(Bloomberg) – U.S. Treasury Secretary Janet Yellen accuses China of using subsidies to give manufacturers in key new industries a competitive advantage at the cost of distorting the global economy. He said he planned to press China on this issue during his upcoming visit.
“No country in the world subsidizes its priority industries and prioritized industries as heavily as China,” Yellen said in an interview with MSNBC on Wednesday, adding that “no country in the world subsidizes its priority industries and prioritized industries as heavily as China.” He emphasized “massive” aid to electricity producers. “China's aspiration is to truly dominate these industries globally.”
Speaking from Norcross, Georgia, the Treasury secretary highlighted the reopening of U.S. solar manufacturing facilities that were shut down in 2017 under pressure from “cheap imports flooding the market.”
Speaking to reporters after the event, Yellen declined to say whether the Biden administration was prepared to threaten China with retaliatory trade measures if China did not cut subsidies.
“It's important that Chinese people understand why we are concerned,” she says. “But we don't want to retaliate. We want to think about what we can do constructively.”
Yellen said in prepared remarks during her visit that China's industrial policy has a track record of causing “significant overinvestment.” He noted that aid to industries such as steel and aluminum is supporting production and employment in China, but “industries in other parts of the world are being forced to contract.”
“We have raised concerns about overcapacity in our previous discussions with China, and we intend to make this a major topic of discussion during our next visit to China,” Yellen said in a speech. . The Treasury secretary is expected to soon head to China for the second time since the two countries resumed high-level diplomacy.
Yellen also clarified that the United States is not alone in complaining about China's industrial overcapacity: “Obviously there are concerns in Europe as well,” she said.
In October, the European Commission launched an investigation into whether Chinese government subsidies were giving unfair advantages to Chinese manufacturers. This month, China moved to impose additional tariffs, citing new evidence of illegal financial support for the industry. Brazil has also launched several anti-dumping investigations.
Mr. Xi's strategy
“Currently, excess capacity is being built in 'new' industries such as solar power, EVs, and lithium-ion batteries,” Yellen said. China's industrial surplus is “hurting not only U.S. businesses and workers, but also businesses and workers around the world.”
Faced with a major drag on growth from the crisis in China's real estate sector, President Xi Jinping and his lieutenants have prioritized manufacturing. The “new three” growth drivers of electric vehicles, batteries and renewable energy are receiving particular attention, along with high-tech semiconductor production.
Read more: Xi visits battery materials company to explain industry policy
During her visit to Georgia, Yellen highlighted the Biden administration's policies to help foster America's own renewable energy industry. The Suniva Inc. solar cell manufacturing plant she plans to visit is scheduled to reopen this spring. Ms. Yellen attributed some of Suniva's resurgent wealth to incentives from the Inflation Control Act and its “onshore clean energy manufacturing” measures, she said.
“China flooded the market with solar panels and drove prices down to a level where virtually no American company could compete. This company went bankrupt,” Yellen said on MSNBC. “And we're not going to make sure something like that doesn't happen again.”
The American Manufacturing Alliance, a group representing manufacturers and workers, praised Yellen's remarks as a “step in the right direction.” “The unwillingness of China's government policies and past administrations to adequately prevent or respond to threats has left us in a weakened state,” Scott Paul, president of the industry group, said in a statement. Ta.
(Updates from the fourth paragraph to add comments to the reporter.)
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