Yellen says her talks in San Francisco with Chinese finance chief laid groundwork for Biden’s meeting with Xi

SAN FRANCISCO - U.S. Treasury Secretary Janet Yellen said Friday that she and her Chinese counterpart agreed to work toward a "healthy economic relationship," during two days of talks that she said helped lay the groundwork for a productive meeting next week between President Joe Biden and Chinese President Xi Jinping.

Yellen said many disagreements remain between the two countries, but she and Chinese Vice Premier He Lifeng committed to working together "on global challenges, from debt issues to climate change-related economic issues."

And both countries, she said, "welcome the objective of a healthy economic relationship that provides a level playing field for companies and workers in both countries and benefits the two peoples."

Biden and Xi will meet Wednesday on the sidelines of the Asia-Pacific Economic Cooperation summit in San Francisco, the first engagement in a year between the leaders of the world’s two biggest economies.

Their finance chiefs held talks in San Francisco this week with the aim of making progress on a slew of economic and trade issues at a time when competition has markedly intensified between their countries.

"While we will at times use economic tools to protect our national security interests, our vision also includes a healthy and stable economic relationship," said Yellen.

But Yellen said the U.S. has evidence that Chinese businesses may be helping finance equipment for Russia’s military. She raised concerns with China and said she wants to see a crackdown on companies violating U.S. sanctions.

"Companies must not provide material support for Russia’s industrial sector," said Yellen. "They will suffer significant consequences if they do."

Both Yellen and Lifeng agreed to increase communications and tackle big issues including debt relief to low-income countries and combating climate change.

"The physical and economic impact of climate change are mounting across the globe, including here in California," said Yellen. "We discovered specific areas where we can enhance our cooperation."

Yellen has met with a host of Chinese officials throughout this year.

In January, she had her first face-to-face meeting with former Vice Premier Liu He in Zurich. She traveled to China in July to discuss economic policies between the nations and urged Chinese government officials to cooperate on climate change and other global challenges and not let sharp disagreements about trade and other irritants derail relations.

"It’s critical to be able to pick up the phone and know you’ll have a good response on the other end," said Yellen. "And that we can trust one another and work together and cooperate."

Yellen said she was invited back to China next year and hopes to make additional progress on economic relations.

KTVU's Brooks Jarosz contributed to this report.