Following a four-day dialogue with Chinese officials, Treasury Secretary Janet Yellen affirmed the Biden administration’s intent to press China on altering its industrial policy, which is perceived as jeopardizing U.S. jobs.
In discussions held in Beijing, Yellen highlighted “difficult conversations” encompassing national security concerns, particularly regarding American apprehensions that Chinese entities are aiding Russia in the conflict in Ukraine. However, the primary focus of her visit revolved around industrial policy, specifically addressing what the U.S. and Europe perceive as excessive manufacturing capacity in China.
Yellen pointed out the proliferation of subsidies provided by the Chinese government in sectors like electric vehicles, battery manufacturing, and solar energy equipment. These subsidies have fueled rapid expansion, prompting fears among wealthy nations of an influx of low-priced Chinese exports that could undermine domestic industries.
Emphasizing the magnitude of China’s influence on global markets, Yellen stressed the potential ramifications of flooding the market with artificially cheap Chinese products. She underscored the imperative for coordinated efforts to tackle overcapacity, particularly in industries where China holds a dominant position.
The upcoming economic and financial working group meetings between the U.S. and China will delve into these pressing issues, coinciding with the IMF and World Bank Spring Meetings. Yellen reiterated the U.S.’s commitment to advocating for a shift in China’s industrial policy during these discussions.
While China’s response remains uncertain, Yellen’s remarks signal a concerted effort to address concerns regarding overcapacity and promote fair competition in global markets. Acknowledging the complexities of the situation, Yellen emphasized the need for China to reassess its policies in light of changing dynamics in the global economy.
Additionally, Yellen emphasized the importance of higher consumer spending in China as a means to mitigate the reliance on government subsidies in key sectors. This approach aligns with efforts to foster balanced and sustainable growth, ultimately benefiting both domestic and international stakeholders.
In light of the ongoing conflict in Ukraine, Yellen warned against any facilitation of arms sales to Russia, cautioning that banks and companies involved could face U.S. sanctions. She underscored the need for collective action to deter support for Russia’s military endeavors.
As discussions continue between China and the U.S., the outcome of these deliberations will shape the future trajectory of economic relations between the two nations. Yellen’s engagement with Chinese officials reflects a commitment to addressing shared challenges and fostering a constructive dialogue aimed at achieving mutually beneficial outcomes.