she really has had all the great prizes as the head of the Council of economic advisors chair of the FED now Secretary of Treasury it's an extraordinary career of Public Service and of course for us here at size it's combined with the fact that she's an extraordinary scholar as well as a practitioner and one of the leading voices on economic policy in our country is a long time leader in the academic Community as the president of the American economic Association and as a scholar here just up the street at Brookings so it's particularly fitting that we are able to host her here and it's particularly fitting that we're able to host her on this issue that she's going to discuss today which is one of the most consequential issues of our time so I know you're all eager to hear from her and so I'd ask you to join me in welcoming Secretary of the Treasury Janet Yellen [Music] [Applause] [Applause] thank you so much and good morning everyone Dean Steinberg thank you for your kind introduction and thank you for your service to our country I'm grateful for your contributions not only during your time in government but here at size and I'm particularly glad to be at this institution is one of the oldest and most extensive China studies programs in the country in 1979 the United States established full diplomatic relations with the People's Republic of China and just two years after your University leaders had their own talks with their Chinese counterparts the goal was to see whether Johns Hopkins and Nanjing University could partner together to educate Future Leaders the result the establishment of the Hopkins Nanjing Center in 1986 one of the first Western academic programs in modern China this collaboration has been tested by the realities and complexities of our bilateral relationship but I believe the students on this campus have served as a reminder of the respect that the American and Chinese people have for each other and they demonstrate that people around the world can learn from one another if we communicate openly and honestly even and especially when we disagree since I began my career through relationship between the United States and China has undergone a significant evolution in the 1970s our relationship was defined by rap rochement and gradual normalization I watched President Nixon make his famous Journey to China in 1972. and I heard our two countries begin to speak to each other again after Decades of Silence in the years that followed I saw China choose to implement Market reforms and open itself to the global economy driving an impressive rise into the second largest economy in the world its development was supported by assistance from the World Bank and other International Economic Institutions and the U.S Congress and successive administrations played a major role in supporting China's integration into Global markets but in recent years I've also seen China's decision to Pivot away from Market reforms toward a more state-driven approach that has undercut its neighbors and countries across the world this has come as China is striking a more confrontational posture toward the United States and our allies and partners not only in the indo-pacific but also in Europe and other regions today we're at a critical time the world is confronting the largest land war in Europe since World War II just as it recovers from a once in a century pandemic debt challenges are mounting for low and middle income countries some Nations including our own have faced pressure on their economic and financial systems and the U.N report released last month
indicates that the Earth is likely to cross a critical global warming threshold within the next decade if no drastic action is taken progress on these issues requires constructive engagement between the world's two largest economies yet our relationship is clearly at a tense moment so today I'd like to discuss our economic relationship with China my goal is to be clear and honest to cut through the noise and speak to this essential relationship based on sober realities the United States proceeds with confidence in its long-term economic strength we Remain the largest and most dynamic economy in the world we also remain firm in our conviction to defend our values and National Security within that context we seek a constructive and fair economic relationship with China both countries need to be able to frankly discuss difficult issues and we should work together when possible for the benefit of our countries and the world our economic approach to China has three principal objectives first we will secure our national security interests and those of our allies and partners and we will protect human rights we will clearly communicate to the PRC our concerns about Its Behavior and we will not hesitate to defend our Vital interests even as our targeted actions may have economic impacts they are motivated solely by our concerns about our security and values our goal is not to use these tools to gain competitive economic advantage second we seek a healthy economic relationship with China one that Fosters growth and innovation in both countries a growing China that plays by International rules is good for the United States and the world both countries can benefit from healthy competition in the economic sphere but healthy economic competition where both sides benefit is only sustainable with this competition is fair we will continue to partner with our allies to respond to China's unfair economic practices and we will continue to make critical Investments at home while engaging with the world to advance our vision for an open fair and rules-based global economic order third we seek cooperation on the Urgent Global challenges of our day since last year's meeting between presidents Biden and XI both countries have agreed to enhance communication around the macro economy and cooperation on issues like climate and debt distress but more needs to be done we call on China to follow through on its promise to work with us on these issues not as a favorite to us but out of our joint Duty and obligation to the world tackling these issues together will also Advance the national interests of both of our countries let me begin by discussing the state of our economies in recent years many have seen conflict between the United States and China as increasingly inevitable this was driven by fears shared by some Americans that the United States was in Decline and that China would imminently LeapFrog us as the world's top economic power leading to a clash between nations it's important to know this pronouncements of U.S decline have been around for decades but they have always been proven wrong the United States has repeatedly demonstrated its ability to adapt and reinvent to face new challenges and this time will be no different and the economic statistics show why since the end of the Cold War the American economy has grown faster than most other advanced economies and over the past two years we have mounted the strongest post-pandemic recovery among major advanced economies our unemployment rate is near historic lows real GDP per capita has reached an all-time high and we've experienced the strongest two-year growth in new businesses on record this recovery is made possible by the strength of our economic fundamentals course this does not mean that our work is finished our top economic priority is Terrain in inflation while protecting the economic gains of our recovery a few weeks ago the United States took decisive action to strengthen public confidence in the banking system after the failures of two Regional institutions the U.S banking system remains sound and we will take any necessary steps to ensure the United States continues to have the strongest and safest Financial system in the world over the past few decades China has experienced an impressive economic rise between 1980 and 2010 China's economy grew by an average of 10 percent per year and this led to a truly remarkable fee namely the rise of hundreds of millions of people out of poverty China's rapid catch-up growth was fueled by its opening up to global trade and pursuit of Market reforms but like many countries China today faces its share of near-term headwinds this includes vulnerabilities in its property sector High youth unemployment and weak household consumption in the longer term China faces structural challenges its population is aging and its Workforce is already declining and its experienced a sharp reduction in productivity growth amid its turn toward economic nationalism and policies that substantially increase the government's intervention in the economy none of these recent developments detract from China's progress or the hard work and talent of the Chinese people but China's long-run growth rate seems likely to decline of course an economy's size is not the sole determinant of its strength America is the largest economy in the world but it also remains an unparalleled leader on a broad set of economic metrics from wealth to technological innovation US GDP per capita is among the highest in the world and over five times as large as China's more than resources or geography our country's success can be attributed to our people values and institutions American democracy well not perfect protects the free exchange of ideas and rule of law that is at the Bedrock of sustainable growth our educational and scientific institutions lead the world our Innovative culture is enriched by new immigrants including those from China enabling us to continue to generate world-class Cutting Edge Products and industries importantly our economic power is Amplified because we don't stand alone America values our close friends and partners in every region of the world including the indo-pacific in the 21st century No Country in isolation can create a strong and sustainable economy for its people that's why under President Biden's leadership we've sought to rebuild and reinvest in our relationships with other countries all this is to say China's economic growth need not be incompatible with U.S economic leadership the United States Remains the most dynamic and prosperous economy in the world and we have no reason to fear healthy economic competition with any country there are many challenges before us the president and I believe that China and the United States can manage our economic relationship responsibly we can work toward a future in which both countries share in and drive global economic progress whether we can reach this Vision depends in large part on what both countries do in the next few years so let me speak to our first objective curing our national security and protecting human rights these are areas where we will not compromise as in all of our Foreign Relations National Security is of Paramount importance in our relationship with China for example we've made clear that safeguarding certain Technologies from the prc's military and security apparatus is a vital National interest we have a broad Suite of tools to achieve this aim when necessary we will take narrowly targeted actions the U.S government's actions can come in the form of export controls they can include additions to an entity list that restricts access by those that provide support to the people's Liberation Army the treasury Department has sanctioned authorities to address threats related to cyber security and China's military civil Fusion we also carefully review foreign investments in the United States for National Security risks and take necessary actions to address any such risks and we're considering a program to restrict certain U.S outbound
investments in specific sensitive Technologies with significant National Security implications as we take these actions let me be clear these National Security actions are not designed for us to gain a competitive economic advantage or to stifle China's economic and technological modernization even though these policies may have economic impacts they are driven by straightforward National Security considerations and we will not compromise on these concerns even when they force trade-offs with our economic interests there are key principles that guide our national security actions in the economic sphere first these actions will be narrowly scoped and targeted to clear objectives they will be calibrated to mitigate spillovers into other areas second it's vital that these tools are easily understood and enforceable and they must be readily adaptable when circumstances change third when possible we will engage and coordinate with our allies and partners in the design and execution of our policies in addition communication is essential to mitigating the risk of misunderstanding and unintended escalation when we take National Security actions we will continue to outline our policy reasoning to other countries and we will listen and address concerns about unintended consequences among our most pressing National Security concerns is Russia's legal and unprovoked war against Ukraine in my visit to Kiev I saw firsthand the brutality of Russia's invasion the Kremlin is bombed hospitals destroyed cultural sites attacked energy grids to cause widespread pain and suffering among civilians ending Russia's war is a moral imperative and it will save many innocent lives as I've said it's also the single best thing we can do for the global economy to help end Russia's War we have mounted the swiftest most unified and most ambitious multilateral sanctions regime in modern history our board Coalition of Partners has also provided assistance to Ukraine so it can defend itself China's No Limits partnership and support for Russia is a worrisome indication that it is not serious about ending the war it is essential that China and other countries do not provide Russia with material support or assistance with sanctions invasion we will continue to make the position of the United States extremely clear to Beijing and companies in its jurisdiction consequences of any violations would be severe like National Security we will not compromise on the protection of Human Rights this principle is foundational to how we engage with the world with our own eyes the world has seen the PRC government escalate its repression at home it is deployed technology to surveil and control the Chinese people technology that it is now exporting to dozens of countries human rights abuses violate the world's moral conscience they also violate the foundational principles of the United Nations which virtually every country including China is signed on to the United States will continue to use our tools to disrupt and deter human rights abuses wherever they occur around the globe in public and in private with Beijing the United States has raised serious concerns about the PRC government's abuses in xinjiang as well as in Hong Kong Tibet and other parts of China and we have and will continue to take action we've imposed sanctions on the prc's regional officials and companies for a range of Human Rights abuses from torture to arbitrary detention and we're restricting Imports of goods produced with forced labor in xinjiang cross these actions we're working in concert with our allies knowing that we're more effective when we all go at it together as we protect our Securities interests and human rights values we will also pursue our second objective healthy economic engagement that benefits both countries let's start with the obvious the US and China are the two largest economies in the world and we are deeply integrated with one another overall trade between our countries reached over 700 billion dollars in 2021. we trade more with China than with any countries other than Canada and Mexico American firms have extensive operations in China hundreds of Chinese firms are listed on our stock exchanges which are part of the deepest and most liquid Capital markets in the world according to the nature index the United States and China are each other's most significant scientific collaborators and China remains among the top sources for international students in the United States as I said the United States will assert ourselves when our Vital interests are at stake but we do not seek to decouple our economy from China's a full separation of our economies would be disastrous for both countries it would be destabilizing for the rest of the world rather we know that the health of the Chinese and U.S economies is closely linked a growing China that plays by the rules can be beneficial to the United States for instance it can mean Rising demand for U.S products and services and more Dynamic U.S Industries in April 2021 I delivered my first major International economic policy speech as treasury secretary and I said that credibility abroad begins with credibility at home at a basic level America's ability to compete in the 21st century turns on the choices that Washington makes not those that Beijing makes our economic strategy is centered around investing in ourselves not suppressing or containing any other economy in the two years since my speech the United States is pursued an economic agenda that I call Modern supply side economics our policies are designed to expand the productive capacity of the American economy namely to raise the ceiling for what our economy can produce to do so President Biden has signed three historic bills into law we've enacted the bipartisan infrastructure law our generation's most ambitious effort to modernize roads Bridges and ports and broaden access to high-speed internet we've mounted an historic expansion of American Semiconductor manufacturing through the chips and science Act and we're making our nation's largest investment in clean energy with the inflation reduction Act ions have fortified U.S strength in the industries of the future and they're lifting our long-term economic Outlook to understand the nature of the healthy economic competition that the United States is pursuing the United States does not see competition that is winner take all instead we believe that healthy economic competition with a fair set of rules can benefit both countries over time a basic principle of Economics is that sustained repeated competition can lead to Mutual Improvement sports teams perform at a higher level when they consistently face top rivals firms produce better and cheaper Goods when they compete for consumers there is a world in which as companies in the U.S and China Challenge each
other our economies can grow standards of living can rise and new Innovations can bear fruit for example China has benefited from American inventions like the personal computer in the MRI in the same way I believe that new scientific and medical developments from China can benefit Americans and the world and spur us to undertake even more Leading Edge research and innovation but this type of healthy competition is only sustainable if it's fair to both sides China has long used government support to help its firms gain market share at the expense of foreign competitors but in recent years its industrial policy has become more ambitious and complex China has expanded support for its state-owned Enterprises and domestic private firms to dominate foreign competitors it's done so in traditional industrial sectors as well as emerging Technologies the strategy has been coupled with aggressive efforts to acquire new technology technological know-how and intellectual property including through IP theft and other illicit means government intervention can be justified in certain circumstances such as to correct specific market failures but China's government employs non-market tools at a much larger scale in breadth than other major economies China also imposes numerous barriers to Market access for American firms that do not exist for Chinese businesses in the United States for example Beijing is often required foreign firms to transfer proprietary technology to domestic ones simply to do business in China these limits on access to the Chinese market tilt the playing field in favor of Chinese firms further we're concerned about a recent uptick in coercive actions targeting U.S firms which comes at the same moment that China states that it is reopening for foreign investment the actions of China's government have had dramatic implications for the location of global manufacturing activity and they have harmed workers and firms in the U.S and around the world in certain cases China has also exploited its economic power to retaliate against and coerce vulnerable trading partners for example it's used boycatsu's specific Goods as punishment in response to diplomatic actions by other countries China's pretext for these actions is often commercial but its real goal is to impose consequences on choices that it dislikes and to force Sovereign governments to capitulate to its political demands the irony is that open fair and rules-based global economy the United States is calling for is the very same International order that helped make China's economic transformation possible and the inefficiencies and vulnerabilities generated by China's unfair practices may end up hurting its own growth China's senior officials have repeatedly spoken about the importance of allowing markets to play a decisive role in resource allocation including in a speech Just earlier this year it would be better for China and the world if Beijing were to actually shift policies in these directions and meet its own stated reform ambitions on its unfair economic practices we will continue to take coordinated actions with our allies and partners in response a top priority for President Biden is the resilience of our critical Supply chains in certain sectors China's unfair economic practices have resulted in the over concentration of the production of critical Goods inside China under President Biden's leadership we're not only investing in manufacturing at home we're also pursuing a strategy called French urine that is aimed at mitigating vulnerabilities that can lead to supply disruptions we're creating redundancies in our critical Supply chains with a large number of trading partners that we can count on of course we know that the best way for us to strengthen the global economic order is to show the world that it works our investments in the international financial institutions and efforts to deepen advertise around the world are enabling more people to benefit from the international economic system we're also accelerating our commitments in the developing world for example the United States and the rest of the G7 aim to mobilize 600 billion dollars in high quality infrastructure Investments by 2027. our focus is on projects that generate positive economic returns and Foster sustainable debt for these countries and when the International System needs updating we will not hesitate to do so the United States is working with shareholders to evolve the multilateral development Banks to better combat today's pressing Global challenges like climate change pandemics and fragility and conflict as we sit the terms of our economic engagement with China we will also pursue our third objective cooperation on major Global challenges it's important that we make progress on global issues regardless of our other disagreements that is what the world needs from its two largest economies as a foundation we must continue to develop steady lines of communication between our countries for macroeconomic and financial cooperation economic developments in the United States in China can quickly Ripple through the global financial markets and broader economy we must maintain a robust exchange of views about how we're responding to economic shocks my conversations with Vice Premiere Leah and China's other senior officials have been a good start and I hope to build on them with my new counterpart beyond the macro economy there are two specific Global priorities I'd like to highlight today debt overhang and climate change these issues can best be managed if both countries work together and in concert with our allies and partners first we must work together to help emerging markets in developing countries facing debt distress the issue of global debt is not a bilateral issue between China and the United States it is about responsible Global Leadership China's status as the world's largest official bilateral creditor imposes on it the same inescapable set of responsibilities as those on other official bilateral creditors when dead cannot be fully repaid China's participation is essential to meaningful debt relief but for too long it is not moved in a comprehensive and timely manner it is served as a roadblock for necessary action earlier this year I felt the urgency of debt relief first hand when I visited Zambia government and Business Leaders spoke to me about how Zambia's debt overhang has held back critical public and private investment and depressed Economic Development but Zambia is not the only country in this situation the IMF estimates that more than half of low-income countries are close to or already in debt distress the United States has had extensive discussions with Beijing about the need for Speedy debt treatment we welcome China's recent provision of specific and credible financing assurances for Sri Lanka which has enabled the IMF to move forward with the program but now all of Sri Lanka's bilateral creditors including China will need to deliver debt treatments in line with their insurance assurances in a timely manner we continue to urge China's full participation to provide debt treatments in other countries in line with IMF parameters this includes urgent cases like Zambia and Ghana prompt action on debt is in China's interest delaying needed debt treatments raises the cost both from borrowers and creditors it worsens borrower's economic fundamentals and increases the amount of debt relief they will eventually need more broadly there's considerable room for improvement in the international debt restructuring process with the IMF and World Bank we're working with a range of stakeholders to improve the common framework process for low-income countries and the debt treatment process more generally as I heard from Zambian officials solving these issues is a true test of multilateralism second we must work together to tackle long-standing Global challenges that threaten us all and climate change is at the top of that list history shows us what our two countries can do moments of climate cooperation between the United States and China have made Global breakthroughs possible including the Paris agreement we have a joint responsibility to lead the way China is the largest emitter of greenhouse greenhouse gases followed by the United States the U.S will do its part over the past year the United States has taken the boldest domestic climate action in our nation's history our investments put us on track to meet U.S commitments under the Paris agreement and Achieve Net Zero by 2050.
and they will have positive spillovers for the world including through reductions in the cost of Clean Energy Technologies we're also working abroad to help countries make a Just Energy transition to reduce their carbon emissions these transitions will also help expand energy access and provide Economic Opportunity for impacted communities and workers we expect China to deliver on its commitments in our joint Glasgow decoration declaration this includes meeting mitigation targets and ending overseas financing of unabated coal-fired power power plants China should also support developing countries and emerging markets in their clean energy transitions further we look forward to working together to boost private Capital flows as co-chairs of the G20 working group on sustainable Finance We Stand ready to work with China on the existential challenge of climate change and we urge China to seriously engage with us and deliver on its commitments the stakes are too high not too well some see the relationship between the U.S and China through the frame of great power conflict a zero-sum bilateral contest where one must fall for the other to rise President Biden and I don't see it that way we believe that the world is big enough for both of us China and the United States can and need to find a way to live together and share in global prosperity we can acknowledge our differences defend our own interests and compete fairly indeed the United States will continue to proceed with confidence about the fundamental strength of the American economy and the skill of American workers but as President Biden said we share a responsibility to prevent competition from becoming anything ever near conflict negotiating The Contours of Engagement between great Powers is difficult and the United States will never compromise on our security or principles but we can find a way forward if China is also willing to play its part that's why I plan to travel to China at the appropriate time my hope is to engage in an important and substantive Dialogue on economic issues with my new Chinese government counterpart following the political trans transition in Beijing I believe this dialogue can help lay the groundwork for responsibly managing our bilateral relationship and cooperating on areas of chair challenge to our Nations and the world as you know I'm an economist by trade economics is popularly seen as a field concerning the structure and performance of entire economies but at its most granular level economics is much more foundational it's the study of choices that people make specifically how people make choices under specific circumstances of scarcity of risk and sometimes of stress and have choices by individuals and firms affect one another and how they add up to a national or Global picture in other words an economy is just an aggregate of choices that people make the relationship between the United States and China is the same our path is not pre-ordained and it is not destined to be costly the trajectory of this relationship is the aggregate of choices that all of us in these two great powers make over time including when to cooperate when to compete and when to recognize that even amid era competition we have a shared interest in peace and prosperity the United States believes that responsible economic relations between the U.S and China is in the self-interest of our peoples it is the Hope and expectation of the world and at this moment of challenge I believe it must be the choice that both countries the United States and China make thank you [Applause] thank you for coming that concludes our program [Music] foreign [Music]
2023-04-22