russia in its war against ukraine. >> thank you all for being here today. i would like to begin by speaking about the groundwork we have laid over the past year.

last april, i outlined our administration's approach to our economic relationship with china. president biden and i are clear eyed about the complexities of this relationship. our priorities include protecting our national security and that of our allies, advancing an objective of a healthy economic relationship with a level playing field for american workers and firms, and cooperating on china. it is undeniable that the u.s.-china relationship is on a stronger footing today than this time last year.

these bills on the candid and constructive meeting between president biden and president she -- xi in woodside, california. through these exchanges, my team has been able to advance the interests of the american people. we set forth our own economic paralysis priorities and gain -- pap -- policy priorities and advocated for specific steps to ensure american workers and

firms are treated fairly. we directly included american national security concerns and some clarified potential misunderstandings to prevent unintentional escalation. last november, the vice premier and i took the important step of affirming key areas of agreement, including a commitment to work toward a healthy economic relationship that provides a level playing field for both countries. this progress matters. given the size of our economies, the u.s.-china economic relationship is among the most important bilateral economic relationships in the world. it matters deeply for american

workers and firms. in turn, the american people expect their leaders to do the hard work of economic diplomacy. it is not the type that always generates headlines. it keeps at it despite the noise in order to advance a responsible approach to the complex challenges we face. president biden and i are committed to such an approach. over the past week, i've had an opportunity to make progress on issues that matter to americans. i have had productive, direct, and extensive meetings over four days with china's economic leadership, including premier li the, vice premier, the governor, and the finance minister lam.

i have also met with those outside the central government including american and other foreign businesses, chinese academics and students, and local government leaders with practical the ground policies. let me address three areas where we have made significant progress this week. first, the vice premier and i agreed to launch intensive exchanges on balanced growth in the domestic and global economies. this represents an important part of my effort to advocate for workers and businesses and gain a better understanding of certain macroeconomic policies. let me explain. my underscored again that the

united states does not seek to decouple from china. our two economies are deeply integrated and a wholesale separation would be disastrous for both of our economies. as we take actions to diversify our supply chains, we seek to benefit american workers and firms. china is a key market for american products and services. competition can spur greater dynamism in american industries. the american businesses i spoke to underscored the significant benefits of a healthy economic relationship. at the same time, i expressed concern to senior chinese officials that there are features of the chinese economy that have grown negative

spillovers on the u.s. and global. i'm particularly worried about how china's macroeconomic imbalances, namely its week household consumption and business overinvestment, with large-scale government support in specific industrial sectors will lead to significant losses to businesses in the united states and the rest of the world. china has long had excess savings. investment in the real estate sector and government funded infrastructure has absorbed much of it. now, we are seeing an increase in business investment in a number of new industries targeted by the prc's industrial policy and that includes electric vehicles, lithium-ion

batteries, and solar. china is now simply too large for the rest of the world to absorbed this enormous capacity. actions taken by the prc today can shift prices. when the global market is flooded by artificially cheap chinese products, the viability of american and other foreign firm is put into question. we have seen this story before. over a decade ago, massive prc government support led to below cost chinese steel that flooded the global market and decimated industries across the world and in the united states. i have made clear that president biden and i will not accept that reality again. i know that these serious concerns are shared by our

allies and partners from advanced economies to emerging markets. china's excess capacity is built up over a significant amount of time. our concerns will not be resolved in a week or month. the exchanges that we announced during this trip will provide a dedicated structure for us to raise our concerns about china's imbalances and overcapacity among a wide range of other topics in a detailed and targeted manner. we intend do underscore the need for a shift in policy by china during these talks. building on the over two hours we spend on this topic with the vice premier last week. this is part of our effort to advocate for american industries

and prevent the significant economic disruptions we have seen in the past. it is important to note that i firmly believe that addressing these imbalances in an appropriate way will not only be good for the u.s. and the world, it will also be good for china's long-term productivity and growth. importantly, we have and will continue to emphasize that our concern about overcapacity is not an advocated by anti-china sentiment or a desire to decouple, rather it is driven by a desire to prevent local economic dislocation and move to a healthier economic relationship with china. second, i was pleased to announce we are expanding cooperation with china in our shared work against illicit finance.

at home, president biden and i have taken major steps to prevent illicit actors from exploiting the u.s. financial system and to hold them accountable when they do. but the united states cannot do it alone. weakness is in financial regulatory regimes abroad, in china and other countries around the world, also provide an avenue for financing for criminal organizations, human traffickers, drug traffickers, fraudsters, and other malicious actors that can harm america and our national security. from now on, a new joint treasury pb oc cooperation and exchange on anti-money laundering established during this trip will enable our countries to share best crack this is an information to clamp down on loopholes in our respective financial systems.

i have asked my team to begin these meetings very soon and we look forward to reporting on our progress. i'm also pleased that illicit finance is a critical component of treasuries work with the pb oc as part of the u.s. prc counter narcotics working group. exchanging information on money laundering as it relates to trafficking of fentanyl and other illicit synthetic drugs can help us disrupt the flow of illicit narcotics, precursor chemicals, and equipment. the opioid at the adamic is a crisis that affects every community in the united states, large or small. with more than 150 americans dying each day. treasury is committed to using all of our tolls -- tools to

counter this threat. third, we are announcing we will continue a series of financial technical exchanges between the united states and china. just like military leaders need a hotline in crisis, american and chinese financial regulators must be able to communicate to prevent financial stresses from turning into crises with tremendous ramifications for our citizens in the international community. over the past few months, we have hosted several exercises with china, including on how we would coordinate if there were to be a failure of a large bank in either of our countries. i'm pleased that we will hold upcoming exchanges on operational resilience in the financial sector and on financial stability implications

from the insurance sector's exposure to climate risks. these are the types of discussions we have with other major economies. since we know a financial issue in a foreign country can quickly cascade two hours and i'm glad we are doing the same with china. this technical exchange builds on other spheres of cooperation. this includes our efforts to alleviate that distress and emerging markets and developing countries. we have seen progress over the past few months on specific debt cases such as zambia's. i have and will continue to push as hard as i can to build greater momentum in other outstanding debt cases. i have also been pleased by the progress we have made in conversations around sustainable finance and i'm committed to

moving our climate cooperation with china forward. alongside these specific steps, i also exchanged views on the macroeconomy and national security. i shared my assessment that the american economy remains strong with president biden's historic economic agenda driving both our current resilience and long-term growth. we also discussed risks to the resilient global outlook. i was able to learn more about how the chinese government views their current economic and financial situation and the steps that they have and are contemplating taking. these steps inform our own economic decision-making. we also had difficult conversations about national security.

president biden and i are determined to do all we can to stem the flow of materials for russia's industrial base we continue to be concerned about the role that any firms including those in the prc are playing and russia's military procurement. i stress the companies including those in the prc must not provide material support for russia's war and that they will face significant consequences if they do. and i reinforce that any banks that facilitate significant transactions to channel military or dual use goods to russia's defense industrial base expose themselves to the risk of u.s. sanctions. we also exchanged information on the use of economic tools in the

national security space. going forward, i believe we must continue to discuss how each side defines national security in the economic sphere. with the u.s. needs to continually evaluate its national security measures given the rapid pace of technological development, we are committed to know surprises. we are privately and publicly laying out our perspective at length alongside the principles and processes which we undertake in formulating our policies. our actions are implemented through transparent rules and regulations with ample comment periods. we would welcome transparency from the prc on its national security actions and greater clarity on where it sees the line between national security

and economic issues. this would provide greater stability to the relationship while also helping foster confidence for firms doing business with the prc, which is in china's interest. the vice premier and i committed to stay in close touch about these issues. the united states will also be hosting our chinese counterparts next week for the fourth meetings of the economic and financial working groups where these issues will be discussed at length. let me end with this, the work of diplomacy is not easy, but in the few months since the woodside summit and certainly since i visited beijing last summer, we have taken major steps to stabilize the u.s.-china bilateral relationship. during this trip, we have been able to build on that foundation

to move the ball forward on specific issues that matter to americans. this does not mean we have resolved all of our differences. there is much more work to do. and it remains unclear what this relationship will endure in the months and years ahead. it as we proceed, we must remember that its trajectory is not predetermined. it depends on the choices each of our country's make. the american people expect a clear read approach to china, one that precedes with confidence about the economic strength of our country and protects our national security, while finding a way forward so that both countries can live in a world of peace and prosperity. the president and i are firmly committed to continue to deliver on that.

thank you. i would be glad to take your questions. >> first question goes to alan rappaport of the new york times. >> thank you, secretary ellen. following your meeting with the premier, his office put out a statement saying the u.s. should refrain from politicizing and national securitizing economics and trade and appeared to be dismissive of some of the concerns you raised about overcapacity. what is your response to that? if china does not make changes, what measures do you think should be considered to protect the green energy industries that the biden administration trying to develop? >> i believe that in several areas of conversation on this topic that i was able to make very clear the basis for our concerns about chinese overcapacity. and that our concerns are not u.s. concerns alone, but also

reflect the views of our allies in europe and japan and in developing emerging markets, mexico, india, among others. so this is a widespread set of concern. and i believe he heard very clearly my view that this is something that if not addressed will injure american workers and firms. and i think he also understands that we have concerns with respect to our supply chain resilience about developingresig overdependence on china as a source of supply in areas like clean energy, which will clearly be expanding, and we need to have some participation in this,

as our allies do. so we agreed, as i mentioned, to launch intensive exchanges, unbalanced growth in domestic and global economies. the chinese have heard our concerns on control impacts on american workers and firms and realize that we need to discuss this and address it collaboratively. >> the next question goes to fatima from the associated press. >> hi, secretary yellen. excuse my voice. your counterparts brought up tiktok. is it practical to ban the output in the u.s.? incapacity, what is it looking for china to do in ng and solar?

are you looking for volunteers on exports? sec. yellen: let me start with tiktok. we discussed it briefly. you know, the president has made it clear that a bill in the house, and i am certainly supportive of efforts by our administration to address national security issues in relation to sensitive, personal data, so our concerns here have to do with sensitive, personal data and protecting it. this is a legitimate concern. it is a concern that china, for its part, also is concerned about many u.s. social caps are

not allowed to operate in china. we would like to find a way forward. of course, this is important for the chinese, you know, the president made clear he would sign the house legislation. sorry, there was a second? fatima: on solar capacity, will we be looking for voluntary export restrictions? sec. yellen: well, i don't have anything specific to say here. this is a problem that has developed over many years. i think, importantly, it reflects chinese policies that place great priority on these sectors, channels, supports, and we want them to continue operating, even when prices drop

to very low levels due to overcapacity. if those firms don't exist, the market instead, it is potentially our firms that have to do so. i think some changes in policy, as i mentioned, on the chinese side, are necessary and appropriate, and these are matters that we will begin discussing as early as next week , when the economic working group convenes again. >> the next question will go to courtney brown with axios. courtney: thanks for taking our question, secretary yellen. i want to follow up with what callan asked. you mentioned in your opening remarks about the biden administration will not accept the reality of what happened over a decade ago with the first china shock. how far is the biden administration willing to go to prevent that from becoming a reality?

what are some of these specific actions that you could take? sec. yellen: well, i don't want to get into where we are on this, but i did, last week, visit a firm in atlanta that was a dynamic and technologically advanced producer of solar cells in the early 2000's. this was a time when china ramped up its capacity to produce solar panels enormously. prices plummeted, and in 2017, the firm finally have losses that were so steep, it went out of business. it went bankrupt. and one of the goals of the inflation reduction act, of course, a key goal is to reduce

emissions, to address climate change, but also it is intended to bolster our supply chains and create some capacity in the united states, to produce these critical clean energy products. and there are a series of supports there and restrictions that have enabled these firms, it now has the potential to operate profitably. but we recognize that continued investments come up capacities in these areas in china, global demand really could again frighten a company like this. and the impact of that, you mentioned the first china shark, that is something that happen in

the year that china joined the world trade organization, its production of manufactured goods ramped up dramatically, and there was tremendous loss in jobs, 15 million jobs in the united states, that really went through the hollowing out of industrial productions in many parts of the country and have a negative impact on american workers. president biden, this is something he is very focused on, wanting to revert these efforts, effects that american workers have seen, and it would not be acceptable to the united states, to president biden, to allow this to happen again. exactly what the right tools are

, i believe it is critical that our chinese counterparts understand the importance that we place on addressing this, and i believe they have tools that they can use for this problem. >> the next question will go to andy dorr, "the wall street journal." andy: you mentioned the u.s.-china ties that some of this recent diplomacy has been able to achieve. i wonder if the overcapacity does become a worst-case scenario and a repeat of the china shop you mentioned. is that something you think has the potential to destabilize the recent momentum? is it essential to the bilateral relationship, whether this can be resolved? sec. yellen: well, we do believe it is a critical issue, and one that could have an adverse impact on american workers and

firms if we don't find a solution. so i believe we have the commitment with the chinese to try to work cooperatively, to understand economic concerns that each of us has. and this is a very important concern of ours. i think my job here is to make sure i have explained this very thoroughly and presented this concern at the highest levels of chinese leadership, so that they understand the importance that we attach to this. i do not want to see the u.s. economic relationship or overall relationship with china deteriorate and fray, and i believe the chinese are undertaking these consultations and ongoing exchanges because

they share a similar desire to stabilize our relationship, that we see the benefit of a strong trade and investment relationship, as i said, from being able to sell into a huge chinese market. for many american firms, it supports many jobs, and the chinese gain similar benefits. we have a deep relationship in terms of trade investments, and i think neither side would wish to see this relationship really the couple. so we are working together honestly in good faith to have frank and candid discussions and to find a way forward that is constructive. >> next question will go to cnn.

>> whether it be tiktok or ev's, there's a lot between washington, mainstreet, toward chinese firms. having made another trip to china, i'm wondering, is the skepticism warranted, and how do you know if a new threshold has reached, and new level of conflict for americans to be encouraged to do business in china. sec. yellen: so we have talked with american firms and build an effort to understand their concerns. to some extent, their concerns reflect chinese actions that worry them, like actions that

have been taken against certain firms working with american businesses or, more recently, a decision not to allow amd chips. and american firms are unclear exactly what kinds of steps china might take in the future, and i've had enough conversations -- and i've tried in our conversations to make clear that this is the reason for caution on the part of american firms about doing business here. that said, there are many american firms that would deepen their involvement in china, to continue to do very profitable business that they are very committed to here, so i would

not over emphasize this problem, but i think on each side, we need to be as transparent as we can about our national security concerns and how actions can take to resolving those concerns. is also what the chinese say, that this reflects a national security concern. as i mentioned, when we put restrictions in place with proposed rules, gone through a fault, we are making a process in which we take comments and make very clear what the rules of the game are, and i think that would be helpful on the chinese side as well. >> and the final question will go to wayne li wang. >> hi, chair yellen.

i share your concern about china and beyond. in keeping with your spirit of being constructed for this trip, in the short term, when i talked to former chinese officials, the solution on the supply side is relatively limited, where local governments are very active, and at this stage, where the economy is already weak, local governments would not want governments to go bankrupt, as you mentioned, with social instability issues. do you have an inkling from policymakers about what could be down in the short immediate term, or perhaps what you raise in terms of solutions? you are a top macroeconomists. sec. yellen: well, there is

supply and there's also demand. we have had conversations with our chinese counterparts about the demand-side of the equation and the fact that china's rate is among the highest in the world, and even at this advanced stage of development. the flipside of a very high saving rate is that consumer spending, as a share of gdp, is quite low in china relative to a country at this level of income. so one possible approach would be to boost demand and to see a larger share of gdp, to boost

their income, and/or, for example, bolster retirement security, the ability to afford education for one's children, and so forth, which are motives for verified saving. and that rebalancing. and this is a matter that we have discussed over more than a decade in china, and i, too, have talked to many officials and members of the academic community who think that that needs to be part of the solution, if consumer spending has a higher percent of gdp, to have such large investment going forward to supply. >> that concludes today's press conference.

thank you all for joining us.