(Bloomberg) -- The US Treasury Department is seeking engagement with China while also sharpening the economic tools needed to counter what it sees as national security challenges, according to two officials, highlighting Washington’s dual message on its top competitor.
Assistant Treasury Secretary Elizabeth Rosenberg, who handles terrorist financing and financial crimes, and Assistant Secretary for Investment Security Paul Rosen detailed the dynamic in prepared testimony ahead of a Capitol Hill hearing scheduled for Wednesday.
Their comments reflect the messaging driven by their boss, Treasury Secretary Janet Yellen, on how the US seeks to “de-risk” its relationship with China, rather that stifle its rise or “decouple” economically.
Read more: Biden Administration Tamps Down Talk of US-China Decoupling
While that formulation has been aimed recently toward Beijing to help ease tensions, it’s also directed at allies, particularly in the European Union, that are uncomfortable with Washington’s hawkishness.
The Treasury officials also highlighted that the US and China can engage on global issues, such as fighting climate change and grappling with emerging market debt.
“We seek expanded engagement with the PRC to work through the difficult issues that we face,” Rosenberg, referring to the People’s Republic of China, said in her remarks to be delivered at a hearing of the Senate Banking Committee.
The White House has been seeking to get relations between the two economic superpowers back on track after months of flare-ups over spying allegations, Taiwan’s sovereignty and tech supremacy. For its part, Beijing appears to see only a change in tone, rather than strategy, with the official Xinhua News Agency saying last week that the US has been “stepping up its siege” of the country.
Read more: China Rejects US Claims Over ‘De-Risking’ Not ‘Decoupling’
Rosenberg said in her testimony that China has used its economic tools to target people in the US and in allied nations, enabled corruption abroad and supported Russia in its war against Ukraine. It has conducted espionage operations in the US and abroad, allowed money laundering, cybercrime and drug trafficking to proliferate and conducted human rights abuses, she said.
In instances such as those, the US “will not hesitate to defend our vital interests,” Rosen said in his remarks. When it comes to China, “where possible we need to find a way to work together for the benefit of the world, but in doing so we never compromise our national security.”
The Biden administration is also working on a new set of restrictions on outbound investments by US companies that risk helping China develop technologies that could pose a threat to US national security, Rosen said, without saying when those might be introduced.
“We continue to contribute to interagency discussions regarding policies to restrict certain US outbound investments in specific sensitive technologies with significant national security implications,” he said.
Read more: US Push for Controls on Investment in China Hits EU Resistance
In her prepared remarks, Rosenberg also signaled the Biden administration’s growing concern over whether Beijing is boosting economic relations with Russia in ways that might help Moscow’s war effort in Ukraine.
“We have seen bilateral China-Russia trade tick up, including certain transactions that the United States has now identified as circumventing US sanctions and export control laws,” she said.
©2023 Bloomberg L.P.