President Joe Biden’s nominee to be Treasury Secretary Janet Yellen’s No. 2 indicated the U.S. is open to using a Trump-era investment ban to punish Beijing for violating international trade rules.
“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,” Wally Adeyemo, the nominee for deputy Treasury secretary, said Tuesday during his Senate confirmation hearing.
Part of that is to take “a critical look at how Chinese firms may be using our financial system to do just that.”
Several lawmakers, including Chairman Ron Wyden, an Oregon Democrat, pressed Adeyemo for details on the status of President Donald Trump’s November executive order calling for U.S. investors to divest from companies owned or controlled by the Chinese military. Wyden specifically asked if Adeyemo would continue its implementation.
Adeyemo said that once he’s confirmed, he will meet with Treasury officials to “understand how it’s being implemented” and “look at the tools that exist today to hold China accountable.”
The investment ban triggered confusion among stock exchanges and investors. The New York Stock Exchange in December announced plans to delist three large Chinese telecom companies, only to reverse that decision and then reinstate it following pressure from then-Treasury Secretary Steven Mnuchin.
To clarify, in January Mnuchin’s Treasury issued a statement naming China Mobile Ltd., China Telecom Corp. and China Unicom Hong Kong Ltd. as the companies that must be delisted.
Adeyemo indicated that the U.S. is open to taking unilateral action, although it’s “always best” to pursue a multilateral solution to “demonstrate that China will be isolated if they violate rules of the road.”
The nominee also indicated a shift in how the Treasury Department will approach diplomacy with China, saying it’s better to look at it “holistically” rather than separating economic and security, as has been done by the agency previously.
“We have to look at it all because that’s the way the Chinese look at these,” he said.
Adeyemo, a former Obama administration official, is expected to be confirmed by the Senate, with several GOP lawmakers expressing their support for his nomination.