Yellen stressed that the United States does not perceive China through the lens of a great power struggle and emphasised that Washington wants to engage in a ‘healthy competition’ with Beijing.
Yellen is not the first government official to call for healthy competition. In 2021, Chinese policymakers and scholars seized the opportunity of former president Donald Trump’s departure from the White House to advocate for healthy competition in the hope of resetting China’s strained relations with the United States.
There will be technical difficulties for such a ‘healthy’ competition. Washington demands Beijing address the lopsided bilateral trade volume by purchasing more US imports and adopting market reforms to give US companies an equal footing in competing with domestic Chinese firms. The majority of US companies no longer perceive China as an attractive investment destination. One factor accounting for this trend is the increasingly unfair playing field for US firms in China.
China has reacted lethargically to these terms. Beijing has yet to establish credible commitments towards increasing the purchase of US imports after failing to honour the Phrase One Trade Deal. This is unsurprising given domestic demand for US goods has declined, partly due to the Chinese government’s patriotic education that fuels economic nationalism and anti-US sentiment.
It remains uncertain whether China can adequately address perceived unfair business practices, especially preferential treatment for state-owned enterprises (SOEs). SOEs are linked to the legitimacy of the government, and Beijing relies on state intervention to ensure foreign competition does not erode the competitiveness of SOEs. Considering China’s tied hands in fulfilling these demands, the odds for healthy competition are slim.
Source : East Asia