(Bloomberg) -- US Treasury Secretary Janet Yellen told China’s Vice Premier He Lifeng of her “serious concern” regarding “malicious cyber activity” a week after the US said Chinese state-sponsored hackers had breached the Treasury Department’s computer networks.
Yellen also warned of consequences for Chinese companies that support Russia in its invasion of Ukraine and discussed Chinese industrial policies, including overcapacity, that she said have harmed US companies and workers, according to a Treasury Department account of the virtual meeting on Monday.
The exchange with He, the point-person for US-China economic and trade affairs, marked what’s likely to be the secretary’s final direct outreach to Beijing.
About 100 government computers were compromised in the breach, including those of senior department leaders, according to a US official and another person familiar with the matter.
As President Joe Biden has sought to stabilize relations between the world’s two top economies, Yellen’s department has been a key facilitator for discussions on financial and economic issues, with working groups meeting with their Chinese counterparts last month.
Yellen’s use of the call with the vice premier to express concerns about hacking underscores a key point she has made about the formal channels of communication she helped to set up with China — that they give senior American officials a built-in forum to candidly raise issues.
She said last month that bilateral dialogue would continue to be seen as valuable. In late 2023, she characterized a lapse in contacts with Beijing as “dangerous.”
Relations between the two superpowers are likely to take on a more confrontational tone after President-elect Donald Trump takes office Jan. 20. He’s warned of slapping tariffs of as much as 60% on Chinese imports, and has signaled he intends to pursue aggressive trade policies toward Beijing that marked his first term.
Yellen and He met over two days last April in the southern Chinese city of Guangzhou, agreeing to set in motion formal talks over what the US has warned is China’s industrial “overcapacity.”
The concern by Washington and other countries is that Beijing is fostering the production of goods, particularly electric vehicles, that outstrip domestic demand, forcing them onto export markets where they threaten to undercut competitors.
Yellen last year also pressed He on what Washington believes are Chinese exports that help sustain Russia’s military amid its war against Ukraine, including drone technology. China during the talks expressed “grave concerns” about US economic and trade restrictions, state-run Xinhua News Agency reported at the time.
The alleged China-backed hack at Treasury followed a wider infiltration of America’s telecom system. Late last month, the White House said nine US telecommunications firms had been breached by another state-sponsored Chinese hacking group known as Salt Typhoon.
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