washington — U.S. Treasury Secretary Janet Yellen called on China Friday to address its industrial overcapacity, reform its trade practices and create a “healthy economic relationship” with the United States.
“The United States seeks a healthy economic relationship with China that benefits both sides,” Yellen said in remarks in the industrial southern Chinese city of Guangzhou. “But a healthy relationship must provide a level playing field for firms and workers in both countries.”
Yellen also met with Chinese Vice Premier He Lifeng and other high-level central bank officials Friday. During the meeting, Yellen told Chinese officials that their industrial overcapacity, particularly in green energy sectors, threaten American production of electric vehicles and solar panel parts.
China has supported its solar panel and EV makers through subsidies, building production capacity far beyond the domestic market’s demand and exporting its products globally. Although this production has massively cheapened prices for these green products — crucial in efforts to fight climate change — American and European governments worry that Chinese products will flood the market and put their own domestic production at risk.
During a meeting Friday with Guangdong province Governor Wang Weizhong, Yellen said the U.S. and China must communicate regarding areas of disagreement, including green industrial policy.
“This includes the issue of China’s industrial overcapacity, which the United States and other countries are concerned can cause global spillovers,” she said.
China has sought to downplay these concerns, with Foreign Ministry spokesperson Wang Wenbin noting earlier this week that China’s green production is a positive in global efforts to reduce carbon emissions.
Wang said U.S. reluctance to export technology to China, a policy related to U.S. fears of industrial overcapacity, meddles with global supply and demand.
“As for who is doing nonmarket manipulation, the fact is for everyone to see,” he said. “The U.S. has not stopped taking measures to contain China’s trade and technology. This is not ‘de-risking,’ rather, it is creating risks.”
Beyond addressing overcapacity, Yellen also expressed concerns about Chinese trade practices.
Yellen said China has pursued “unfair economic practices, including imposing barriers to access for foreign firms and taking coercive actions against American companies.”
She urged Chinese officials to reform these policies.
“I strongly believe that this doesn’t only hurt these American firms,” Yellen said in a speech at an event hosted by the American Chamber of Commerce in Guangzhou. “Ending these unfair practices would benefit China by improving the business climate here.”
Yellen’s visit to China, her second, marks the first visit by a senior U.S. official to China since November meetings between U.S. President Joe Biden and Chinese President Xi Jinping.
Both He and Yellen said the U.S. and China need to, in He’s words, “properly respond to key concerns of the other side” to form a more cooperative economic relationship.
Yellen said, “It also remains crucial for the two largest economies to seek progress on global challenges like climate change and debt distress in emerging markets in developing countries and to closely communicate on issues of concern such as overcapacity and national security-related economic actions.”
She added that U.S. efforts to push Chinese policies are geared toward reducing global risk.
“This is not anti-China policy,” she said. “It’s an effort for us to mitigate the risks from the inevitable global economic dislocation that will result if China doesn’t adjust its policies.”
…