Janet Yellen Says the Right Things—Can the Right Policy Follow?

News AnalysisU.S. Treasury Secretary Janet Yellen recently admonished China for its refusal to condemn Russia over the Ukraine invasion. “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,” said Yellen at the Atlantic Council on April 13. “The world’s attitude towards China and its willingness to embrace further economic integration may well be affected by China’s reaction [denial] to our call for resolute action on Russia.” In the language of international relations, the implication seems to be that there will—or should—be economic ramifications for Beijing’s political conduct. It remains to be seen whether there is any legitimate threat of action behind these statements, or how exactly it is that integration might be negatively affected by the Chinese Communist Party’s (CCP) stance on Ukraine. Secondary sanctions to an overt violation of the U.S. sanction regime appear feasible. Still, the notion that the international business community would place geopolitical considerations above its own interests in China is an entirely separate issue. This is especially true when considering the deeply entrenched relationship between Western companies and the CCP. Either party extricating itself from the current status quo would necessitate a large-scale reimagining of the international economic environment in general. Yellen called attention to this exact fact later in her speech. She discussed the need to bolster U.S. resilience to Chinese market distortions that result from Beijing “engaging in [predatory economic] practices that I think unfairly damage our national-security interests.” She also highlighted the need for the United States and Europe to work on strengthening their supply chain resiliency. Making the Western world less reliant on China, and countering Beijing’s hostile economic practices in international markets, are undoubtedly important strategic imperatives for the United States. However, Yellen’s optimism about maintaining the current interrelated economic system while simultaneously influencing CCP behavior is questionable. “I would like to see us preserve the benefits of deep economic integration with China, not going to a bipolar world, but clearly that’s a danger [predatory economic behavior] that we need to address,” she said. The flaw in Yellen’s statement is that an economic environment defined by “deep economic integration” with China is by its nature inherently (if implicitly) on its way to becoming bipolar; Beijing embraces economic integration only as far as to consolidate CCP rule and to increase the relative geopolitical strength of China. Consider some of the ways that this “economic integration” is currently wielded as a strategic tool by the CCP: dumping on international markets (pumping commodity markets with non-competitively priced products that increase Chinese market share); flooding countries with cheap credit that create debt traps and economically subservient client-states (the Belt and Road Initiative—also known as “One Belt, One Road”—investment project); and intellectual property theft (stealing technology that is then used in accordance with the former two points to undermine foreign countries economically). Russian President Vladimir Putin and Chinese leader Xi Jinping arrive for the welcome banquet for leaders attending the Belt and Road Forum at the Great Hall of the People in Beijing, China, on April 26, 2019. (Nicolas Asfouri/Pool/Getty Images) The fact is that predatory behavior is the fundamental operating principle of Chinese foreign policy. Yellen seems to be expressing an evolution of the same mindset that welcomed China into the World Trade Organization (WTO) in 2001. The notion back then was that a democratic China would eventually emerge from the ashes of the CCP, burned away by the purifying fires of free trade and regular interaction with developed Western countries. Having failed to materialize, the idea seems to have morphed into an acceptance that the CCP may be a predatory actor. However, a system of economic integration can still be maintained as long as we specifically counter the negative aspects of the Party’s behavior. This could be a plausible reality—if U.S. policy were guided solely with the U.S. national interest in mind. And to her credit, Yellen did continuously pay lip service to this end, as well as reiterated the need for other countries in the international system to work together in countering CCP economic malpractice; however, her interviewer’s follow-up question demonstrates the ideology-imbued approach that, unfortunately, permeates the entire U.S. political establishment. Immediately following Yellen’s call for deeper economic cooperation between friendly countries, Rana Foroohar—associate editor at the Financial Times and a reliable establishment voice—interjected abou

Janet Yellen Says the Right Things—Can the Right Policy Follow?

News Analysis

U.S. Treasury Secretary Janet Yellen recently admonished China for its refusal to condemn Russia over the Ukraine invasion.

“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,” said Yellen at the Atlantic Council on April 13.

“The world’s attitude towards China and its willingness to embrace further economic integration may well be affected by China’s reaction [denial] to our call for resolute action on Russia.”

In the language of international relations, the implication seems to be that there will—or should—be economic ramifications for Beijing’s political conduct. It remains to be seen whether there is any legitimate threat of action behind these statements, or how exactly it is that integration might be negatively affected by the Chinese Communist Party’s (CCP) stance on Ukraine.

Secondary sanctions to an overt violation of the U.S. sanction regime appear feasible. Still, the notion that the international business community would place geopolitical considerations above its own interests in China is an entirely separate issue. This is especially true when considering the deeply entrenched relationship between Western companies and the CCP.

Either party extricating itself from the current status quo would necessitate a large-scale reimagining of the international economic environment in general.

Yellen called attention to this exact fact later in her speech. She discussed the need to bolster U.S. resilience to Chinese market distortions that result from Beijing “engaging in [predatory economic] practices that I think unfairly damage our national-security interests.”

She also highlighted the need for the United States and Europe to work on strengthening their supply chain resiliency.

Making the Western world less reliant on China, and countering Beijing’s hostile economic practices in international markets, are undoubtedly important strategic imperatives for the United States. However, Yellen’s optimism about maintaining the current interrelated economic system while simultaneously influencing CCP behavior is questionable.

“I would like to see us preserve the benefits of deep economic integration with China, not going to a bipolar world, but clearly that’s a danger [predatory economic behavior] that we need to address,” she said.

The flaw in Yellen’s statement is that an economic environment defined by “deep economic integration” with China is by its nature inherently (if implicitly) on its way to becoming bipolar; Beijing embraces economic integration only as far as to consolidate CCP rule and to increase the relative geopolitical strength of China.

Consider some of the ways that this “economic integration” is currently wielded as a strategic tool by the CCP: dumping on international markets (pumping commodity markets with non-competitively priced products that increase Chinese market share); flooding countries with cheap credit that create debt traps and economically subservient client-states (the Belt and Road Initiative—also known as “One Belt, One Road”—investment project); and intellectual property theft (stealing technology that is then used in accordance with the former two points to undermine foreign countries economically).

Epoch Times Photo
Russian President Vladimir Putin and Chinese leader Xi Jinping arrive for the welcome banquet for leaders attending the Belt and Road Forum at the Great Hall of the People in Beijing, China, on April 26, 2019. (Nicolas Asfouri/Pool/Getty Images)

The fact is that predatory behavior is the fundamental operating principle of Chinese foreign policy.

Yellen seems to be expressing an evolution of the same mindset that welcomed China into the World Trade Organization (WTO) in 2001. The notion back then was that a democratic China would eventually emerge from the ashes of the CCP, burned away by the purifying fires of free trade and regular interaction with developed Western countries.

Having failed to materialize, the idea seems to have morphed into an acceptance that the CCP may be a predatory actor. However, a system of economic integration can still be maintained as long as we specifically counter the negative aspects of the Party’s behavior. This could be a plausible reality—if U.S. policy were guided solely with the U.S. national interest in mind.

And to her credit, Yellen did continuously pay lip service to this end, as well as reiterated the need for other countries in the international system to work together in countering CCP economic malpractice; however, her interviewer’s follow-up question demonstrates the ideology-imbued approach that, unfortunately, permeates the entire U.S. political establishment.

Immediately following Yellen’s call for deeper economic cooperation between friendly countries, Rana Foroohar—associate editor at the Financial Times and a reliable establishment voice—interjected about how ESG (environmental, social, and corporate governance) regulations will be key to enabling a more secure economic future.

ESG has received criticism due to its tendency toward heavy regulation, supporting greater government bureaucracy, centralized economic control, and market manipulation—all free from accountability to any electorate, let alone shareholders (see stakeholder capitalism for a complete understanding of the ideological roots of ESG).

Even if one does view ESG as a purely good-faith movement, with proponents who are guided only by the desire to benefit the environment (along with the assumption—and it’s a big one—that ESG investments will lead to the type of positive change desired rather than just creating dangerous market bubbles), these are certainly not the considerations that guide the regime in China.

Suppose the Chinese national interest guides Beijing’s policy, and abstract notions of social justice and climate-based equity guide Washington’s policy. In that case, it is hard to imagine that the United States would actually be effective in securing a more stable economic environment.

Epoch Times Photo
U.S. President Joe Biden speaks during the opening ceremony of the U.N. Climate Change Conference COP26 in Glasgow, United Kingdom, on Nov. 1, 2021. (Yves Herman/WPA Pool/Getty Images)

The problem is that it is hard to ascend to a position of consequence in any Western establishment if one does not profess the same millenarian faith in the “climate is king (or queen)” movement that guides ESG. And even if one does, it is likely that they will then be ostracized by (usually unelected) true believers in the bureaucratic halls of power.

Consider the current uproar over the possibility of right-wing Marine Le Pen winning the presidency in France. Le Pen came in second to incumbent Emmanuel Macron in the first round of the country’s presidential election on April 10. The two frontrunners will now face off in the second round on April 24.

This has important implications for France’s energy situation, as well. Le Pen has criticized sanctions on Russian oil and gas that are meant to punish Moscow, which has reverberated back on the French populace in the form of skyrocketing energy prices and a significantly higher cost of living in general.

Many of Le Pen’s views are anathema to members of Europe’s supranational institutions, who disdain anything with a whiff of populism (or electoral politics in general). While Le Pen has explicitly condemned Russia’s actions in Ukraine, she has apparently not adopted the required level of zeal in denouncing Russia and expressing detest for Russian President Vladimir Putin.

According to a report from The Wall Street Journal, Biden administration officials have privately stated their belief that Macron will win, and Luxembourg’s foreign minister said that a Le Pen victory would result in “an upheaval in Europe.”

This type of rhetoric is not foreign to U.S. citizens who lived through the Trump presidency. The same cries were consistently heard, echoing throughout Brussels and Geneva since 2016.

Being an adherent to the proper ideology-bordering-on-religion is a sorting mechanism for whether an individual is accepted into the modern-day regal club of influential and very important persons. Outsiders who fail to espouse the proper tenets (present-day heretics) are not welcome. If Le Pen can pull through for the win, she will experience this reality firsthand, just as former President Donald Trump did.

Yellen’s statements expressed a desire to hold China accountable and secure the U.S. economic position. Unfortunately, as a more purposeful reading of her discussion betrays, other, less-explicit factors influence policy and decision-making.

When the primary consideration of Western leaders is maintaining their own hold on power, countering an economic predator like communist China inevitably becomes a second-tier concern. Unfortunately, the citizens of countries like the United States are the ones who are forced to live with the negative consequences of the elite’s preoccupation with power, filtered through the prism of concern for the abstract “common good.”

Unless, of course, you happen to be a member of the Atlantic Council.

Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.


Follow

"Dominick Sansone is a regular contributor to The Epoch Times. He focuses on Russia-China relations and U.S. foreign policy."