BEIJING —The Biden administration will pressure China to change an industrial strategy that poses a threat to jobs in USAUS Treasury Secretary Janet Yellen said on Monday after four days of meetings with Chinese officials.
He also said he had had “difficult conversations” in Beijing about national security, including concerns in Washington that Chinese companies were backing Russia in its war in Ukraine.
But the priority of his trip was industrial policy and what the United States and Europe describe as manufacturing overcapacity in China. Wealthy countries fear that a wave of low-priced Chinese exports will overwhelm factories at home. Yellen cited the production of electric vehicles and their batteries, as well as solar energy equipment — two sectors the U.S. government is trying to boost in her country — as sectors where Chinese government subsidies have fueled a rapid increase in production.
“China is simply too big for the rest of the world to absorb this enormous capacity. Actions taken today by the PRC can change global prices,” she said, using an acronym for the country’s official name, People’s Republic of China. “And when the global market is flooded by artificially cheap Chinese products, the viability of American and other foreign firms is called into question.”
It was unclear how China would respond to those requests. European officials have raised the issue on several occasions during visits to China with no sign of change in Beijing.
What’s more, one of Chinese leader Xi Jinping’s main goals is to turn the country into a great power so that it does not have to bow to outside pressures.
However, overcapacity also affects China. Price wars in the electric vehicle sector are expected to put some manufacturers out of business, and experts have called for better coordination of policies designed to encourage new technologies. During Yellen’s visit, the government agreed to start talks on what both sides called “balanced growth.”
“We must emphasize the need for policy change in China during these talks,” Yellen said at an outdoor news conference on a warm spring day at the U.S. ambassador’s residence in Beijing.
China’s official Xinhua news agency said Saturday that the Chinese side had “fully responded to the production capacity issue” during Yellen’s meeting with Vice Premier He Lifeng, the person in charge of trade and economic affairs between China and the United States.
More than a decade ago, the Treasury Secretary indicated, a flood of “below-cost Chinese steel (…) decimated industries around the world and in the United States. “I have made it clear that neither President Biden nor I will accept that reality again.”
Regarding the war in Ukraine, the secretary warned that any bank that facilitates the sale of military or dual-use material to Russia may face US sanctions.
“I stressed that companies, including those in the PRC, should not provide material support to Russia’s war effort, and that they will face significant consequences if they do so,” he said.
Yellen, former chair of the US Federal Reserve, met with Chinese central bank governor Pan Gongsheng on Tuesday morning.
Source: AP
