals for which China accounts for a sizable share of the world’s production.

“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 added. The metals are critically important for the manufacturing of semiconductors, which are tiny chips that power everything from mobile phones to electric vehicles and missile systems.

TSMC, the world’s largest contract chipmaker that is based in Taiwan, has said in a statement to Reuters that it does not expect China’s export restrictions to have “any direct impact” on its production.

“I will always champion your interests and work to make sure there is a level playing field. This includes coordinating with our allies to respond to China’s unfair economic practices,” Ms. Yellen added.

The American Chamber of Commerce in China, in its annual survey on the business environment in China published in March, identified the protection of intellectual property (IP) in China as one of the main concerns among its members.

“Nearly one-quarter of members say that inadequate IP protection limits investment in China, with difficulty prosecuting IP infringements and insufficient IP protection as the top two challenges,” the survey says.

On June 15, Mr. Gallagher, Ms. Steel, and more than 20 other House Republicans sent a letter to Attorney General Merrick Garland, seeking a briefing from the Department of Justice on its effort to combat Chinese IP theft. They wrote in their letter that China’s IP theft costs the U.S. economy $600 billion per year.

Ms. Yellen called on Beijing to adopt more market-oriented practices but emphasized that the United States will not seek to decouple from China.

“A decoupling of the world’s two largest economies would be destabilizing for the global economy,” she explained.

‘Human Rights Abuses’

Zhou Fengsuo, an exiled former Tiananmen student leader and the founder of the U.S. nonprofit Humanitarian China, questioned why Ms. Yellen would travel to China given the communist regime’s human rights records.

Why does Yellen go to China when the “CCP is engaging in genocide” and the “Hong Kong government is offering bounties for overseas activists?” Mr. Zhou wrote on Twitter on July 6.

“Her visit is needed for [the] CCP regime to normalize its human rights abuses and transnational repressions,” Mr. Zhou continued. “Delinking trade and investment from human rights was the worst mistake of [the] U.S. government, repeat no more.”

China has used “combating extremism” as a pretext to lock up over 1 million Uyghurs in its far-western region of Xinjiang, where detainees are subjected to forced labor, torture, political indoctrination, forced abortion, and other inhuman treatment in Chinese internment camps.

Both the Trump and the Biden administrations have formally declared China’s treatment of Uyghurs as “genocide” and “crimes against humanity.”

Uyghurs are not the only group being targeted in China. The CCP has also systematically persecuted Christians, Falun Gong practitioners, and Tibetans, as well as Chinese human rights lawyers.

In Hong Kong, the local police have recently issued arrest warrants and bounties for eight exiled pro-democracy activists, arguing that they have violated the territory’s national security law. The move has since drawn criticism from government officials in the United States, the United Kingdom, Australia, and Canada.

Wang Yaqiu, senior China researcher at New York-based Human Rights Watch, said China’s human rights violations shouldn’t be left out of bilateral talks between China and the United States, in a tweet before Ms. Yellen arrived in China.

“Nothing wrong with talking business per se,” Ms. Wang wrote on July 2. “But economic talks with China must not be based on ignoring Beijing’s abuses, because it’s precisely through doing that for 40 years that we now have to contend with a much more powerful and aggressive CCP.”