Tatan Syuflana/Pool/Reuters
- Janet Yellen has warned Chinese companies not to give Russia material support in its war against Ukraine.
- Yellen, who's visiting China, is also seeking to address China's industrial overproduction.
- The US and China have agreed to hold future discussions on "balanced growth."
US Treasury Secretary Janet Yellen is in China to talk tough with Beijing about its massive overproduction of stuff.
But while the economy is at the top of Yellen's agenda, it's China's ties with Russia that could be the stickiest point in Washington and Beijing's relationship.
During her trip, Yellen warned Chinese Vice Premier He Lifeng that Chinese companies providing "material support" for Russia's war against Ukraine could face "significant consequences," according to a meeting summary from the Treasury on Saturday.
"We've been clear with China that we see Russia as gaining support from goods that Chinese firms are supplying to Russia," Yellen told journalists. She didn't publicly specify what the consequences for China could be.
Yellen's sharply worded comments about China's relationship with Russia stand in contrast to the warmer tone she's taken on her trip regarding Washington-Beijing ties, even amid tensions over a range of issues including trade, tech, and geopolitics.
"While we have more to do, I believe that, over the past year, we have put our bilateral relationship on more stable footing," Yellen said on Sunday.
US has concerns about China's support for Russia
Yellen's shot at China over Russia came after recent warnings from another US official.
Last week, Secretary of State Antony Blinken told European Union and NATO foreign ministers that Beijing was assisting Moscow "at a concerning scale," including providing Russia with tools and technical expertise, the Financial Times reported, citing three unnamed people familiar with the discussions.
One of the people told FT that Blinken brought up these worries about China in every session of a meeting of NATO foreign ministers on Wednesday and Thursday, adding that Blinken's warnings were "explicit."
"There has been a shift, and it was felt in the room," the person told the FT, adding: "This was a new development. It was very striking."
China's foreign minister said in February that the country didn't supply lethal weapons to either party in the Ukraine war.
Beijing told Yellen it wasn't in its policy to provide Russia with military support, the Treasury Secretary said on Saturday. "Neither of us want this to be an issue with our bilateral relationship," she added.
Despite this stance, trade between China and Russia jumped to a record $240 billion in 2023 — keeping Russia's sanctions-hit economy resilient even as the war in Ukraine stretches into its third year.
In a sign that Beijing and Moscow's relationship will continue to be problematic for Washington, Russia's foreign minister, Sergey Lavrov, is also in China on Monday and Tuesday to discuss bilateral cooperation and "hot topics," according to a translation of the Russian foreign ministry's statement on Sunday.
The US and China agreed to promote 'balanced growth'
Yellen's discussions about overproduction with China appeared to be more measured than her comments about Beijing's ties with Russia.
The US is taking issue with China's industrial capacity, particularly in the hot areas of electric vehicles, solar cells, and lithium-ion batteries. The administration of China's leader, Xi Jinping, has identified that trio of manufacturing as the new drivers of the world's second-largest economy as it transitions from growth fueled by the embattled real-estate sector.
Chinese companies are now flooding the global market with new energy products, undermining US and European companies' ability to compete with them effectively.
In one striking example, Chinese manufacturers are pumping out so many solar panels that it's tanking their value, prompting some people in other parts of the world to line their garden fences with the once-prized items.
But the US and China still agreed to hold additional talks in the future to promote "balanced growth."
"I think the Chinese realize how concerned we are about the implications of their industrial strategy for the United States, for the potential to flood our markets with exports that make it difficult for American firms to compete," Yellen told journalists on Saturday.
"It's not going to be solved in an afternoon or a month, but I think they have heard that this is an important issue to us," she added.
For his part, Chinese Premier Li Qiang on Sunday told Yellen not to "politicize" trade and economic issues. He also said, however, that both the US and China had "deeply intertwined economic interests" and should find ways to manage and resolve differences.