Biden's economic plans will help the U.S. compete with China, says former Treasury secretary

Jacob Lew, Treasury secretary from 2013 to 2017, said China's Belt and Road Initiative gained traction as the U.S. under Trump retreated from the world stage.

Biden's economic plans will help the U.S. compete with China, says former Treasury secretary

President Joe Biden's plans to bolster the U.S. economy will help the country compete with China's massive Belt and Road Initiative, former Treasury Secretary Jacob Lew said on Wednesday.

The Belt and Road Initiative is China's ambitious program to build physical and digital infrastructure that connects hundreds of countries from Asia to the Middle East, Africa and Europe. Many critics consider it Chinese President Xi Jinping's signature foreign policy to expand his country's global influence.

Lew, who was Treasury secretary from 2013 to 2017 under former President Barack Obama, pointed out that China's Belt and Road Initiative has gained traction in the last few years. At the same time, the U.S. under former President Donald Trump retreated from the world stage, he said.

President Joe Biden speaks in the Eisenhower Executive Office Building in Washington, D.C., on Wednesday, April 7, 2021.

Leigh Vogel | Bloomberg | Getty Images

"The challenge we have is to look at our domestic challenges and to look at the places where we are very strong and should be stronger," Lew told CNBC's "Squawk Box Asia." He added that the U.S. is strong in technology and innovation, education, and remaining open to talent from around the world.

"We then look ahead to the challenges of the future ... we have to engage in the world, we have to engage with other countries, working together. And you can't say we're not going to be there and then object when someone else shows up," said Lew.

Lew's comments came as Biden has held meetings with Democratic and Republican members of Congress to discuss his proposed $2 trillion infrastructure and economic recovery package.

The plan aims to rebuild U.S. infrastructure including roads, broadband and utilities, as well as invest in jobs training and research and development.

U.S. and China working together

U.S.-China relations have remained rocky since Biden was inaugurated in January.

The two countries have clashed on issues ranging from the autonomy of Hong Kong to alleged human rights abuses in China's northwestern region of Xinjiang.

Despite their differences, Lew said there are many areas where the U.S. and China can work together. Those areas include climate change, health care and challenges with Iran and North Korea, said the former Treasury secretary.

"I think it's a mistake to be on a path where either side is looking for confrontation. It's a mistake to deny that differences exist and there's a need to engage, making differences clear, but also to look for areas where we can work together," Lew said.

"I'm hoping that things like the conversations on climate are the beginning of an opening for discussions between our two countries," he added.

Chinese state media said Wednesday that Xi will give a speech on Thursday via video conference at the global leaders climate summit hosted by Biden.  

Many also expect the leaders of the world's two largest economies — and the largest carbon polluters — to have their first meeting on the sidelines of the summit.

— CNBC's Jacob Pramuk and Evelyn Cheng contributed to this report.