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Biden’s Treasury deputy nominee urges tough line on China

A senior US Treasury Department official has said the US is "actively considering what to do" about Trump-era tariffs in Chinese imports.
US. Deputy Treasury Secretary Wally Adeyemo. Photo: Reuters.

(ATF) Wally Adeyemo, Biden’s nominee as deputy Treasury secretary, said on Tuesday February 23 that the US should work with allies to hold China accountable to international rules and ensure a level playing field for corporations.

“China is our top strategic competitor,” Adeyemo told a confirmation hearing by the Senate finance committee. “Where China is not willing to play on a level playing field, it is important that we hold them accountable in the international system,” Adeyemo said, adding that taking action along with other countries would “demonstrate to the Chinese that they are isolated when they violate the rules.”

Adeyemo stuck to the hardline tone on Beijing taken by other Biden officials, vowing to fight what he called “unfair economic practices” in China.

Adeyemo seems almost certain to be confirmed as Treasury secretary Janet Yellen’s deputy, and will play a key role in shaping US economic policy on issues ranging from financial regulation to sanctions on foreign governments.

He indicated that he is willing to continue using the sanction policies adopted by the Trump administration in dealing with China.

“It is critical that we use Treasury’s tools to hold China accountable for actions they take that are not consistent with international law and that put our national security at risk,” Adeyemo said, adding that this includes “a critical look at how Chinese firms may be using our financial system to do just that.”

Adeyemo is one of two key Biden economic appointees with recent BlackRock links, along with Brian Deese, who will chair the National Economic Council.

Both men are veterans of the Obama administration, and Adeyemo has frontline experience of developing US economic policy towards China and other Asian nations, as he was chief negotiator for the Trans-Pacific Partnership’s provisions on macro-economic policy when he previously worked at the Treasury.

The Trans-Pacific Partnership was a trade agreement that was signed in 2016 and widely viewed as an attempt by the US to reduce the economic reliance of many Asian countries on China, but it never took effect after it was repudiated by Donald Trump when he came to office in early 2017.

Adeyemo worked as a senior adviser to BlackRock from 2017 to 2019, including a stint as interim chief of staff to Larry Fink.

Brian Deese was most recently the global head of sustainable investing at BlackRock.

That was a high-profile role last year as BlackRock stepped up its efforts to burnish its environmental, social and governance (ESG) credentials, following criticism over its investments in polluting corporations.

Adeyemo and Deese accordingly both bring close links to BlackRock CEO Larry Fink to their new senior roles in the Biden economic team, and can be expected to be a conduit of Fink’s views to the US administration. Fink has made greater access to China a key business goal for BlackRock and could be expected to urge conciliatory policies on his former employees.

Adeyemo said at his hearing on Tuesday that his new employer – Treasury secretary Janet Yellen – had asked him to conduct a top-to-bottom review of US sanctions policy, if confirmed.

“Treasury’s tools must play a role in responding to authoritarian governments that seek to subvert our democratic institutions; combating unfair economic practices in China and elsewhere; and detecting and eliminating terrorist organizations that seek to do us harm,” he told the committee.

The US Treasury oversees a host of sanctioning tools, including a ban on US investment in companies with alleged ties to China’s military that was introduced by Trump.

The ban, which has prompted market confusion since being unveiled late last year, takes effect in November and investors are eager to learn if Biden will revoke it or clarify its scope and use it to go after top Chinese firms.

Adeyemo said the United States needs a holistic approach on China that factors in national security.

“We can’t separate the economic from the pure security; we have to look at it all because that’s the way the Chinese look at these issues,” he told the committee.

Adeyemo also called for targeted investments in critical US industries and technologies, and policies to protect workers and companies from anti-competitive trade practices.

The Covid pandemic exposed critical vulnerabilities in the US supply chain for medical supplies and drugs that needed to be addressed, but the federal government should also review “how those threats can morph going into the future,” Adeyemo said.

He defended Biden’s $1.9 trillion stimulus plan, and dodged questions about concerns that its passage could trigger inflation.

Adeyemo also backed Biden’s plans to raise corporate tax rates, and said he would work with international partners to end “a race to the bottom” in corporate taxation.

Senate finance committee chairman Ron Wyden, a Democrat, and other members of the committee lauded Adeyemo’s qualifications. Republican senator Chuck Grassley said that he expected Adeyemo to be confirmed in the job.


Jon Macaskill

Jon Macaskill has over 25 years experience covering financial markets from New York and London. He won the State Street press award for 'Best Editorial Comment' in 2016


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