Yellen urges China to shift from ‘unfair’ state-driven economic policy

WASHINGTON: US Treasury Secretary Janet Yellen called Thursday for China to shift from a state-driven approach in economic policy, saying the model can discourage investors.

“Too strong a role for state-owned enterprises can choke growth, and an excessive role for the security apparatus can dissuade investment,” she added, speaking at the US-China Business Council’s 50th anniversary dinner in Washington.

US companies have long complained about what they see as an unfair business environment in China, with limited protection for intellectual property and preferential treatment afforded to domestic competitors.

The fears were worsened this year by a crackdown on consulting firms operating in China, and changes to an anti-espionage law that gives Beijing more power than ever to punish what it deems threats to national security.

Citing a recent US-China Business Council member survey, Yellen noted that firms were reconsidering investment plans and said that should be concerning for Beijing.

A bigger proportion of companies signaled plans to move some operations out of China in the 2023 survey than any year since 2016.

The trends point to potential benefits in China “pursuing structural reforms,” Yellen said.

“For too long, American workers and firms have not been able to compete on a level playing field with those in China,” she added.

“The PRC deploys unfair economic practices, from non-market tools, to barriers to access for foreign firms, to coercive actions against American companies,” Yellen said, referring to the People’s Republic of China.