Yellen calls for US, allies to fortify supply chains to combat China’s ‘unfair trade practices’
Treasury Secretary Janet Yellen will call for the United States to leverage its allies to build more resilient supply chains during a speech in South Korea on Tuesday.
Her remarks will focus on the need to jointly develop stronger supply chains for key components, like semiconductors and electric vehicle batteries, with like-minded countries to combat China’s attempted dominance in those industries, according to excerpts released by the Treasury Department.
“We cannot allow countries like China to use their market position in key raw materials, technologies or products to disrupt our economy or exercise unwanted geopolitical leverage,” Yellen will say.
She will speak during a visit to the LG Sciencepark in Seoul on Tuesday local time, which is Monday evening in the United States. Yellen’s visit to South Korea comes as part of a trip to Asia that included the Group of Twenty meeting of finance ministers and central bankers in Indonesia.
The speech comes as Yellen and other Biden administration officials push Congress to pass a bill to boost the domestic semiconductor industry and discourage companies from basing their manufacturing in China.
Lawmakers have been negotiating through a conference committee to develop a singular bill that can pass both chambers.
But with growing urgency over the funding, a new path has emerged for lawmakers to potentially push through roughly $50 billion in funding for the industry in the coming days and avoid contention over more controversial aspects of the larger proposal, which have delayed passage.
Yellen on Tuesday will acknowledge that countries “remain vulnerable” to adversaries leveraging their dominant market positions to exert their geopolitical goals, referencing Russia’s invasion of Ukraine.
“One such example is China, which has directed significant resources to seek a dominant position in the manufacturing of certain advanced technologies, including semiconductors, while employing a range of unfair trade practices to achieve this position,” Yellen will say.
Although the semiconductor bill would boost domestic production, Yellen will argue that building resilient supply chains will require “friend-shoring,” a concept that a group of nations with shared values should convince companies to build manufacturing operations within their territories.
“Friend-shoring is about deepening relationships and diversifying our supply chains with a greater number of trusted trading partners to lower risks for our economy and theirs,” Yellen will say.
“In doing so, we can help to insulate both American and Korean households from the price increases and disruptions caused by geopolitical and economic risks and facilitate our businesses’ access to vital inputs and products — from medicine to semiconductors to electric vehicle batteries,” she will add.
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