The United States wants to end its “undue dependence” on rare earths, solar panels and other key products from China to prevent Beijing from cutting off supplies as it has done for d other countries, said US Treasury Secretary Janet Yellen.
Yellen, who arrived in Seoul on Monday evening, told Reuters she was pushing to strengthen trade relations with South Korea and other trusted allies to improve the resilience of supply chains and avoid possible manipulation by geopolitical rivals.
“Resilient supply chains mean a diversity of sources of supply and eliminates wherever possible the possibility that geopolitical rivals can manipulate us and threaten our security,” she said in an interview en route to Seoul. .
Yellen will outline his concerns in a major policy speech in Seoul on Tuesday after touring the facilities of South Korean tech heavyweight LG Corp on the final leg of an 11-day visit to the Indo-Pacific region.
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According to excerpts from her remarks, Yellen will make a strong case for “shoring friends” or diversifying US supply chains to rely more on trusted business partners, a move she says would also combat inflation and would help counter China’s “unfair trade practices”.
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Yellen said South Korea had “tremendous assets in terms of resources, technology and capabilities” and that its companies, including LG, were already investing in the United States.
“They have substantial capability to produce advanced semiconductors,” was particularly important given the United States’ “huge dependence” on Taiwan Semiconductor, she said.
Reducing US dependence on certain Chinese exports was essential, as Beijing had cut off supplies from countries like Japan in the past, while putting further pressure on Australia and Lithuania, said a senior Treasury official.
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“They used coercion to pressure a number of countries whose behavior they disapproved of,” Yellen said. “We know that’s a reason why we don’t want to depend on China.”
Despite his strong words, Yellen said the relationship with China was not “totally negative or degenerating into extremely hostile territory.”
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She said China listens to US concerns in other areas and has now taken constructive steps to restructure the debt of low-income countries.
“We have real concerns about China and we are putting pressure on them, but I don’t want to paint the picture of just an escalation of hostilities with China,” she said.