Yellen Urges China for Stronger Response on Russia
Treasury Secretary Janet Yellen this week urged China to join other countries in standing up to Russia, saying Beijing risks alienating itself from the global economy if it continues to sit out the conflict. Although the U.S. hasn’t yet seen evidence that China is helping Russia evade U.S. sanctions or export controls, Beijing hasn’t condemned Russia’s actions in Ukraine and could still hand Moscow an economic lifeline, which would be met with U.S. secondary sanctions and strong export restrictions (see 2203080053, 2203140009 and 2203140009).
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“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,” Yellen said during an April 13 event hosted by the Atlantic Council.
Yellen said some countries are hoping to “invent a system that frees them of reliance on the dollar,” which could then shield them from some of the financial effects of U.S. sanctions. “I really hope that we don't end up with a bipolar system, and I think we need to work very hard and to work with China to try to avert such an outcome,” Yellen said, adding that she doesn’t believe such a system will succeed.
“You see the power of partnership between the United States and our allies, and the importance of the dollar and the euro as currencies in which transactions take place as a tool to impose sanctions that can be immensely costly,” Yellen said. “There will be a desire to avoid sanctions to replace the dollar, but I don't think we will likely see that happen.”
Yellen also warned companies against continuing business in Russia. Although the companies may be “seeing an opportunity to gain by preserving their relationship with Russia and backfilling the void left by others,” Yellen said the strategy is “short-sighted,” and businesses that maintain ties with the country could soon be subject to sanctions.
“Let's be clear,” she said. “The unified coalition of sanctioning countries will not be indifferent to actions that undermine the sanctions we've put in place.”