U.S. Treasury Secretary Janet Yellen speaks on the sidelines of a G20 meeting at Gandhinagar, India, on July 17.AMIT DAVE/Reuters
U.S. Treasury Secretary Janet Yellen said on Monday the United States was making good progress in bringing inflation down and she did not expect the U.S. economy to enter into a recession.
Yellen, speaking to Bloomberg TV from India during a meeting of Group of 20 finance officials, said slower growth in China could spill over to other economies, but the U.S. economy was on “a good path” to reducing inflation while the labour market remained strong.
“For the United States, growth has slowed, but our labour market continues to be quite strong. I don’t expect a recession,” Yellen said. “The most recent inflation data were quite encouraging.”
Data on Monday showed China’s economy grew 6.3 per cent in the second quarter on a year-on-year basis, accelerating from 4.5 per cent in the first three months of the year, but well below expectations of 7.3 per cent, as demand weakened at home and abroad.
U.S. data released last month showed gross domestic product increased at a 2 per cent annualized rate in the first quarter, a sharp upward revision from the 1.3 per cent pace reported earlier, but still below the 2.6 per cent growth reported in the fourth quarter.
Yellen downplayed the prospect for U.S. tariff cuts or reductions as part of the Biden administration’s push to re-establish relations with Beijing.
She said Chinese officials raised serious concerns, especially about U.S. tariffs, during her visit earlier this month, but the underlying reasons that Washington implemented them in the first place, including unfair trade practices, had not been addressed.
“We have to see what comes out of the four-year review” of tariffs, Yellen said, adding, “But I would emphasize that really the underlying concerns have not yet been addressed. And we need to work on that going forward.”
She said U.S. technology restrictions aimed at China were not meant to be “tit for tat,” but were focused on national security concerns, and in some cases, human rights abuses.
Yellen said the United States was likely to proceed with a new executive order restricting outbound investment that has also sparked concerns in China, but stressed that these would focus narrowly on three sectors – semiconductors, quantum computing and artificial intelligence.
“They would contain a combination of notification requirements, and in a very narrowly scoped portion of these sectors, prohibitions, but these would not be broad controls that would affect U.S. investment broadly in China,” she said.
Asked if the order was finished, Yellen said, “We want to make sure that we get it right, and we’ve been working on the details.”
She said there was a “good chance” it would happen, but said it would come with a notice of proposed rule making, giving the public a chance to comment on any proposed controls.
Yellen said she did not know about the hacking of emails of Commerce Secretary Gina Raimondo and other government officials by a group based in China and did not discuss it with Chinese officials, but said the U.S. government had raised its concerns with Beijing.