Yellen Says Bid to Decouple From China Would Be ‘Disastrous’

Treasury Secretary Janet L. Yellen said on Tuesday that it would be a mistake for the United States to try to “decouple” from China and called for deepening economic ties between the world’s two largest economies.

The comments came as the Biden administration has been seeking to improve relations with China, which faced a setback this year when a Chinese surveillance balloon was found flying across the United States. Secretary of State Antony J. Blinken is planning to travel to Beijing next week, and Ms. Yellen hopes to make a trip there soon.

Speaking at a House Financial Services Committee hearing on Tuesday, Ms. Yellen made clear that she believes the economic relationship with China is critical.

“I think we gain and China gains from trade and investment that is as open as possible, and it would be disastrous for us to attempt to decouple from China,” Ms. Yellen said.

The United States maintains tariffs that the Trump administration imposed on billions of dollars’ worth of Chinese imports, and the Biden administration is developing new restrictions on how U.S. companies can invest in China. But Ms. Yellen said that the United States intended only to “de-risk” the relationship and that it had no intention of inflicting economic harm on China.

“I certainly do not think it is in our interest to stifle the economic progress of the Chinese people,” Ms. Yellen said. “China has succeeded in lifting hundreds of millions of people out of poverty, and I think that’s something that we should applaud.”

Although she struck an accommodating tone, Ms. Yellen also laid out concerns likely to arise in meetings with her Chinese counterparts.

Because of national security concerns, she said, the administration is considering restrictions on American private equity firms’ investments in Chinese firms that have connections with China’s military. She also said the Treasury Department was examining additional sanctions on China in response to human rights abuses against Uyghurs in Xinjiang.

In recent months, the United States has been ratcheting up pressure on China to provide debt relief to Zambia and other developing countries. Ms. Yellen lamented that despite some signs of a willingness to cooperate and help poor countries avoid defaults, China had not done enough. She emphasized a growing need for international financial institutions like the World Bank and the International Monetary Fund to help the most vulnerable economies.

“These institutions reflect American values,” Ms. Yellen said. “It serves as an important counterweight to nontransparent, unsustainable lending from others like China.”

Asked about Ms. Yellen’s comments on Tuesday, Wang Wenbin, a spokesman for China’s Foreign Ministry, rejected the idea that the I.M.F. or the World Bank is meant to further American interests.

“The I.M.F. is not the I.M.F. of the United States, nor is the World Bank for that matter,” he said.