U.S. Treasury Secretary Janet Yellen on Wednesday called on China to use its influence with Russia to end the war in Ukraine, warning that a failure to act by Beijing would affect its economic relations with countries that have opposed the Russian invasion.
“The world’s attitudes towards China and its willingness to embrace further economic integration may well be affected by China’s reaction to our call for resolute action on Russia,” Yellen said in remarks delivered at an event hosted by the Atlantic Council.
“China cannot expect the global community to respect its appeals to the principles of sovereignty and territorial integrity in the future if it does not respect these principles now, when it counts,” Yellen said. “China has recently affirmed a special relationship with Russia. I fervently hope that China will make something positive of this relationship and help to end this war.”
The Chinese government’s reaction to Yellen’s speech was not immediately available, but Chinese Foreign Ministry spokesperson Zhao Lijian, in a regular press briefing prior to Yellen’s remarks, commented on the situation in Ukraine.
Calling the United States “the culprit of the Ukraine crisis,” Zhao criticized the sanctions levied against Russia, saying that “instead of solving any problems, sanctions have only put a dent in the languishing world economy.”
“Countries all over the world already have enough on their plate, as they need to respond to COVID-19 and try to recover the economy,” Zhao said. “Against such a backdrop, sweeping and indiscriminate sanctions will not only create new irreversible loss but may also bring shocks to the current world economic system, wiping out the outcome of international economic cooperation for decades and ultimately forcing the world’s people to pay a hefty price.”
Zhao said that China continues to support “dialogue and negotiation” aimed at a “political settlement” to the conflict.
While China was the only country that Yellen addressed by name, she noted that many countries have refused to take a position on the Ukraine conflict.
“Let me now say a few words to those countries who are currently sitting on the fence, perhaps seeing an opportunity to gain by preserving their relationship with Russia and backfilling the void left by others,” Yellen said. “Such motivations are shortsighted. The future of our international order, both for peaceful security and economic prosperity, is at stake. And this is an order that benefits us all.”
She said that the broad coalition of countries participating in the sanctions against Russia “will not be indifferent to actions that undermine the sanctions we have put in place.”
Food summit planned
Yellen acknowledged that the war in Ukraine had greatly exacerbated existing shortages of food and other essentials in some parts of the world.
“With over 275 million people facing acute food insecurity, I am deeply concerned about the impact of Russia’s war on food prices and supply, particularly on poor populations who spend a larger share of their income on food,” she said.
Yellen said that next week she would convene a summit of leaders in the field — on the sidelines of the spring meetings of the International Monetary Fund and the World Bank — in Washington.
In a question-and-answer session after her speech, she said, “This will be an urgent concern for us next week to try to think about how we can stave off starvation around the world. It’s really of grave concern.”
A fine line on trade
Like other Biden administration officials in recent weeks, Yellen in her remarks walked a fine line, calling for the U.S. to pivot away from its reliance on China for key imports but not calling for a systematic “decoupling” of the world’s two largest economies.
“We cannot allow countries to use their market position in key raw materials, technologies or products to have the power to disrupt our economy or exercise unwanted geopolitical leverage,” Yellen said. “Let’s build on and deepen economic integration and the efficiencies it brings on terms that work better for American workers. And let’s do it with the countries we know we can count on.”
Yellen said that the U.S. ought to encourage the development of key industries in U.S.-friendly countries, using the term “friend-shoring” to describe the transition. She also encouraged the development of new trade agreements between groups of willing World Trade Organization members — she described such agreements as “plurilateral.”
Avoiding a ‘bipolar’ system
During the question-and-answer session, Yellen was asked if the U.S. stance on sanctions and other issues might result in a “new kind of bipolarity in the world” in which “the U.S. and its allies are in one camp, and maybe China and others are in another camp.”
“I really hope that we don’t end up with a bipolar system,” Yellen said. “And I think we need to work very hard and to work with China to try to avert such an outcome.”
Yellen also addressed the apparent desire among some countries, including China, to reduce the importance of the U.S. dollar as the world’s primary reserve currency because it allows the U.S. and its allies to significantly disrupt other nations’ economies.
Regarding the sanctions on Russia, she said, “You see the power of partnership between the United States and our allies, and the importance of the dollar and the euro, as currencies in which transactions take place.”
However, Yellen said, she doesn’t believe it is likely that the dollar’s status will be challenged in the foreseeable future.
“I think it will be a long time, if ever, before the dollar is replaced as a key reserve currency in the global economy,” she said.