“Many countries do depend on strong Chinese growth to promote growth in their own economies, particularly countries in Asia — and slow growth in China can have some negative spillovers for the United States,” Yellen said in a Bloomberg Television interview Monday hours after a raft of Chinese economic data came in weaker than expected.

In the US, “growth has slowed, but our labor market continues to be quite strong — I don’t expect a recession,” Yellen said. The economy is on a “good path” to bring inflation down without a major weakening in the labor market, she said.

Last week’s report on consumer prices was “quite encouraging,” Yellen said. Wednesday’s release showed that prices, excluding food and energy, rose 0.2% in June from the previous month, for the smallest advance since August 2021. Headline inflation ran at a 3% annual pace, well down from last year’s peak above 9%.

“The labor market’s been so strong, it has encouraged more prime-age people to enter” the workforce, taking some of the heat out of the market, she said. “Wage growth is moderating and inflation is subsiding.”

As for China, the Treasury secretary highlighted “relatively weak” consumer spending in the relatively slow economic rebound following the country’s post-Covid reopening. Monday’s figures showed that gross domestic product rose less than 1% from the first quarter, while retail sales for June rose less than forecast.

“It looks like consumers are more focused on building back their savings buffers,” Yellen said.

G-20 Meetings

Yellen was speaking on the sidelines of meetings with counterparts from Group of 20 economies in Gandhinagar, India. On Sunday, she said that building on the “groundwork” of her recent visit to China was among her objectives. She’s also seeking progress on debt relief for poorer nations and reforms to multilateral development banks.

Asked about what the US is prepared to do to “de-escalate” tensions with China, Yellen indicated that tariff reductions won’t be on the table.

While a four-year review of the previous Trump administration’s tariff increases is under way, “I would emphasize that really the underlying concerns we have have not yet been addressed, and we need to work on that going forward,” Yellen said.

“We put tariffs in place on China because we had underlying concerns about unfair trade practices, particularly those affecting intellectual property and technology transfer,” she said.

Investment Curbs

The Treasury chief also said that any moves to curb outbound US investment to China would be narrowly targeted and based solely on national-security considerations.

“There is a good chance that we will” go ahead with controls on outbound investments, she said.

Along with attending meetings of the G-20 and a Sunday session with finance ministers from the Group of Seven advanced economies, Yellen has used the Gandhinagar visit to hold a number of bilateral meetings, including with counterparts from India, Turkey and the European Union.