Yellen: U.S., China to launch initiative addressing 'economic imbalances'

April 6 (UPI) -- The United States and China have reached an agreement to combat money laundering and address economic imbalances, Treasury Secretary Janet Yellen confirmed Saturday after in-person meetings with Chinese Vice Premier He Lifeng.

The news comes after Yellen had two days of "frank and productive discussions" with Chinese officials in Guangzhou, a city of 15.3 million northwest of Hong Kong on China's Pearl River.

"After significant discussion with my counterpart, I am pleased that we have agreed to launch two significant new initiatives that will advance the interests of American workers and firms and help protect U.S. national security," Yellen said in a statement.

The first of those initiatives relates to China's overcapacity in some economic sectors. Backed by government subsidies, Chinese production can undercut U.S. competitors in the same sector with no solution to date.

Chinese and U.S. officials will now hold "intensive" meetings to address balanced growth.

"These exchanges will facilitate a discussion around macroeconomic imbalances, including their connection to overcapacity, and I intend to use this opportunity to advocate for a level playing field for American workers and firms," Yellen said.

"I am particularly concerned about the impact of Chinese industrial overcapacity in certain sectors as a result of government support, and the impact it could have on the American economy"

Yellen had previously mentioned "overcapacity" during the meetings with her Chinese counterparts, making it clear that addressing the issue "remains crucial" to American interests.

The second joint initiative relates to combating money laundering affecting both countries.

The Treasury Department will now work directly with the People's Bank of China "to expand cooperation against illicit finance and financial crime," Yellen said Saturday, without detailing specifics.

She did point to criminals that are "able to identify and exploit loopholes in the U.S. and Chinese financial systems.

"This new effort will enable the U.S. and China to share best practices and provide updates on the actions we are each taking to close loopholes in our respective financial systems," the secretary said. "Since it is secrecy that enables criminals to flourish, our collaborative effort is a key step forward to advancing the security of Americans and protecting the integrity of two of the largest financial systems in the world."

The Chinese bank's collaboration with the Treasury Department will be ongoing and will allow both countries to close off financial avenues to criminals engaged in money laundering, Yellen said.