U.S. Treasury: We Must Collaborate to Fight Against China’s Low Cost Offensive

U.S. Treasury Secretary Janet Yellen has stated that the U.S. and Europe must collaborate to prevent China’s low-cost offensive. She revealed that this issue will be significantly discussed at the upcoming meeting of finance ministers from the Group of Seven (G7) countries next month.

According to the New York Times (NYT), on the 21st (local time), Yellen made this statement in a speech in Germany before attending the G7 finance ministers’ meeting in Italy. She warned that the flood of low-cost product exports from China could pose a serious threat to the global economy.

Yellen stated, “China’s industrial policies may seem distant at the moment, but if we do not respond in a strategically unified manner, the viability of companies worldwide, including the U.S. and Germany, could be at risk.”

China’s overproduction and low-cost exports in clean energy sectors such as electric vehicles and solar power have recently emerged as common concerns in the U.S. and Europe.

Particularly, the Biden administration, which has made large investments in the domestic clean energy sector, cannot ignore the weakening of its efforts due to China’s overproduction of related products.

According to the NYT, the U.S. is hoping for a joint response similar to when the West united to block the flood of Chinese-manufactured products in the early 2000s.

President Biden dramatically increased tariffs on some imported goods last week, including imposing a 100% tariff on Chinese-made electric vehicles. This U.S. tariff increase is expected to influence Europe’s decisions, which is currently investigating subsidies for Chinese electric vehicles and other products.

The NYT also reported that the U.S. hopes to convince China, through a united front, that Europe, China’s largest trading partner, is ready to build trade barriers against China. Yellen, while mentioning China’s ambitions to dominate the clean energy technology sector, emphasized that “this could hinder the growth industries of countries worldwide, including emerging markets.”