Treasury Secretary Janet Yellen on Wednesday delivered a pointed warning to China on its alignment with Russia, suggesting potential economic consequences from the international community depending on how it approaches President Vladimir Putin’s invasion of Ukraine.
“China has recently affirmed a special relationship with Russia,” Yellen said in a prepared remarks Wednesday to the Atlantic Council – an institution established in the 1960s to foster support for collective international security. “I fervently hope that China will make something positive of this relationship and help to end this war.”
In some of her sharpest comments on China since taking office, the Treasury chief warned that “going forward, it will be increasingly difficult to separate economic issues from broader considerations of national interest, including national security.”
“The world’s attitude towards China and its willingness to embrace further economic integration may well be affected by China’s reaction to our call for resolute action on Russia,” she said. President Xi Jinping’s government has refrained from joining the US-led sanctions on Russia, while calling for respect for the principles of sovereignty and territorial integrity. China has also declared that Russia’s moves on Ukraine are “not comparable at all” to Beijing’s determination to reunify Taiwan with mainland China.
“China cannot expect the global community to respect its appeals to the principles of sovereignty and territorial integrity in the future if does not respect these principles now when it counts,” Yellen said.
She also reiterated that for nations “sitting on the fence” over the international effort to punish Russia, any moves to undermine sanctions would draw the ire of the US and its allies.
The speech comes a week before finance chiefs from across the globe gather – virtually and in person – in Washington for the spring meetings organised by the World Bank and International Monetary Fund.
In the face of moves by Xi to lay out China’s authoritarian system as a model for emerging and developing nations across the globe, Yellen said “the future of the international order” was at stake. Yellen also rebutted any criticism that the efforts led by Washington to isolate Russia from the dollar-based global financial system were “motivated by any one country’s foreign-policy objectives.”
The US-led neutralising of about half of Russia’s foreign-exchange reserves, and cutting off a swathe of Russian institutions from accessing dollar-based financial infrastructure, has raised questions among some analysts about whether it’s abusing the greenback’s dominance.