The United States is set to launch economic talks this week with Bangladesh’s interim government, including its leader, Muhammad Yunus, the Financial Times reported on Tuesday.

The government led by the Nobel Peace laureate was sworn in last month with the aim of holding elections in the South Asian nation after the ouster of prime minister Sheikh Hasina following deadly protests against quotas for government jobs.

“The United States is optimistic that, by implementing needed reforms, Bangladesh can address its economic vulnerabilities and build a foundation for continued growth and increased prosperity,” Brent Neiman, assistant US Treasury secretary for international finance, told the newspaper.

A delegation of treasury, state and trade officials, is expected to discuss Bangladesh’s fiscal and monetary policy and also the health of its financial system, the paper said. The talks will be held on Saturday and Sunday in the capital, Dhaka, it added.

Officials in Bangladesh’s finance ministry and Yunus’ office said they were not aware of the visit.

Bangladesh’s $450-billion economy has slowed sharply since the Russia-Ukraine war pushed up prices of fuel and food imports, forcing it to turn to the International Monetary Fund last year for a $4.7-billion bailout.

The reports followed another batch of data indicating the US economy remained in rude health and compounded concerns that the Federal Reserve will hold off cutting interest rates this year or even hike them again.

Traders have been on edge since Saturday’s barrage by Iran, which Israel’s army chief General Herzi Halevi warned would be met with a response.

Leaders in Tehran said the strike was a legitimate response to a deadly attack on an Iranian embassy building in Damascus that it blames on Israel.

Iran state TV said three blasts had been heard near central Isfahan, the site of a key nuclear facility. Tehran had earlier said it could revise its nuclear policies if Israel threatened to attack its sites.

The Mehr news agency also said that “flights to Tehran, Isfahan and Shiraz, and airports in the west, northwest and southwest have been suspended”.Israel’s military said sirens sounded in the country’s north.

The news sent shivers through markets, with both main oil contracts surging more than three percent on worries about supplies from the crude-rich region, while fears of a regional conflict saw equities tumble.

Tokyo, Seoul and Taipei each plunged more than three percent, while Hong Kong and Sydney were off more than one percent.

There were also losses in Shanghai, Singapore, Wellington, Manila and Jakarta.

The rush for safety also saw the yen rally against the dollar and gold jump more than one percent past $2,400, while US Treasuries climbed.

“It is now clear that the escalating shadow warfare between Israel and Iran… has finally ignited the powder keg in the Middle East, and we have moved decisively out of the shadows and into the glaring light of open conflict,” said Stephen Innes of SPI Asset Management.

“It should be noted that this is not a staged response to an Iranian drone attack but rather an indication that we have entered a new phase of this conflict, one that is likely to have significant and far-reaching consequences for Middle East peace and least of all risk markets.”

The mood among traders was already downbeat as they contemplated the prospect of the Fed staying pat on interest rates this year following data showing jobless claims came in below expectations while a gauge of business activity hit a two-year high.

Meanwhile, Atlanta Fed boss Raphael Bostic said inflation is “too high” and he felt there was no need to cut borrowing costs until later in the year.”I’m comfortable being patient,” he added.

New York Fed chief John Williams and governor Michelle Bowman also said they saw fewer reductions than expected, if at all, this year.

Michael Landsberg, of Landsberg Bennett Private Wealth Management, said: “We are firmly in the camp of no rate cuts in 2024.

“We believe investors should prepare for a higher-for-longer regime when it comes to both inflation and interest rates.”

One mover was gold, which climbed to $2,009 an ounce XAU= and briefly hit a six-month top of $2,017.82. GOL/

The approach of month end could also cause some caution given the hefty gains investors are sitting on. Japan’s Nikkei .N225 eased 0.3 per cent, but it still up 8.6 per cent so far in November.

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS also dipped 0.3 per cent, giving it a monthly gain of 6.4 per cent.

Chinese blue chips .CSI300 lost another 1.1 per cent, and have missed out on all the global cheer with the market down 2 per cent in November so far.

China’s central banks announced it would encourage financial institutions to support private companies, but was short on detail.EUROSTOXX 50 futures STXEc1 eased 0.2 per cent, while FTSE futures FFIc1 fell 0.1 per cent.

S&P 500 futures ESc1 eased 0.2 per cent, and Nasdaq futures NQc1 lost 0.4 per cent. The S&P 500 cash index has rallied for four weeks straight and up 8.7 per cent on the month so far, which would be its best performance since mid-2022.

The Federal Reserve’s favoured measure of inflation is due on Thursday and is expected to slow to its lowest since mid-2021, reinforcing market wagers that the next move in rates will be down.

Fed Chair Jerome Powell will have a chance to push back against the doves at a Fireside Chat on Friday, and there are at least seven other Fed speakers on the docket this week.

“A view we hold strongly is that central banks are unlikely to deliver easing in the first half of 2024 absent a threat to the expansion or financial stability,” agues Bruce Kasman, head of global economics at JPMorgan.

“Indeed, this message of patience is likely to be notable in upcoming DM policy communications in response to recent financial market developments.”

European Central Bank President Christine Lagarde has also sounded in no hurry to ease and will have another opportunity to ram home the message at the EU parliament later on Monday.

Data on EU consumer prices for November is due Thursday and expected to show a cooling in both the headline and core rates, which would support market pricing for cuts.

Markets priced in 80 basis points of US easing next year, and around 82 basis points for the ECB. FEDWATCH, 0#ECBWATCH

The chance of an easing in borrowing costs has generated a big rally in bonds, with yields on 10-year Treasuries US10YT=RR down 36 basis points so far this month at 4.50 per cent.

That in turn has been a drag on the dollar which has lost 3 per cent on a basket of major counterparts this month =USD.

The euro was up at $1.0940 EUR=EBS on Monday, not far from its recent four-month high of $1.0965, while the dollar softened to 149.23 yen JPY=EBS.

A run of firmer official fixes for the Chinese yuan has also weighed on the dollar against Asian currencies and the Australian dollar AUD=D3.

The oil market faces a tense few days ahead of a meeting of OPEC+ on Nov. 30, a meting that had originally been slated for Sunday but was postponed as producers struggled to find a unanimous position. O/R

Reports suggest African oil producers are seeking higher caps for 2024, while Saudi Arabia may extend its additional 1 million bpd voluntary production cut, which is due to expire at the end of December.

“Saudi Arabia and OPEC+ faces a challenge in convincing markets that it can help keep oil markets tight in 2024,” wrote commodity analysts at CBA in a note.

“OPEC+ will have to show significant supply discipline, or at least jawbone such ability, to alleviate market worries of a deep surplus in oil markets next year.”

The uncertainty erased early gains and Brent LCOc1 edged down 31 cents to $80.27 a barrel, while U.S. crude CLc1 lost 31 cents to $75.23 per barrel.

Besides, the number of memberships at the Dubai Chamber of Commerce held by Bangladeshi businesses rose by 47 per cent (1,044 companies) to a total of 10,975 companies in January-June this year.

Established in 1965, the Dubai Chamber of Commerce released the data on its members on its website this month.

Data shows more than 350,000 member companies exported and re-exported goods of USD 27.29 billion or 137 billion UAE dirhams in the first half of this year.

Nobody from Bangladesh, however, runs businesses in the UAE with permission to invest in the Gulf country. According to the Bangladesh Bank, 17 companies have received government clearance so far to open foreign offices or factories on a small scale, and Singapore, Kenya, Malaysia, India, Sri Lanka, Saudi Arabia, the United Kingdom, the United States and Hong Kong are the most favourite destination for Bangladeshi entrepreneurs investing in foreign lands.

Bangladeshis themselves or in other names are investing in various sectors including villas, apartments, restaurants and star hotels across the various UEA emirates including Dubai, Sharjah, Abu Dhabi and Ajman. Many of them, however, hid their identity and used the citizenship of various countries including Albania and Cyprus.

Regarding this, Transparency International Bangladesh (TIB) executive director Iftekharuzzaman told on 26 September the wealth and businesses of Bangladeshis have been apparently built on the laundered money, and the data of Dubai Chambers on the membership of the 11,000 Bangladeshi-owned companies tells that money laundering increased to this gulf country.

However, many also went legally to UEA as workers and then invested there, he said adding that is why it is necessary to scrutinise the entire list of the Dubai Chamber to find out who invests legally and illegally.

The TIB executive director noted if the government becomes interested, they can easily collect this list by talking to the UAE government.

Iftekharuzzaman said most of the money is laundered through mis-invoicing in the guise of import and export, as well as through hundi, and it rises because of political instability during the election. On top of that, money laundering is being encouraged because laws are not enforced.

According to several Bangladeshis living in the UAE, other than holding a service, a license is required to open a business in the UAE with a membership fee, and there are options to obtain licenses for more than 2,000 businesses including consultancy, trading, apartments and land businesses. Educated people coming to the UEA from Bangladesh are getting involved in business in the Gulf country. In contrast, influential people are involved in business through money laundering, which is why more Bangladeshi companies get membership in the Dubai Chamber.

According to the Dubai Chamber, a total of 30,146 companies received their membership in the first half of this year, and 22 per cent of those companies are Indian.  The membership at the Dubai Chamber held by Indian businesses rose by 37 per cent (6,717 companies) to 90,118 companies in January-June this year.

Indian businesses were followed by the Emiratis (4,445 companies) and Pakistanis (3,395 companies). The membership held by Pakistani-owned companies rose by 59 per cent to 40,315 companies. As many as 2,154 Egyptian-owned companies received the membership in January-June raising the total number to 18,000 while 1,184 Syrian-owned companies obtained membership, taking the total number of Syrian-owned companies to 10,678.

However, UK and Chinese citizens fell behind Bangladeshis at the Dubai Chamber. As many as 963 British firms joined the Dubai Chamber in the first half of 2023, yet the total number of British firms did not cross 10,000 while 8,265 Chinese firms hold membership at the Dubai Chamber.

Mohammad Ali Rashed Lootah, president and chief executive officer of Dubai Chamber, said in a statement, “The diversity of nationalities represented among the new companies joining the chamber reflects the vibrancy of Dubai’s dynamic business environment, together with the emirate’s strong ability to consistently attract a broad range of foreign direct investment.”

According to the Dubai Chamber, trading and repair services accounted for 42.4 per cent of the new member companies registered in the first half of 2023, followed by the real estate, renting, and business service sector, which made up 30.8 per cent of new member companies while businesses in the construction industry accounted for 7.2 per cent.

The UAE introduced a golden visa scheme to attract foreign rich people. A person who owns wealth worth USD 2 million can apply for this visa. Rules on buying houses were also relaxed for foreigners allowing 70 per cent of transactions in cash. Since then, foreigners including Bangladeshis have increasingly bought properties in Dubai.

It costs about 300,000-400,000 dirhams or approximately Tk 12 million to buy a three or four-room apartment in Dubai, which is cheaper than the properties in the upscale area of Dhaka. It has been learned that many Bangladeshis have built villas in Ajman emirate and Dubai’s Palm Jumeirah, Emirates Hill, Silicon Oasis and Business Bay areas; many even bought hundreds of acres of land.

The EU Tax Observatory analysed the data collected by the US-based Center for Advanced Defense Studies last January. According to the EU Tax Observatory, as of 2020, 459 Bangladeshi bought 972 properties worth USD 315 million in Dubai concealing their information.

Bangladeshis, mostly workers, account for 10 per cent of the total population in the UAE and they send their earnings home, but the hundi operation is involved in transferring the money.

Besides, a huge amount of money is allegedly laundered from Bangladesh to foreign countries annually.  The Bangladesh Financial Intelligence Unit (BFIU) of the Bangladesh Bank is tasked with fighting money laundering, but the agency takes no steps against money laundering. The government took no significant step to stop money laundering either.

Centre for Policy Dialogue (CPD) distinguished fellow Mustafizur Rahman said there has been a rising trend among the Bangladeshis to make wealth and build businesses in the UAE in a sequel to the making Canada and Malaysia a second home. The government’s agencies concerned should investigate who has become the Dubai Chamber members and whether they took the money through hundi or borrowing from banks. If the money to the Middle-East country illegally, it is necessary to take legal action against the people concerned, because the economy of the country is being damaged because of them.

“We will temporarily limit rice exports for about 45 days from the end of this month,” a senior member of the Myanmar Rice Federation told Reuters, adding that rising domestic prices was prompting authorities to limit exports.

Myanmar is the world’s fifth-largest rice exporter, selling more than 2 million metric tons a year, according to US Department of Agriculture data.

Last month, India banned exports of non-basmati white rice, reducing supplies on the global market by about 10 million tons, or 20 per cent.

“Myanmar is not a big player in the rice market like India or Thailand but the restrictions are coming at a time when supplies are tightening,” said a Mumbai-based dealer with a global trade house.

“This will send a bullish signal to the market and increase the concerns of buyers,” the dealer added.

Global rice prices offered by leading exporters including Thailand and Vietnam have climbed since India’s decision to curb supplies.

Vietnamese rice export prices remained the highest among Asian hubs this week due to supply concerns fuelled in part by India’s recent restrictions on shipments, with rates for the Thai variety closing in.

Vietnam’s 5 per cent broken rice RI-VNBKN5-P1 was quoted at USD 650 – USD 660 per metric ton, versus USD 660 a week earlier. Thailand’s 5 per cent broken rice export prices RI-THBKN5-P1 rose to USD 630 per metric ton from USD 615- USD 620 last week.

Global rice importers, including the Philippines and Indonesia, are rushing to boost purchases as a dry El Nino weather pattern is expected to reduce production.

Britain’s annual inflation rate dropped sharply in July to a 15-month low, official data revealed Wednesday, off the back of lower energy prices and in line with economists’ expectations.

The Consumer Prices Index (CPI) rose by an annual rate of 6.8 per cent, down from 7.9 per cent in June, the Office for National Statistics (ONS) said, easing the country’s cost-of-living crisis.

July’s price growth met the predictions of analysts, including the Bank of England, which had forecast the 6.8-per cent rate.

It follows a bigger-than-expected drop in June, when the CPI fell 0.8 per cent.

However, UK inflation has for months been the highest among G7 nations, despite the Bank of England hiking its key interest rate more than a dozen times in succession to try to tame it.

Although there was a fall in gas and electricity prices in July, food prices continued to rise, but less quickly than in the same month a year earlier. “Inflation slowed markedly for the second consecutive month, driven by falls in the price of gas and electricity,” ONS deputy director of prices Matthew Corder said.

“Although remaining high, food price inflation has also eased again, particularly for milk, bread and cereal. “Core inflation was unchanged in July, with the falling cost of goods offset by higher service prices,” he added.

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‘Get it done’

Prime Minister Rishi Sunak has set a target of halving inflation through this year to around five percent by 2024.

Despite the Bank of England projecting inflation could actually rise again next month, due to the impact of public sector pay rises, Sunak insisted Wednesday’s figures showed “the plan is working”.

“If we stick to the plan I’ve set out, we’ll get it done,” Sunak added.

However, the Institute for Fiscal Studies economic think-tank was sceptical.

“The stubbornly high rate of price inflation for goods and services other than food and energy has put the target in jeopardy,” said IFS research economist Heidi Karjalainen.

Finance minister Jeremy Hunt welcomed the latest CPI data but cautioned “we’re not at the finish line” and that hitting the Bank of England’s two-percent inflation target “as soon as possible” remained the overarching goal.

Data published Tuesday showed that UK unemployment increased in the three months to the end of June while wages grew at a record annual pace.

Interest rate rises since late 2021 have sparked widespread financial pain, with mortgage turmoil in particular as commercial lenders lift their own rates on home loans.

Wednesday’s CPI figures may not prevent a further rate rise in late September, when the Bank of England’s monetary policy committee next meets to decide whether to hike its current base rate of 5.25 per cent.

The agreement, which still needs IMF Executive Board approval, eases some program requirements because a devastating drought has created a “very challenging” economic environment in Argentina, causing some end-June financial targets to be missed.

Reuters first reported the agreement would combine the fifth and sixth reviews of Argentina’s IMF program – a move that provides additional loan funds sooner. The IMF said its board would meet to consider the agreement in the second half of August.

The Fund said in a statement that since the fourth review of the loan program in March, Argentina’s economic situation has become very challenging due to the larger-than-anticipated impact of a drought, which had a significant impact on exports and fiscal revenues.”

“There have also been policy slippages and delays, which have contributed to strong domestic demand and a weaker trade balance,” the IMF added.

To sustain demand for Argentina’s peso currency, the agreement calls for authorities to ensure that policy interest rates remain “sufficiently positive in real terms.”

The agreement projects a more gradual accumulation of reserves, with a target of around $1 billion by the end of 2023, compared to an $8 billion goal set in March.

The agreement calls for Argentina to tamp down import demand with new foreign exchange taxes for imported goods and to strengthen expenditure controls. But its 2023 primary fiscal deficit target remains unchanged at 1.9 per cent of GDP, the IMF said.

With no liquid currency reserves in the central bank, Argentina has recently introduced more peso exchange rates to stop the drainage. The Fund said that the program will need waivers because these measures are “against the introduction of multiple currency practices.”

The government will need to take some additional measures, known as prior actions, between the staff level agreement and the board approval, according to a source familiar with the matter, who asked not to be named because the measures are still not public.

The next review is expected to take place in November, a month earlier than originally scheduled.

Argentina is set to have another three reviews on its 2022 IMF program by September 2024, though the IMF statement didn’t specify what would happen with those.

The IMF’s board approval of the reviews would come after a primary vote on Aug. 13 in which Economy Minister Sergio Massa runs as one of the presidential candidates for the ruling coalition.

Massa said the fresh disbursement will provide some stability through the second half of the year. Following the announcement, Argentina’s over-the-counter sovereign debt rose nearly 2 per cent on average and the country’s main stock index was up 1.68 per cent.

The country still needs to avoid a default with the Fund next week, with maturities of $2.6 billion due on 31 July and almost $800 million due on 1 August.

Argentine officials are working to “get financing from several sources” to meet these obligations, the source added, without providing any further details.

On Friday evening, the Development Bank of Latin America (CAF) approved a $1 billion credit for Argentina, a spokesperson from the economy ministry said.

Another option to help Argentina make the payments is a potential a swap line with Beijing, a move it recently made to complete part of its June payment to the IMF.

Sberbank has already held two rounds of talks with the Bangladesh Bank about opening a branch here, reports news agency Reuters quoting a Bangladesh media.

“Sberbank is exploring all possibilities and formats for providing banking services at the request of Russian clients doing business with companies in Bangladesh,” Anatoly Popov, deputy chairman of Sberbank’s executive board said.

Like many Russian companies, Sberbank, which was targeted with sweeping Western sanctions soon after Moscow invaded Ukraine in February 2022, has been looking towards Asia, where few countries have joined in with sanctions against Moscow, as it looks to find new trading partners, the Reuters report added.

Business and Trade Secretary Kemi Badenoch signed the accession protocol for the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) in New Zealand.

It makes the United Kingdom the first new member and first European nation to join the bloc since it was created in 2018.

The CPTPP comprises fellow G7 members Canada and Japan, plus the UK’s long-standing allies Australia and New Zealand, alongside Brunei, Chile, Malaysia, Mexico, Peru, Singapore and Vietnam.

It has been seen as a bulwark against Chinese dominance in the region, although Beijing has applied to join.

London has been pushing a “Global Britain” strategy since formally severing nearly 50 years of ties with its nearest neighbours in the European Union three years ago.

Sunday’s signing — the formal confirmation of the agreement for UK membership of the CPTPP after nearly two years of talks — will be the UK’s biggest trade deal since Brexit.

The government said it will cut tariffs for UK exports to CPTPP countries, which with UK membership will have a combined GDP of £12 trillion ($15.7 trillion), and account for 15 per cent of global GDP.

The agreement is expected to come into force in the second half of next year, after parliamentary scrutiny and legislation.

Badenoch called the deal “a big boost for British businesses”, opening up opportunities for trade to a market of more than 500 million people and access to the wider region.

“We are using our status as an independent trading nation to join an exciting, growing, forward-looking trade bloc, which will help grow the UK economy and build on the hundreds of thousands of jobs CPTPP-owned businesses already support up and down the country,” she said.

UK accession to the CPTPP — the successor to a previous trans-Pacific trade pact that the United States withdrew from in 2017 under president Donald Trump — has been met with a mixed reception.

For Brexit supporters, it has been seen as a chance for the UK to join other trading blocs with faster-growing economies than those closer to home — and boost the country’s international geopolitical and economic clout.

But critics say it will struggle to compensate for the economic damage sustained by leaving the 27-member EU — the world’s largest trading bloc and collective economy.

Analysts estimate the eventual UK economic boost is £1.8 billion ($2.2 billion) — a 0.08 per cent annual GDP increase.

The government’s spending watchdog, the Office for Budget Responsibility, in April forecast that the London’s Brexit deal with Brussels will reduce long-term productivity by 4.0 per cent compared to when the UK was a member.

US treasury secretary Janet Yellen called on Friday for market reforms in China and criticized its recent tough actions against US companies and mineral export controls, while China’s premier called on her to “meet China halfway” and put bilateral relations back on track.

Yellen met with premier Li Qiang on Friday during a visit to Beijing aimed at repairing fractious US-Chinese economic relations, but made clear in her public remarks that Washington and its Western allies will continue to hit back at what she called China’s “unfair economic practices.”

Despite talk of US-China economic decoupling, recent data show that the world’s two largest economies remain deeply linked, with two-way trade hitting a record $690 billion last year.

“We seek healthy economic competition that is not winner-take-all but that, with a fair set of rules, can benefit both countries over time,” Yellen told Chinese Premier Li Qiang in a meeting on Friday that the Treasury said was “candid and constructive.”

China released a statement from Li calling for strengthened communication, consensus on economic issues and “candid in-depth and pragmatic exchanges, so as to inject stability and positive energy into Sino-US economic ties.”

“China hopes the US will uphold a rational and pragmatic attitude, meet China halfway, and push China-US relations back on track soon,” Li’s statement said.

It made no mention of recent semiconductor-related mineral export controls from both countries.

Yellen is due to meet with Chinese vice premier He Lifeng — her direct counterpart as China’s top economic official — on Saturday, a US treasury official said.

Yellen also spoke to the American Chamber of Commerce in China (AmCham) after what a Treasury official called “substantive” talks with former Chinese economy czar Liu He — He Lifeng’s predecessor — who remains a close confidante of president Xi Jinping. Yellen also met with departing top Chinese central banker Yi Gang.

Yellen and other US officials are walking a diplomatic tightrope, trying to repair ties with China after the US military shot down a Chinese government balloon over the United States while continuing to push Beijing to halt practices they view as harmful to US and Western companies.

Yellen said she hoped her visit would spur more regular communication between the two rivals, and said any targeted actions by Washington to protect its national security should not “needlessly” jeopardize the broader relationship.

US officials have downplayed the prospects for any major breakthroughs, while highlighting the importance of more regular communications between the world’s two biggest economies.

China hopes the United States will take “concrete actions” to create a favourable environment for the healthy development of economic and trade ties, its finance ministry said in a statement on Friday.

“No winners emerge from a trade war or from decoupling and ‘breaking chains’,” the statement added.

Li told Yellen a rainbow that appeared as her plane landed from Washington on Thursday offered hope for the future of US-China ties.

“I think there is more to China-US relations than just wind and rain. We will surely see more rainbows,” he said.

US companies in China hope Yellen’s visit will ensure trade and commercial lanes between the two economies remain open, regardless of the temperature of geopolitical tensions.

AmCham president Michael Hart welcomed Yellen’s “extra firepower” in pressing for changes in China’s policies, and said her visit could pave the way for more exchanges at lower levels between the two sides.

“I think if there was another year of no visits by top US government leaders, the market would get colder,” he added.

Possible Biden-Xi meeting

The US diplomatic push comes ahead of a possible meeting between President Joe Biden and Xi as soon as September’s Group of 20 Summit in New Delhi or the Asia-Pacific Economic Cooperation gathering scheduled for November in San Francisco.

Secretary of state Antony Blinken traveled to Beijing last month and agreed with Xi that the mutual rivalry should not veer into conflict. Biden’s climate envoy John Kerry is expected to visit later this month, and the US treasury believes climate finance is an area where Beijing and Washington can cooperate.

Yellen told the US business executives a “stable and constructive relationship” between the two countries would benefit U.S. companies and workers, but Washington also needed to protect its national security interests and human rights.

Regular exchanges could help both countries monitor economic and financial risks at a time when the global economy was facing “headwinds like Russia’s illegal war in Ukraine and the lingering effects of the pandemic,” Yellen added.

At the same time, she said she would raise concerns with Chinese officials about Beijing’s use of expanded subsidies for state-owned enterprises and domestic firms, barriers to market access for foreign firms, and its recent “punitive actions” against US firms.

New Chinese export controls on gallium and germanium, critical minerals used in technologies like semiconductors, were also concerning, she said, adding the move underscored the need for “resilient and diversified supply chains.”

Market Reforms

Yellen also took aim at China’s planned economy, urging Beijing to return to more market-oriented practices that had underpinned its rapid growth in past years.

“A shift toward market reforms would be in China’s interests,” she told the AmCham event.

“A market-based approach helped spur rapid growth in China and helped lift hundreds of millions of people out of poverty. This is a remarkable economic success story.”

Yellen dismissed the idea of decoupling the US and Chinese economies, nothing that China’s enormous and growing middle-class provided a big market for American goods and services. and stressed that Washington’s targeted actions against China were based on national security concerns.

A Treasury official said the vibrant US business community in China was “a living embodiment that we are not decoupling.”

“We have no interest in decoupling. We’ve got lots of leading American firms who have had a very long history and are deeply enmeshed into the Chinese economy,” the official told reporters.