In this May 7, 2021 file photo, Treasury Secretary Janet Yellen is photographed speaking during her daily press conference in the Brady Briefing Room at the White House in Washington, DC. June 7, 2021 (Reuters) – Global stock markets taunted and the dollar fell after U.S. Treasury Secretary Janet Yellen downplayed concerns about the prospect of rising interest rates due to soaring inflation.
GUANGZHOU, China – U.S. Treasury Secretary Janet Yellen warned on Friday during a visit to China that the Chinese government's industrial subsidies could pose risks to the resilience of the global economy.
Yellen arrived in the southern city of Guangzhou on Thursday for several days of talks with Chinese officials, her second visit to the world's second-largest economy in less than a year.
He expressed concern that China's “overcapacity” was undermining businesses in the United States and other countries.
Such overcapacity is seen as a result of China's heavy subsidies for industries such as solar power, electric vehicles, and batteries, which have created a glut of cheap products that threatens other sectors. There is a danger of creating.
“Direct and indirect government support has now led to production capacity that is significantly higher than what China's domestic demand and global markets can sustain,” he told a gathering of the U.S. business community in Guangzhou on Friday. said.
“Overcapacity could lead to large exports at depressed prices,” she said.
“And that could lead to supply chain concentration, posing risks to the resilience of the global economy.”
In a question-and-answer session after his speech, he said these concerns were not part of an “anti-China policy” but were aimed at mitigating the risk of “inevitable global economic disruption” if China's policies remained unchanged. said. .
Yellen also said at the gathering, hosted by the American Chamber of Commerce in China, that she would work with Chinese officials to raise “challenges” facing American companies doing business in China.
That included the Chinese government “setting up barriers to access for foreign companies and taking coercive actions against American companies,” he said.
“This will not only hurt these American companies, but eliminating these unfair practices will benefit China by improving its business environment,” Yellen said.
“A level playing field”
Yellen then met with Vice Premier He Lifeng, considered one of the most powerful economic policymakers in the Chinese government, and looked forward to “further in-depth discussions on issues of importance to the economic and financial sectors of China, the United States, and the world.” He said he is doing so.
He also said he would seek “appropriate responses to major concerns in China-US economic relations.”
He added: “It is hoped that both sides will achieve new mutually beneficial and win-win results.”
The two countries subsequently began private talks, during which the United States not only delved deeply into the economic situation of both countries, but also touched on more sensitive areas such as national security and China's alleged support for Russia's defense industrial base. He says he plans to work on it.
In the morning, Yellen told the governor of Guangdong province, a vast province that symbolizes the reform and development that has driven China's breakneck growth, that the United States is committed to a “sound economic relationship.”
But she stressed that it requires a “level playing field for American workers and businesses.”
China's backlash
The Chinese government has dismissed concerns about massive state aid for the industry, slamming the EU's EV subsidy probe last month as “protectionism” and part of Western efforts to politicize international trade. .
As U.S. President Joe Biden pushes to expand domestic manufacturing in clean energy, policymakers have warned that China's overcapacity could hurt growth in these industries, with large Washington's concerns about exports are growing.
Paul Triolo, associate partner for China at Albright Stonebridge Group, said the Biden administration is very sensitive to the U.S. auto industry's concerns about China and EVs, especially in an election year.
“The administration is likely to take some action that shows it is willing to act preemptively to prevent future problems with China's overproduction of EVs,” he told AFP.
But he warned that the Chinese government was likely to react “terribly” given the impact on U.S. automakers is not yet known.
During her visit, Yellen will also meet with Chinese Premier Li Qiang, as well as central bank governor Ban Gongsheng and France's finance minister.
China and the United States have clashed in recent years over flashpoints ranging from technology and trade to human rights, as well as over the autonomous island of Taiwan and the South China Sea.
Relations have stabilized to some extent since Biden and China's Xi Jinping met in San Francisco in November, with both sides calling it a moderate success.
Yellen's visit in July 2023 helped restart dialogue after a period of heightened tensions, particularly over Taiwan, and led to the launch of the Bilateral Working Group on Economic and Financial Policy.
US Secretary of State Antony Blinken is also expected to visit China again in the coming weeks, a sign that the two countries are returning to more regular engagements.
