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US Treasury Secretary Yellen: Complaint about huge overcapacity
Photo: Andres Martinez Casares / EPA
According to Treasury Secretary Janet Yellen, the US government will not stand idly by and accept a flood of cheap Chinese industrial goods. "We have experienced this story before," she told reporters in Beijing on Monday. More than a decade ago, massive support from the Chinese government led to cheap steel from the People's Republic flooding the world market and destroying many jobs in US industry. "I have made it clear that President Biden and I will not accept this reality again," she said after four days of talks in China.
However, Yellen was not specific. It did not threaten new tariffs or other trade measures if China continued massive government support for electric vehicles, batteries, solar panels and other green energy products.
Yellen used her second trip to China in nine months to complain about huge overcapacity that would far exceed domestic demand. Experts fear that the products, some of which are heavily subsidized, will be thrown cheaply onto the world market and could displace products from industrialized countries that have to survive without government help. If the world market is flooded with artificially cheap Chinese products, "the viability of American and other foreign companies will be called into question," emphasized the Finance Minister.
As a possible short-term solution, Yellen said China should take measures to strengthen domestic consumer demand. She spoke in detail with Prime Minister Li Qiang and also met with Finance Minister Lan Foan on Sunday. On Monday she spoke to central bank chief Pan Gongsheng.
Beijing believes the debate about overcapacity is misguided. Tariffs or other trade restrictions would deprive consumers worldwide of green energy alternatives that are important for achieving global climate goals. The state news agency Xinhua quoted Prime Minister Li as saying that the US should "refrain from turning economic and trade issues into political or security issues." Trade Minister Wang Wentao described US and European concerns about Chinese overcapacity for electric cars as unfounded. Instead of relying on subsidies, domestic electric vehicle manufacturers are relying on continuous technological innovation.
mik/Reuters