The United States “will not accept” a situation where underpriced Chinese goods flood the global market, battering industries elsewhere, US Treasury Secretary Janet Yellen said Monday as she wrapped up high-level talks in China.Yellen has repeatedly warned about the risks of China’s excess industrial capacity during four days of meetings with officials and business leaders in the southern city of Guangzhou and capital Beijing.
Washington is concerned that Chinese government support is leading to more production capacity than global markets can absorb, resulting in a surge of cheap exports in sectors such as solar and electric vehicles and stifling the growth of those industries elsewhere.Yellen on Monday said massive Chinese government support more than a decade ago had led to below-cost steel flooding the global market, which “decimated industries across the world and in the United States”.”I’ve made clear that President Biden and I will not accept that reality again,” she told a news conference at the US ambassador’s residence, adding that America’s allies and partners shared similar concerns.She said some change in Chinese policy would be “necessary and appropriate”, but did not commit to specific actions Washington might take otherwise, while underscoring the United States did not “seek to decouple” from China. After 11 hours of meetings with her counterpart Vice Premier He Lifeng, she raised the issue with Premier Li Qiang as well — moves Washington hopes will bring the concerns to the highest levels of Chinese policymaking.Yellen said she was especially worried about China’s weak household consumption and business overinvestment, “imbalances” she said were “aggravated by large-scale government support in specific industrial sectors”.But Beijing has pushed back, with China’s Commerce Minister Wang Wentao this week calling fears of overcapacity “groundless”, according to state media.
Steadying ties
Yellen’s push on overcapacity comes even as bilateral ties have stabilised in other areas, with both sides willing to cooperate on issues including climate change, debt restructuring and money laundering.”I do not want to see the US economic relationship or overall relationship with China deteriorate and fray,” Yellen told reporters, adding that she believes China shares a similar desire to steady relations
The two countries have also agreed to open channels for further talks on excess capacity.But Li earlier told Yellen that Washington should view the matter of production capacity “objectively” and from a “market-oriented” perspective, the state-run Xinhua news agency said.Yellen noted that excess capacity concerns would not be addressed in a week or month, but stressed that doing so would be positive for China’s long-term productivity and growth.
