United States Treasury Secretary Janet Yellen wrapped up high-level talks in China on Monday, issuing a stern warning against the proliferation of underpriced Chinese goods inundating global markets and causing detrimental effects to industries worldwide. Yellen’s remarks come amidst a four-day dialogue in Guangzhou and Beijing, where she engaged with Chinese officials and business leaders on various economic issues.
Yellen reiterated concerns regarding China’s excess industrial capacity, particularly in sectors such as solar and electric vehicles, fueled by substantial government support. She emphasized the detrimental impact of such practices on industries both domestically and internationally. The Treasury Secretary expressed President Biden’s and her own unwavering stance against a recurrence of the scenario witnessed a decade ago when below-cost Chinese steel flooded global markets, severely impacting industries, including those in the United States.
Throughout approximately 11 hours of talks, Yellen engaged with Chinese Vice Premier He Lifeng and Premier Li Qiang, aiming to elevate concerns to the highest echelons of Chinese policymaking. Despite Washington’s apprehensions, Chinese Commerce Minister Wang Wentao dismissed fears of overcapacity as “groundless,” according to state media.
Despite these economic tensions, bilateral ties between the two nations have shown signs of stabilization, with both sides expressing willingness to cooperate on issues ranging from climate change to anti-money laundering measures. Yellen underscored the importance of addressing excess capacity concerns for China’s long-term productivity and growth, although she acknowledged that resolution would not be immediate.
In addition to economic matters, Yellen raised concerns about national security, cautioning against Chinese support for Russia’s military procurement. She emphasized the need for transparency from China regarding its national security actions and urged clarity on delineating between national security and economic interests.
Yun Sun, a senior fellow at the Stimson Center, viewed Yellen’s discussions as a positive step in conveying U.S. concerns and understanding China’s reactions. Sun highlighted the potential for cooperation in technical areas, such as combating money laundering, to bolster confidence in bilateral relations.
Despite the challenges, progress has been noted, particularly in debt restructuring cases like Zambia’s, signaling areas of cooperation amidst broader economic tensions between the world’s two largest economies.
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