The United States will not allow a flood of Chinese imports to destroy American companies and jobs as they did in the early 2000s, treasury secretary Janet Yellen said at the end of a weeklong visit to China. She urged Beijing to change its economic policies so that Chinese consumers and firms would buy more of the electric vehicles, batteries and solar panels that would otherwise be exported.
“We’ve seen this story before. Over a decade ago, massive [Chinese] government support led to below-cost Chinese steel that flooded the global market and 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. I know that these serious concerns are shared by our allies and partners, from advanced economies to emerging markets,” she told reporters in Beijing.
Ms Yellen declined to say how Washington will respond if China fails to reduce its exports of green energy goods or to threaten higher tariffs. During talks with China’s vice-premier He Lifeng, she agreed to launch “intensive exchanges on balanced growth” in the domestic and global economies.
The treasury secretary insisted that Washington had no wish to decouple from China, adding that the two economies were so deeply integrated that a wholesale segregation would be disastrous for both. But she said that China’s weak household consumption, high business investment with and government investment in new industries posed a risk to the US and the rest of the world.
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“China has long had excess savings, but investment in the real estate sector and government-funded infrastructure had absorbed much of it. Now, we are seeing an increase in business investment in a number of ‘new’ industries targeted by the [China’s] industrial policy. That includes electric vehicles, lithium-ion batteries and solar,” she said.
“China is now simply too large for the rest of the world to absorb this enormous capacity. Actions taken by the PRC today can shift world prices. And when the global market is flooded by artificially cheap Chinese products, the viability of American and other foreign firms is put into question.”
[ EU and US must better defend their economies against China, says trade envoyOpens in new window ]
Ms Yellen’s visit to China, her second in the past year, comes amid rising tensions between Beijing and Washington over the South China Sea. She said she had “difficult conversations” with her hosts about national security, particularly over US concerns about Chinese firms that may be exporting material to Russia that could be used to help its war against Ukraine.
“We continue to be concerned about the role that any firms, including those in the PRC, are playing in Russia’s military procurement,” she said.
“I stressed that companies, including those in [China], must not provide material support for Russia’s war and that they will face significant consequences if they do. And I reinforced that any banks that facilitate significant transactions that channel military or dual-use goods to Russia’s defence industrial base expose themselves to the risk of US sanctions.”
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