US Treasury Secretary Janet Yellen stated on Friday in China that Beijing’s subsidies to the industry represent “a risk to global economic resilience” and warned about the “overcapacity” of Chinese production.
Yellen arrived in China on Thursday for her second visit in less than a year, with stops planned first in the city of Guangdong, capital of Guangdong province, and then in Beijing.
Yellen estimated that significant Chinese aid to her industry could cause a glut of goods and flood world markets, which could create difficulties for American and other companies.
“The government’s direct and indirect aid is leading to a production capacity that far exceeds China’s domestic demand, as well as what the world market can support,” warned the head of finance for President Joe Biden’s administration before a group. of American businessmen in Canton.
“Overcapacity can lead to large volumes of exports at reduced prices” and an “overconcentration of supply chains, putting global economic resilience at risk,” he added.
The Treasury Secretary met hours earlier with the governor of Guangdong province, the richest in the country and a symbol of Chinese manufacturing power. Yellen insisted that the United States wants “a healthy economic relationship” with China.
But he warned that this requires “a level playing field for American companies” and “open and direct communication about areas of disagreement.”
In recent weeks, Yellen has warned about the Chinese government’s significant subsidies to sectors such as green energy, electric vehicles and lithium batteries.
Overproduction flooding the global market has happened before in sectors like steel and aluminum, Yellen recalled last week.
The senior official also met with Vice Prime Minister He Lifeng, considered one of the most influential figures in Chinese economic policy.
The Chinese leader said that they will try to “provide appropriate responses to the main concerns in economic relations between China and the United States.” “The hope is that both sides will achieve new mutually beneficial results,” he added.
“Protectionism”
Beijing has so far dismissed concerns about the effects of too much production.
Last month, Chinese authorities attributed the investigation launched by the European Union into Chinese subsidies for electric vehicles to “protectionism.”
The issue is important for President Joe Biden, who wants to boost green energy production in the United States and turn this policy into an argument for the November elections.
“It is likely that the administration [Biden] take measures to show its willingness to act preventively to avoid future problems related to Chinese overcapacity in electric vehicles,” estimates Paul Triolo, China specialist for the American consulting firm Albright Stonebridge Group.
Beijing could “react negatively,” the expert warned.
Despite these discrepancies, both powers seem committed to continuing to stabilize their relations after years of multiple points of commercial, geopolitical and technological friction.
Yellen’s first visit eight months ago helped stabilize this relationship, particularly through the creation of bilateral working groups.
On this occasion, the Treasury Secretary also plans to meet with her counterpart Lan Fo’an and Premier Li Qiang, as well as the governor of the central bank, Pan Gongsheng.
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