During her visit to China, U.S. Treasury Secretary Janet Yellen emphasized that new American industries will not follow the same path to decline as the steel industry due to Chinese subsidies.
According to foreign media outlets such as Reuters and The Washington Post on the 8th (local time), Secretary Yellen, who wrapped up a series of meetings with high-ranking Chinese officials including Premier Li Qiang and Deputy Prime Minister He Lifeng over the past four days, revealed at a press conference that she had “difficult conversations” with the Chinese side. She raised issues regarding China’s excessive investment in weak domestic consumption and sectors such as electric vehicles, batteries, and solar power, accompanied by ‘massive government subsidies.’
Secretary Yellen stated, “We’ve experienced this before,” referring to the time “over a decade ago when Chinese steel, subsidized by the Chinese government, flooded the global market at prices below cost, leading to the near-extinction of many industries worldwide, including the United States.” She continued, “President Biden and I have made it clear that we will not ignore this reality again,” emphasizing that if Chinese products with artificially lowered prices flood the world, it would “raise questions about the survival of American and other foreign companies.”
Secretary Yellen added, “China is too large for other countries in the world to handle its tremendous production capacity,” and “The measures taken by the People’s Republic of China can affect global prices.” Therefore, she stated that the U.S. government will pressure China to modify future policies that could threaten American jobs.
Recently, as China has been practically dumping products such as electric cars, batteries, solar power, and home appliances abroad to stimulate its economy, countries worldwide, including the United States and Europe, have been put on alert against China’s low-cost offensive. Notably, President Joe Biden, who desperately needs the support of the American working class ahead of this year’s election, has shown a solid will to respond to China’s low-cost offensive. Even Secretary Yellen, who has demonstrated a friendly attitude towards China, made it clear before her visit that she would raise the issue of China’s overproduction.
However, it is uncertain how China will respond to these requests from the United States. Furthermore, The Washington Post reported that China’s overproduction is causing problems within its own country, such as intensifying competition in the electric vehicle market.
During her visit, Secretary Yellen expressed concern about China’s support for Russia and warned that banks trading military supplies or dual-use goods with Russia could face U.S. sanctions.
She emphasized that “no companies, including those in the People’s Republic of China, should provide material support for the Russian war, and if such actions occur, they will face serious consequences.”
While the U.S. and China agree on financial stability cooperation, the U.S.-China Financial Working Group, established during Secretary Yellen’s visit to China last year, recently conducted joint response training, assuming a significant bank’s bankruptcy scenario. Reuters quoted a U.S. Treasury Department official saying additional training will be conducted around April and May.
Secretary Yellen arrived in Guangzhou, China, on the 4th to start her visit. After completing most of her schedule, she is expected to leave on the 9th.
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