Summers ‘Concerned’ Over Lack of Regular U.S. Talks With China
Ex-Treasury Secretary Lawrence Summers urged the establishment of an “ongoing” channel of U.S. communication with China following a report that his former department is planning not to resurrect a previous forum for such contacts.
“I am concerned about the canceling of dialogue,” Summers said Friday on Bloomberg Television’s “Wall Street Week.” “It seems to me that in many ways, the more fundamental your disagreements, the more important it is that there be some form of communication.”
While Treasury Secretary Janet Yellen has spoken with a senior Chinese counterpart, and plans further contacts with Chinese officials, the expectation for now is not to restart formal high-level talks, Bloomberg reported this week, citing people familiar with the situation. Those talks were discontinued during the Trump administration’s trade war with China in 2018.
“I’m not counseling us to not aggressively pursue our interests,” said Summers, a paid contributor to Bloomberg. “We do need a kind of firmness and directness that we always haven’t had.”
But Summers, who also served as top economic adviser in President Barack Obama’s White House and is now at Harvard University, suggested the lack of regular contacts could make it tougher to handle tensions.
“Whether it’s called a strategic economic dialogue, whatever it is called, I hope there’s some kind of ongoing channel so as to manage potential crises,” Summers said.
The latest source of tension emerged this week, with the Biden administration warning investors about the risks of doing business in Hong Kong, and issuing an advisory saying China’s push to exert more control over the financial hub threatens the rule of law and endangers employees and data.
Yellen said on CNBC Thursday, “I have been in touch with Chinese counterparts. And we have discussed a range of issues. And I expect that that will continue.”
While some have likened Sino-American tensions to a new Cold War, Summers said the deep linkages between the world’s two largest economies makes the situation much different from the faceoff between the U.S. and Soviet Union.
“We need to recognize that we’re in a kind of unprecedented situation,” Summers said.
The economist also cast doubts about attempting to reduce reliance on overseas supply chains with the aim of boosting U.S. manufacturing jobs. The strategy can boost the cost of imported goods, making American industry less competitive.
“That’s a kind of old-fashioned Latin American notion that didn’t work very well in Latin America,” Summers said, referring to the import-substitution theory popularized in the 1950s by economists including Argentina’s Raul Prebisch. Summers added that it “ultimately over the long term won’t work so well here.”
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