Yellen says Indo-Pacific countries should not have to choose between U.S. and China

By David Lawder

WASHINGTON (Reuters) - U.S. Treasury Secretary Janet Yellen on Thursday sought to reassure Asian countries that the U.S. approach to China will not lead to a 'disastrous' division of the global economy that would force them to take sides.

In a speech ahead of the U.S.-hosted Asia Pacific Economic Cooperation Summit in San Francisco later this month, Yellen said that a full de-coupling of the U.S. and Chinese economies was "simply not practical," especially given the complexity of Asian supply chains and deep economic linkages to China in the region.

Her comments sought to assuage growing concerns about geopolitical fragmentation of the global economy into U.S.-led and China-led factions as export and national security technology controls grow between the world's two largest economies.

She reiterated that the U.S. is not seeking to decouple from China.

"A full separation of our economies, or an approach in which countries including those in the Indo-Pacific are forced to take sides, would have significant negative global repercussions," Yellen said. "We have no interest in such a divided world and its disastrous effects."

Yellen said the U.S. was pursuing the "de-risking and diversifying" of its economic ties to China, by investing in manufacturing at home and by strengthening linkages with allies and partners around the world, including Indo-Pacific countries.

(Reporting by David Lawder; Editing by Andrea Ricci)