The US “will not accept” a situation where underpriced Chinese goods flood the global market, battering industries elsewhere, US Secretary of the Treasury Janet Yellen said yesterday 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 Guangzhou City and 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.
Photo: AFP
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,” Yellen said.
“I’ve made clear that [US] President [Joe] Biden and I will not accept that reality again,” she told a news conference at the US ambassador’s residence, adding that Washington’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 US did not “seek to decouple” from China.
After 11 hours of meetings with Chinese Vice Premier He Lifeng (何立峰), Yellen raised the issue with Chinese Premier Li Qiang (李強) as well — moves the US hopes would 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.”
However, Beijing has pushed back, with Chinese Minister of Commerce Wang Wentao (王文濤) on Sunday calling fears of overcapacity “groundless,” state media reported.
Yellen’s push on overcapacity comes even as bilateral ties have stabilized 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.
However, Li earlier told Yellen that Washington should view the matter of production capacity “objectively” and from a “market-oriented” perspective, Xinhua news agency reported.
Yellen said that excess capacity concerns would not be addressed in a week or month, but added that doing so would be positive for China’s long-term productivity and growth.
Yellen said she also had “difficult conversations about national security,” warning Chinese officials of the consequences of supporting Russia’s military procurement efforts and using economic tools to address national security concerns.
In particular, she said the US was committed to having “no surprises” in the use of such tools.
The US has laid out its principles and policymaking process, she said, but added: “We would welcome transparency from [China] on its national security actions and greater clarity on where it sees the line between national security and economic issues.”
China has been accused in recent years of slapping import bans on certain products from countries, notably Australia, over political disagreements.
Yellen also said she discussed the issue of TikTok “briefly” with Chinese counterparts, saying Washington had legitimate concerns when it comes to protecting sensitive personal data.
The US Congress is threatening to ban the wildly popular video app unless it changes hands.
Yellen said that China also shares worries over data protection, with many US social apps blocked from the country.
“We would like to find a way forward,” she said.
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