China’s Economic slowdown is a “Risk Factor” for US, Says Treasury Secretary Yellen
A month after returning from her visit to China, U.S. Secretary of the Treasury Janet Yellen opened up about the interplay between the two countries’ economies, the risks the Chinese slowdown has on the U.S., and a side trip she took courtesy of ingesting magic mushrooms. Addressing growing concerns over the economic downturn in the world’s second-largest economy, and possible spillover effects to the U.S., the Treasurer was optimistic about her country’s path.
China and U.S.
Amidst the growing concerns surrounding China’s economic prospects, including a 5% devaluation of the yuan, and across-the-board weakening economic indicators, China now has the worst-performing currency in Asia after the yen.
Treasury Secretary Yellen, speaking in Las Vegas, seemed to be undoing some of the recent strong talk from U.S. President Biden at a fundraiser on August 11. Biden referred to China’s economic issues as a “ticking time bomb” and referred to Communist Party leaders as “bad folks.” The U.S. President expressed concerns about China’s slowed growth and elevated unemployment rate. She was speaking at a press conference following a speech in Las Vegas. Yellen referred to China’s economic woes as a “risk factor” for the US, a risk that she believes won’t significantly undermine the overall prospects of the American economy.
As Yellen touted the economic policy achievements of the Biden administration, she highlighted the resilient state of the US economy.
Risks to U.S.
In classic economist style, Yellen hedged her “low risk” comments by suggesting there is a possibility that while China’s slowdown will primarily impact its neighboring Asian nations, there will inevitably be some repercussions for the United States.
Yellen strongly emphasized uncertainty, “That said, I feel very good about US prospects overall. Let’s call that a risk, she said, signalling her measured optimism amidst the uncertainties linked to China’s economic trajectory. Yellen underscored the unexpectedly robust state of the U.S. labor market despite the Federal Reserve’s aggressive rate-hiking campaign – one of the most vigorous tightening efforts in decades.
Psychedelic Side Trip?
While in Beijing, Yellen made a bit of a stir both in China and in her home country for having been seen easting a psychedelic mushroom-based dish called Jian shou qing, or “see hand blue”, a fungi dish known for being hallucinogenic.
Yellen spoke about her experiences on CNN. She recognized the humor of the episode but said that the cooked food had no side effects.
Take Away
The U.S. economy is likely to be impacted by trade with the world’s second-largest economy. According to the U.S. Treasury Secretary, weakness in China will be somewhat contagious. She remains cautious but optimistic that the robust state of growth and employment in the U.S will serve to minimize negative effects.
Managing Editor, Channelchek
