(March 27): U.S. Treasury Secretary Janet Yellen said she intends to pressure China on an upcoming visit to the country about increasing industrial capacity that is distorting the global economy.
“China's excess capacity will distort global prices and production patterns, harming not only U.S. businesses and workers but also businesses around the world,” Yellen said in excerpts from remarks she plans to make Wednesday during a visit to Georgia. “This is hurting workers,” he said. “We have pointed out overcapacity in our previous discussions with China, and we intend to make this issue a major topic of discussion during our next visit to China.”
Yellen is visiting Norcross, Georgia, to highlight the reopening of a U.S. solar manufacturing facility that closed in 2017 due to pressure from “cheap imports flooding the market.” China now dominates the global solar energy industry after years of policy support for domestic companies.
The legacy of China's industrial policy “led to significant overinvestment” in products such as steel and aluminum, which helped the country's production and jobs, but “forced industry in the rest of the world to contract.” ,” Yellen said.
“Currently, excess capacity is being built in 'new' industries such as solar power, EVs, and lithium-ion batteries,” Yellen said in an excerpt released by the Treasury Department.
This is expected to be the US Treasury Secretary's second visit to China since the two countries resumed high-level diplomacy.
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.
Beijing's moves aren't just worrying U.S. policymakers. The European Union moved this month to impose additional tariffs on Chinese EVs entering the bloc, citing new evidence that Beijing is providing illegal financial support to the industry.
During her visit to Georgia, Yellen plans to highlight the Biden administration's policies to help foster America's own renewable energy industry. The Saniva 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.
