Yellen: Chinese Banks Assure US Treasury Officials They Are ‘Doing Well’
US Treasury Secretary Receives Reassurances from China
U.S. Treasury Secretary Janet Yellen recently stated that Treasury officials visiting Beijing received assurances that Chinese banks are “doing well” despite turmoil in the country’s financial and real estate markets. Yellen added that she did not see large spillovers to the U.S. economy at this stage. She emphasized that a U.S.-China Economic Working Group would meet in Beijing shortly for larger discussions on China’s economic situation.
Pressure on China’s Financial Sector
The Financial Working Group met last week and U.S. Treasury officials focused on pressures in the financial sector, particularly in the banking sector, stemming from debt problems of local governments and the real estate sector. Yellen stated that they received assurances that banks in China are doing well. However, Chinese financial markets sold off heavily this week as investors both international and domestic grow frustrated with the Chinese government’s reluctance to take bold measures to shore up the economy amid a protracted crisis in its real estate sector and debt pressures.
Potential Spillovers to the US Economy
Yellen addressed the potential for spillovers from China’s turmoil to the U.S. economy, stating that there could be an impact. She mentioned that if growth slows to important trade partners in Asian countries, some spillovers might be seen, but she doesn’t think they’re going to be very large.
Russian Assets and Aid to Ukraine
Regarding calls to confiscate hundreds of billions of dollars in frozen Russian assets, Yellen mentioned that she expected G7 finance ministers to soon receive a report reviewing potential legal justifications and risks associated with seizing the funds and diverting them to aid Ukraine. When asked if the report would be ready by the end of February, Yellen said, “We’re working to do it quickly.” She has previously said that an international law justification agreed by G7 countries would be needed and that the U.S. Congress would need to pass legislation to enable seizure of Russian assets held in the U.S.
