Treasury Secretary Janet Yellen recently met with Vice Premier He Lifeng in Guangzhou to launch a dialogue on balanced growth between the US and China. Yellen emphasized the importance of a level playing field to protect American workers and businesses. As the two largest economies in the world, both countries have a responsibility to manage their relationship responsibly and work together on global challenges.
According to forecasts from the Economist Intelligence Unit, China’s battery manufacturing capacity is expected to outpace demand by 2027 due to the rapid growth of the electric vehicle industry. Beijing’s support for battery-powered vehicles has allowed Chinese companies like BYD and Geely to become leaders in the world’s largest car market and turn China into the top auto exporter. However, this growth has also led to excess manufacturing capacity, with estimates suggesting China could produce 5 to 10 million EVs per year.
Despite concerns about overcapacity, China has continued to invest in cutting-edge technology, including electric vehicles, commercial spaceflight, and life sciences. This investment aligns with President Xi Jinping’s goal of unleashing new productive forces in the economy. Chinese state media have pushed back against Yellen’s message on excess capacity, with Xinhua suggesting that discussing Chinese overcapacity in clean energy could be a pretext for protectionist policies that favor American companies.
Xinhua argued that suppressing China’s EV-related industries would not benefit the US in growing its own industry, calling for mutually beneficial cooperation between the two countries. The hope is that Yellen’s visit will lead to progress in breaking down barriers and fostering greater collaboration. Despite differences in approach, both the US and China recognize the importance of managing their economic relationship responsibly and working together on global challenges.
Overall, the dialogue on balanced growth between the US and China will be crucial in addressing issues like excess capacity in the electric vehicle industry. Both countries need to find ways to cooperate and support each other’s economic growth while ensuring a level playing field for businesses and workers. By working together, the US and China can leverage their strengths and address global challenges in a more effective manner.
