Yellen calls for better US-China relations as tensions rise

Relations between the two countries have become increasingly strained after the discovery of a Chinese surveillance balloon in U.S. air space and since the Communist nation has grown its ties with Russia despite its continued invasion into Ukraine.  

“A growing China that plays by international rules is good for the United States and the world," Yellen said. “Both countries can benefit from healthy competition in the economic sphere. But healthy economic competition — where both sides benefit — is only sustainable if that competition is fair."  

Fever pitch

Yellen's speech comes as tensions between the U.S. and China are at a fever pitch. The discovery of a surveillance balloon outfitted with high-tech equipment designed to gather sensitive information, making a pass over a sensitive U.S. military site, has drawn lawmakers' scrutiny.  

And China’s support of Russia as it continues to wage its war in Ukraine is causing concern among Western leaders. Though China has maintained that it is neutral in the conflict, stating that it won’t sell weapons to either side in the war, it recently held joint military drills with Russia. 

“China’s no limits partnership and support for Russia is a worrisome indication that it is not serious about ending the war,” she said. “It is essential that China and other countries do not provide Russia with material support or assistance with sanctions evasion.” 

Yellen, in her speech, said U.S. national security “is of paramount importance” in the relationship with the People’s Republic of China. She said the U.S. is " considering a program to restrict certain U.S. outbound investments in specific sensitive technologies with significant national security implications.” 

The U.S. last year moved to block exports of advanced computer chips to China, an action meant to quell China's ability to create advanced military systems including weapons of mass destruction, Commerce Department officials said last October.  

Military exercises in Taiwan are also ratcheting up fears that China could invade the island. Earlier this month, China conducted large-scale combat exercises around Taiwan that simulated sealing off the island in response to the Taiwanese president’s trip to the U.S. this month.

Conciliatory tone  

“We will secure our national security interests and those of our allies and partners, and we will protect human rights” Yellen said in her speech. “We will clearly communicate to the PRC our concerns about its behavior.” 

U.S. Trade Representative Katherine Tai also struck a relatively conciliatory tone in Tokyo this week, in response to a reporter’s question about whether Washington is trying to decouple the American economy from China’s. 

Tai, who is on her fourth visit to Japan after being appointed the top U.S. trade envoy, said all members of President Joe Biden’s Democratic administration have been “very clear that it is not the intention to decouple” China’s economy. 

Yellen met with her Chinese counterpart, Vice Premier Liu He, in Zurich in January, which was the highest-ranking contact between the two countries since their respective presidents agreed last November during their first in-person meeting to look for areas of potential cooperation. On Thursday, Yellen said she wants to visit China “at the appropriate time.” 

“It is important that we make progress on global issues regardless of our other disagreements,” Yellen said. "That’s what the world needs from its two largest economies.” 

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Associated Press reporters Mari Yamaguchi and Haruka Nuga in Tokyo contributed to this report.