U.S. Treasury Secretary Janet Yellen and Chinese Premier Li Qiang discussed the importance of open communication and respectful partnership between the two economic superpowers during a meeting in Beijing. Yellen emphasized the need for responsible management of the complex relationship between the United States and China, highlighting the progress made over the past year through difficult conversations. She specifically addressed the issue of China’s excess factory capacity, particularly in the production of electric vehicles (EVs) and solar panels, which has had an impact on producers in the U.S. and other countries.
Yellen’s visit to China focused on addressing economic tensions between the two countries, with a particular emphasis on China’s overcapacity in clean energy products. This issue has been a point of contention in the bilateral relationship, which Yellen has sought to address through dialogue and cooperation. The meeting between Yellen and her Chinese counterpart Vice Premier He Lifeng in Guangzhou resulted in an agreement to launch a dialogue on “balanced growth” with a focus on creating a level playing field to protect U.S. workers and businesses. Yellen stressed the importance of responsible management of the complex relationship between the world’s two largest economies.
The Economist Intelligence Unit forecasts that China’s battery manufacturing capacity will surpass demand by 2027, given the rapid growth of the country’s EV industry. While Beijing’s support for battery-powered vehicles has helped Chinese companies gain market share, it has also led to excess manufacturing capacity. This has raised concerns about China’s ability to produce between 5 and 10 million EVs per year, which could have implications for global trade. Despite these challenges, China continues to invest in cutting-edge technology, including EVs, commercial spaceflight, and life sciences, areas where U.S. firms hold advantages.
Yellen’s message on excess capacity in China’s clean energy sector has been met with pushback from Chinese state media, which have criticized her for promoting protectionist policies that could harm cooperation between the two countries. Xinhua, the state news agency, argued that suppressing China’s EV-related industries would not benefit the U.S. economy and called for mutually beneficial cooperation instead. The issue of overcapacity in China’s clean energy sector remains a point of contention in the U.S.-China economic relationship, and both countries are working to find common ground on this issue.
The meeting between U.S. President Joe Biden and Chinese President Xi Jinping, as well as the talks between military officials from both countries, demonstrate a commitment to managing tensions and maintaining stability in the relationship. Both countries have recognized the importance of open communication and dialogue in addressing economic and security challenges, despite differences on various issues. Yellen’s visit to China is part of broader efforts to strengthen economic ties and promote cooperation between the world’s two largest economies. By engaging in difficult conversations and working towards responsible management of the relationship, the U.S. and China aim to foster a more stable and constructive partnership for the benefit of both countries and the global economy.
