US Treasury Secretary Janet Yellen said on Friday that Treasury officials visiting Beijing recently received assurances that Chinese banks are “doing well” despite turmoil in the country’s financial and real estate markets, adding that she did not see large spillovers to the US economy at this stage.

Yellen told reporters during a visit to a Milwaukee job training centre that a US-China Economic Working Group would meet in Beijing shortly for larger discussions on China’s economic situation.

The Financial Working Group met last week and US Treasury officials “focused on pressures in the financial sector, in the banking sector, stemming from debt problems of local governments and the real estate sector,” Yellen said. “They received assurances that banks in China are doing well.”

Chinese financial markets, however, sold off heavily this week as investors, both international and domestic, grew frustrated with the Chinese government’s reluctance to take bold measures to shore up the economy amid a protracted crisis in its real estate sector and debt pressures.

Asked about the potential for spillovers from China’s turmoil to the US economy, Yellen said that there could be impact.

Read Biden, Xi meet as US-China military, economic tensions grind on

“If growth slows to Asian countries that are important trade partners, we may see some spillovers. But I don’t think they’re going to be very large,” she said.

Regarding calls to confiscate hundreds of billions of dollars in frozen Russian assets, Yellen said she expected G7 finance ministers to soon receive a report reviewing potential legal justifications and risks associated with seizing the funds and diverting them to aid Ukraine.

Asked if the report would be ready by the end of February, Yellen said: “We’re working to do it quickly.”

She has previously said that an international law justification agreed by G7 countries would be needed and that the US Congress would need to pass legislation to enable seizure of Russian assets held in the US.

Published in The Express Tribune, January 28th, 2024.

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