by Andrea Shalal and Joe Cash

BEIJING (Reuters) – U.S. Treasury Secretary Janet Yellen on Friday called for market reforms in China and slammed the world’s second-largest economy for recent “punitive” actions against U.S. companies and curbs on the export of strategic minerals.

Arriving in Beijing on Thursday, she said the measures underscored the need for “resilient” and diverse supply chains. She also said Washington and its allies would respond to China’s “unfair economic practices.”

Janet Yellen made the remarks to the American Chamber of Commerce in China, after having, according to a representative of the US Treasury Department, a “substantial” conversation with the influential economic adviser to Beijing, Liu He, and the governor of the Chinese central bank, Yi Gang.

The United States wants “healthy” competition with China, based on fair rules that benefit both parties and not on domination (“Winner takes all”), she also told Chinese Premier Li. Qiang.

The US secretary said she hoped her visit would foster more regular communication with Beijing, adding that any targeted action by Washington to protect its national security should not “unnecessarily” jeopardize their relationship.

Li Qiang said the rainbow that appeared as Janet Yellen’s plane landed in Beijing on Thursday brought hope.

“I think the relationship between China and the United States is not just about wind and rain. We will definitely see more rainbows,” he said.

FOR A MARKET-ORIENTED ECONOMY

Janet Yellen’s four-day visit is part of a series of high-level diplomatic trips designed to ease tensions between the world’s two biggest economic powers, though expectations are low as representatives from both sides admit that protecting national security interests takes precedence over strengthening economic ties.

Janet Yellen expressed concern over new Chinese export controls on gallium and germanium, essential minerals used in particular in the semiconductor industry.

The former Federal Reserve chair also attacked China’s planned economy, urging Beijing to return to more market-oriented practices.

“A market-based approach has helped to increase China’s rapid growth and lift hundreds of millions of people out of poverty. This is a remarkable economic achievement,” she told the audience. American contractors.

Janet Yellen noted that China’s huge and growing middle class is an important market for American goods and services and pointed out that Washington’s targeted measures against China were based on concerns of national security.

“We seek to diversify, not decouple,” she added. “A decoupling of the world’s two largest economies would be destabilizing for the global economy and would be virtually impossible to undertake.”

China’s finance ministry said Beijing hopes the United States will take “concrete steps” to create an environment conducive to the healthy development of bilateral economic and trade relations.

“No winner emerges from a trade war or from decoupling and ‘breaking the chains’,” he said in a statement.

(Report Andrea Shalal; Jean Terzian and Laetitia Volga, edited by Blandine Hénault)

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