Washington, DC – U.S. Representative Young Kim (CA-40) questioned Treasury Secretary Janet Yellen at today’s Financial Services Committee hearing titled, “The Annual Testimony of the Secretary of the Treasury on the State of the International Financial System.”
Rep. Kim is vice chairwoman of the House Financial Services Subcommittee on National Security, Illicit Finance, and International Financial Institutions and chairwoman of the House Foreign Affairs Subcommittee on the Indo-Pacific.
Watch her full questioning HERE or read highlights below.
On supporting Taiwan’s participation in the International Monetary Fund (IMF)
Rep. Kim: “As you know, the House unanimously passed my bill, H.R. 540, the Taiwan Nondiscrimination Act. This will support Taiwan’s membership at the IMF, where the statehood is not a prerequisite to join the international organizations, and the IMF has no conditions where statehood is a requirement. As you know, Taiwan already belongs to WTO and the Asian Development Bank, so if Taiwan seeks its membership at the IMF, would you support it?”
Sec. Yellen: “Well, you know, Taiwan has not expressed any interest in joining the IMF. This is not a decision that the United States recommends.”
Rep. Kim: “With all due respect, Secretary Yellen, that’s why we passed the Taiwan Nondiscrimination Act. And we are hoping that you will work with us and fully support Taiwan’s membership at the IMF. Obviously, it goes without saying the world would benefit from having the input and expertise of world’s 21st largest economy. I hope you will work with us. And the legislation is already passed out of the House.”
Sec. Yellen: “Sure. I guess what I can say is that we have supported greater engagement between the IMF and Taiwan, even with Taiwan being a nonmember. We have urged surveillance activities and other IMF activities to work with Taiwan.”
Rep. Kim: “Taiwan has indicated their expressed interest to join. So when that happens, I hope you will support that.”
On countering CCP’s economic coercion
Rep. Kim: “To address the growing problem of indebtedness of low-income countries, G20 nations and the Paris Club agreed to the Common Framework with the CCP. Can you speak of any of your efforts to force the CCP to make its sovereign lending more transparent through the Common Framework?”
Sec. Yellen: “We have engaged thoroughly over a long period of time and deeply in every way we can with China to bring them to the table, to participate actively in restructurings through the Common Framework. It’s been frustrating, but I think that there has been some progress. We have urged the IMF, the World Bank. They’ve set up a sovereign debt roundtable, which is a forum to discuss issues that China routinely raises that aren’t really case specific, but broader. And I think we’ve made some progress there.”
Rep. Kim: “Thank you, Secretary. Let us continue to be more vigilant in making sure that like-minded countries and with our allies that we can force the CCP to be more transparent. We cannot afford to cave in to CCP demands that private creditors should be ignored in debt restructuring negotiations. There should be comparable treatment between public and private creditors. As you know, private capital is a powerful tool to counter the CCP’s debt diplomacy.”
On lifting sanctions against CCP entities and the fentanyl working group
Rep. Kim: “ Earlier this year, the U.S. and CCP launched the bilateral Counternarcotics Working Group to counter the manufacturing and trafficking of all illicit synthetic drugs. But I’m afraid that we are giving away some of our leverage by lifting some sanctions. And once again, we are yielding to the empty promises made by CCP officials. Can you tell us about the role of Treasury and your role in the working group?”
Sec. Yellen: “Well, we participated in the Counternarcotics Working Group, and Treasury has also, under the auspices of Financial Working Group we’ve established with our counterparts led by the People’s Bank of China, an anti-money laundering forum, where we’re working on best practices and also relates to counternarcotics. We have seen China take some action against firms that are involved in producing.”
Rep. Kim: “I know last year when Xi Jinping and President Biden met, they also started the Fentanyl Working Group and Narcotics Working Group early this year. But we know from experience that we cannot solely rely on the commitments made by Xi Jinping and CCP officials. I hope that you will do more to ensure that the CCP abides by the commitments that is established by the Working Group. And I know you are participating, but please be more firm.”
Sec. Yellen: “Yes, we’ve taken sanctions, actions ourselves against Chinese firms on this.”
Rep. Kim: “Thank you.”
