US Treasury Secretary Yellen Addresses China's Overcapacity Problems in Electric Vehicles and Clean Energy Products: Inside Story Revealed

On April 6, 2024, US Treasury Secretary Yellen and Chinese Vice Premier He Lifeng arrived at Zhudao Hotel in Guangzhou for a meeting. (Pedro Pardo/AFP)

[TheEpochTimes19Giblean2024]The focus of US Treasury Secretary Yellen’s visit to China is to address China’s overcapacity problems in electric vehicles, solar panels, and other clean energy products that are putting States and other countries at risk. The US Deputy Treasury Secretary who visited China with Yellen gave the inside story on their discussions with Chinese Premier Li Qiang on the issue of overcapacity in China.

US Treasury Assistant Secretary: Li Qiang is willing to discuss China’s overcapacity problem

US Treasury Secretary Janet Yellen arrived in Guangzhou, China on the afternoon of April 4, beginning a six-day visit to China. Yellen’s visit to China included Jay Shambaugh, US Treasury Under Secretary for International Affairs. They held two days of bilateral talks with Chinese Vice Premier He Lifeng in Guangzhou, then went to Beijing to meet with Chinese Premier Li Qiang, and then met with Chinese Finance Minister Lan Fo’an. Yellen also met with Liu He, former Vice Premier of the Communist Party of China, and Pan Gongsheng, Governor of the Central Bank of China.

Recently, US media outlet The Wire China reported that Shambo brought up the discussions between Yellen and the leadership of the Chinese Communist Party in an interview with Shambo hosted by Bob Davis, including developments within the efforts of the US to get Beijing to deal with overcapacity and economic imbalances, how the two countries will deal with future financial crises, and whether China is devaluing its yuan on purpose.

Before joining the Treasury Department in early 2023, Chambeau was an international economist at George Washington University, focusing on currencies, exchange rates, and macroeconomics. He was the chief economist for the White House Council of Economic Advisers.

In February of this year, a five-member delegation led by Shambaugh held two days of talks with officials from the Chinese Communist Party’s Ministry of Finance on the US-China Economic Working Group in Beijing. The meeting between finance ministry officials from the two countries was seen as preparation for Yellen’s visit to China in April.

Chambaugh said Yellen’s visit to China will allow her to hold in-depth discussions on meaningful issues and engage in substantive dialogue with the Chinese side. At the conference in Guangzhou, they were able to communicate more, especially one-on-one and even in smaller groups.

He said that he often communicates with Liao Min, the Deputy Finance Minister of the Chinese Communist Party, but there are many differences between the two sides in the economic field.

Regarding whether China’s overcapacity in the fields of electric vehicles, solar panels and clean technology products is a key issue discussed between the United States and China, Shangbo said that this is one of the important aspects. During the meeting with Li Qiang, they discussed this topic for more than two hours. The United States raised the issue of China’s pre-eminence with Li Qiang, and Li Qiang was willing to talk about it and they talked a lot about it.

Chambeau said this is a complex issue with macroeconomic imbalances, including particularly high savings rates. If investment is high and focused in manufacturing areas, it is possible that large capacity will begin to accumulate in these areas.

Shambaugh said China is challenging market share restrictions elsewhere. Since China accounts for 30% of the world’s production and is growing very quickly, it is beginning to squeeze out the market share of other countries.

Shangbo believes that the United States is making sure that China understands its concerns and what the United States is concerned about. Ensuring communication at the highest levels of leadership on both sides is a very important aspect – including the prime minister and deputy prime minister for economic policy. Because in the Chinese Communist Party system, getting permission from the top is very important.

The CCP did not reject the United States during the negotiations, but it still spoke harshly in its external propaganda.

Before her visit to China, Yellen set the tone on China’s “overcapacity” problem. At a press conference on April 8, Yellen explained that there is strong support for industries such as new energy vehicles and production capacity has increased significantly However, China’s domestic demand is weak, so there is too much investment in the industry and are commodity prices. When these products are exported In Europe and the United States, the survival of local companies will be in trouble, just as Chinese steel swept the world market more than ten years ago. In addition, “China’s economy is too big today, and actions taken by Chinese entities can change international prices and may call into question the survival of companies in the United States and other countries.” “

Asked what objections the Chinese Communist Party has made against the US economy, Shangbo said that when they were talking about fair growth, China did not criticize much. They sometimes talk about America’s huge fiscal deficit.

However, when Yellen visited China, propaganda outside the CCP focused on rejecting US views, saying that the US was building on the theory of China’s overcapacity.

Wang Wentao, Minister of Commerce of the Communist Party of China, began his trip to France on April 7 and held a roundtable meeting of Chinese electric vehicle companies in Europe in Paris. Wang Wentao said that Chinese electric vehicle companies rely on continuous technological innovation, a complete production and supply chain system, and sufficient market competition for rapid development, rather than relying on subsidies to gain competitive advantages and the Department Europe without foundation.

Xinhuanet, the mouthpiece of the Chinese Communist Party, published an article on April 11, “The absurd logic of China’s overcapacity theory is beginning. “

In fact, China has admitted that there is an overcapacity problem in many places.

Shangbo, in a report last December, revealed that China spoke about the problem of overcapacity in some industries. In March this year, they also discussed the risk of overcapacity in some industries. This is not a new problem.

“What we need to do is to prevent this situation in advance,” said Shangbo, and then say, “Oh, we can take four years to solve this issue .”

Editor-in-Chief: Fang Xiao #