US Treasury Secretary Janet Yellen recently visited China, calling on the country to address manufacturing overcapacity that could lead to global economic issues and create a level-playing field for American companies and workers. During her visit, she discussed US concerns about Chinese trade practices, including unfair treatments and barriers to access for foreign firms. Yellen emphasized the importance of open communication on areas of disagreement between the US and China.
Yellen’s visit included meetings with Chinese officials, US business leaders, and representatives from American, European, and Japanese companies. In her discussions with the governor of Guangdong province, Yellen highlighted the issue of China’s industrial overcapacity and its potential impact on the global economy. She also addressed concerns raised by American firms operating in China, stating that ending unfair economic practices would benefit both American companies and China in terms of improving the business climate.
Guangzhou, where Yellen visited, is a major industrial and export hub in China, home to companies like Huawei and BYD, China’s largest EV maker. The Chinese government has supported industries such as solar panels and electric vehicles, leading to excess production capacity that could pose challenges for foreign markets. Yellen’s focus during her visit was on ensuring fair competition in sectors such as green energy and electric vehicles and advocating for adequate market access for US companies.
Despite China’s assertions that their production capacity growth is a result of market demand and international division of labor, the US raised concerns about the impact of China’s exports on global markets. Yellen emphasized that addressing excess capacity is a shared concern among many countries and is not intended as an anti-China policy. Concerns about Chinese exports impacting the US auto sector have also been raised, with reports indicating potential harm to the industry if inexpensive Chinese autos flood the American market.
Yellen expressed that the US is prepared to use all available tools, including tariffs, to respond to China’s heavily subsidized manufacturing of green energy products if necessary. The Alliance for American Manufacturing released a report highlighting the potential negative impact of China’s industrial overcapacity on the US auto sector, which accounts for a significant portion of America’s GDP. Yellen’s visit to China aimed to address these concerns and encourage fair competition and market access for US companies in key sectors like green energy and electric vehicles.
