BRUSSELS — Even as Western allies grapple with how to counter Russia’s assault on Ukraine, U.S. Treasury Secretary Janet Yellen warned Tuesday that they also must take a wary and united approach to checking China and its business practices.
“We have a common interest in incentivizing China to refrain from economic practices that have disadvantaged all of us,” Yellen said in a speech to the Brussels Economic Forum.
“These practices range from those affecting trade and investment, to development and climate policies, to approaches to provide debt relief to countries facing unsustainable debt burdens,” she added.
Yellen was in Brussels ahead of a meeting of finance ministers for the Group of Seven leading economies in Bonn, Germany.
She also met Tuesday with EU Commission President Ursula von der Leyen. Yellen said they discussed “critical issues related to energy security, Ukraine’s economic needs, and continued coordination to impose sanctions on Russia.”
Yellen has spoken at length about China’s financing practices in Africa, which has seen a massive influx of Chinese investment. She has recently called on China explicitly to end its relationship with Russia.
“We have a set of common vulnerabilities that we should address,” Yellen said to her European audience.
“And China is more likely to respond favorably if it cannot play one of us off against the other,” she said. “The Biden administration believes that cooperation of this kind will be more effective than the unilateralism that we saw in the not-too-distant past.”
Yellen’s visit to Europe – she spent time in Poland before her stop in Brussels – is meant to address the effects of the war in Ukraine, an international tax plan she negotiated with more than 130 countries last year and an energy crisis contributing to high inflation worldwide.
The mounting costs of the war are a cause of concern for the G-7 finance ministers.
She said that despite funding efforts from the U.S. and its European allies, “what’s clear is that the bilateral and multilateral support announced so far will not be sufficient to address Ukraine’s needs, even in the short term.”
She urged partner nations “to join us in increasing their financial support to Ukraine.”
Yellen also spoke about the need to implement a global minimum tax of 15% on multinational corporations. It’s meant to deter global companies from stashing profits in countries where they pay little or no taxes.
“This agreement will halt a decadeslong race to the bottom in corporate taxation around the globe — a competition that has proven self-defeating,” she said.
On Monday, Yellen met with Polish Prime Minister Mateusz Morawiecki about tightening sanctions against Russia and pressed for participation in the tax deal that Poland has blocked so far.
It got final approval at a meeting of the Group of 20 economies last October, but Polish officials have questioned if the tax will actually apply to online giants and insists that it does.