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Secretary Yellen: I think as everyone knows President Biden talked to President Xi yesterday and my trip to meet with my counterpart should be seen as a continuation of a dialogue that we’ve been engaged in and deepening ever since President Xi and President Biden met in Bali. President Biden charged me with attempting to stabilize our economic relationship, to deepen our communication, and we’ve been doing that over the last year, year and a half. This will be my third meeting with my counterpart, He Lifeng, the Vice Premier. We have set up two working groups, an Economic Working Group and Financial Working Group. We have met three times and [are] scheduled to meet again during the IMF/World Bank meetings next week and I think we’ve certainly have had an opportunity to discuss in depth our economic relationship and we’ve agreed that it’s important to both of us that we don’t want to decouple our economies. We want to continue – and we think we both benefit from – trade and investment, but that it needs to be on a level playing field. And I think it’s important at all levels, and for me, at the level of the Vice Premier to communicate both the value we place on our relationship but also the concerns we have – and have agreed that we need to have a level playing field. In particular, we’re concerned about massive investment in China and a set of industries that’s resulting in overcapacity, and we’re concerned about the spillovers that Chinese subsidies to these industries are having on the United States and other countries as well. So, this will be one of the topics of discussion. We’ve also agreed it’s important for each of us, and for the world as a whole, that we cooperate on a wide range of issues, and we’re doing that too. We will discuss illicit finance and the progress that we are making together on anti-money laundering and countering illicit finance. In addition, our Financial Working Group is undertaking joint exercises and technical work with colleagues in the People’s Bank of China relating to financial stability. How would we coordinate our efforts if there were to be stress on a large global banking institution? We’re also discussing how we go about assessing the risks from climate change. So, those are some of the things that we’ll be talking about. So, deepening our communication and attempting to have productive and constructive discussions through our differences. 

 

Q: Secretary Yellen, Brian Cheung with NBC News, can you tell us about how this meeting came together? And with the President’s phone call with President Xi yesterday, and your visit, is the expectation that there are going to be other bilateral meetings later on this year? And what might those dialogues look like?

 

Secretary Yellen: Well, I think our expectation is that we will at senior levels, and increasingly at all levels, continue to have ongoing and deepening dialogue. We went for too long with too little communication, and misunderstandings developed. So, President Biden and President Xi agreed when they met in California that they would continue to stay in touch periodically and my understanding is yesterday’s call was understood to be one of the periodic meetings, and my counterpart and I have commissioned these workgroups that report to us and we’re gathering, and I expect that we will continue to meet periodically as well as the work groups. So, I expect this to be an ongoing set of interactions.

 

Q: Secretary, you mentioned the concerns about the overcapacity in China. Will you be bringing a message that if there are not changes, that trade barriers might be considered that the need to protect these industries in the U.S. and Europe, that China will face increasing pressures for trade barriers and tariffs?

 

Secretary Yellen: I don’t have anything specific to offer on that, but I will emphasize that the United States takes resiliency of supply chains seriously as an issue that we feel it’s important to have some domestic presence in clean energy, clean energy technologies. The Inflation Reduction Act is both intended to advance our emissions reduction goals, but also to reduce our extreme dependence on China with respect to clean energy supplies. So, we are trying to nurture an industry in, for example, solar cells, electric batteries, electric vehicles, and these are actually all areas where we think that massive investment in China is creating some overcapacity. So, we’re providing tax subsidies to these, and to some of these sectors, and I wouldn’t want to rule out other possible ways in which we would protect them. But, you know, I think it’s not just the United States, but quite a few countries, including Mexico, Europe, Japan that are feeling the pressure from massive investment in these industries in China.

 

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