US Treasury Secretary Janet Yellen is scheduled to testify on Capitol Hill today, Tuesday, and she will say in a prepared speech that international financial institutions should be viewed as a counterweight allied with the United States to China’s growing influence in the developing world. It seeks to rally congressional support for US financial support for these lenders.
The letter, seen by Bloomberg and reported by Al Arabiya.net, carried Yellen’s praise for institutions such as the International Monetary Fund and the World Bank, which “reflect American values,” according to the Treasury Secretary.
In her testimony, Yellen wrote, “Our leadership in these institutions is one of our primary ways of engaging with emerging markets and developing countries,” a speech scheduled for 10 a.m. before the House Financial Services Committee. “International financial institutions provide real resources to meet the challenges the world faces – from weathering economic storms to stimulating long-term economic development,” she added.
The aid “serves as an important counterweight to opaque and unsustainable lending from others, such as China,” she said.
The Treasury Secretary’s remarks illustrate the battle lines between the world’s two largest economies, as they vie for influence in the developing world. China has become the largest official lender to many poor countries around the world.
Asked about Yellen’s upcoming remarks, Chinese Foreign Ministry spokesman Wang Wenbin said the IMF and the World Bank should reflect the interests of all member countries.
“The International Monetary Fund and the World Bank are multilateral financial institutions, they are platforms that reflect greater democracy in international relations, and they are also platforms for international cooperation. They are not called the IMF or the World Bank of the United States,” he told reporters at a regular conference in Beijing on Tuesday.
But Republicans, who now control the committees in the House of Representatives, are likely to resist her praise of the international financial institutions created in the aftermath of World War II. Some members of the Republican Party criticized the World Bank and the International Monetary Fund for stepping outside their mandate to stimulate economic growth in developing countries.
Yellen has championed a plan to expand the World Bank’s work. In addition to country-specific projects, it wants all multilateral development banks to support cross-border efforts that address broad threats like climate change and pandemics.
Yellen and other administration officials have outlined an approach that seeks to restrict China’s access to sensitive technologies out of national security concerns, while also limiting US dependence on China for critical goods and materials.
House Committee Chairman Patrick McHenry, a Republican, is expected to question Yellen about a planned executive order that would restrict some US investment in China.
McHenry wrote to Yellen in May asking whether the order would be effective in preventing China from developing sensitive technologies.