Yellen’s Slap at China Could Widen Economic Front: ‘China Distorts EV and Solar Markets’

Janet Yellen, U.S. Secretary of the Treasury, strongly criticized China for distorting the global market with its overproduction in the electric car and solar industries before she visited China next month.

This raises concerns that the economic front between the U.S. and China, limited to semiconductors, could expand to the green sector.

According to Reuters on the 27th (local time), Secretary Yellen, during her visit to Suniva, a solar module company in Georgia, pointed out that “China’s overproduction is distorting international prices and production orders” and that “this is causing harm to workers and companies not only in the U.S. but around the world.”

Suniva, which closed its doors in 2017 due to the onslaught of low-priced Chinese solar products, was able to revive thanks to subsidies through the Inflation Reduction Act (IRA).

Secretary Yellen said she would “pressure her Chinese counterparts to take appropriate measures to address this issue” and criticized that “China’s overinvestment in the clean energy sector poses a risk to its economic growth.”

She further criticized that “in the past, the Chinese government has led overinvestment and overproduction in the steel and aluminum industries, exporting low-priced mass-produced products” and that “while this may have maintained China’s production and employment, it has put pressures on the rest of the world’s industries.”

However, Secretary Yellen urged constructive dialogue with the Chinese government during a meeting with reporters.

She stated, “We’re seeing similar concerns in Europe but don’t want to move towards retaliatory measures. We’re looking to see what we can do constructively.”

Currently, China is making aggressive strides in the electric car, solar, and secondary battery markets, showing rapid growth thanks to the authorities’ full support.

Chinese products account for more than 80% of the global solar market, and China’s brand electric car market share is also expected to approach 80% last year.

In this context, Secretary Yellen’s remarks have led to cautious analysis that the U.S. and China’s ‘battle for supremacy’ surrounding semiconductors may now expand to the green sector.

In response to China’s rapid growth, the U.S. is introducing aggressive subsidy policies such as the IRA (Inflation Reduction Act) and the Chips Act to revive manufacturing.

However, China has objected to this, challenging the discriminatory nature of the U.S. IRA subsidy clauses at the World Trade Organization (WTO).

Meanwhile, Secretary Yellen is scheduled to visit China next month to meet with China’s Vice Premier, He Lifeng, and China’s Minister of Finance, Lan Fo’an.