U.S. Treasury Secretary Janet Yellen (left) shakes hands with Chinese Vice Premier He Lifeng in the southern Chinese city of Guangzhou, April 5, 2024.
Pedro Pardo | Afp | Getty Images
U.S. Treasury Secretary Janet Yellen said Saturday that she and Chinese Vice Premier He Lifeng agreed to begin exchanges on “balanced” economic growth, an effort to address U.S. concerns about China’s excess manufacturing capacity.
After two days of economic talks in Guangzhou, China’s southern export hub, Yellen said she and He also agreed to start a forum to cooperate on anti-money laundering efforts in their respective financial systems.
The exchanges will “facilitate a discussion about macroeconomic imbalances, including their link to overcapacity, and I intend to use the opportunity to support a level playing field for American workers and businesses,” Yellen said in a statement released after the talks. .
He called the four-and-a-half-hour discussion with He on Saturday productive and frank.
During his four-day visit to China, his top priority was convincing Chinese officials to curb excess production capacity of electric vehicles (EVs), solar panels and other clean energy technologies that threaten competing companies in the United States and in other countries.
The Biden administration is facing growing calls from US lawmakers to raise tariffs on Chinese electric vehicles to protect US manufacturers.
Chinese state media rejected his arguments about excess capacity, calling them a “pretext” for US protectionist policies and “alarmism.”
No tariff threat
Yellen did not threaten to raise tariffs or impose other trade barriers if China fails to curb state support that has expanded production of electric vehicles, solar panels and other clean energy products well beyond domestic demand, a senior official said of the US Treasury.
“I think the Chinese realize how concerned we are about the implications of their industrial strategy, for the United States, for the possibility of flooding our markets with exports that make it difficult for American companies to compete,” Yellen said. “And then other countries have the same concern.”
He said the forum would provide a “structured” way to discuss a complicated issue but that it would take time to resolve.
“It will be critical to the future of our bilateral relations and China’s relations with other important countries,” he added.
He added that Chinese officials are “more confident” about the world’s second-largest economy after putting in place policies to address problems in the real estate sector and local government debt.
China’s Xinhua news agency said in a statement that discussions between He and Yellen were “candid, pragmatic and constructive”, confirming that both sides agreed to further discuss balanced growth and financial stability.
Beijing also expressed serious concerns about the economic and trade restrictions imposed by the United States on China and gave a comprehensive response to the issue of production capacity during the talks, the statement said.
The U.S. Treasury official, who spoke on condition of anonymity, said the balanced growth forum was first proposed in February at an economic working group meeting.
Wendy Cutler, a former US trade negotiator, said the forum focused on overcapacity was a positive development, but there was a danger it could “turn into a stalling tactic” by Beijing to avoid the actions needed to bring back supply and demand balance.
Yellen also said she warned Chinese companies that they would face “significant consequences” if they provided material support to Russia’s invasion of Ukraine. The Chinese side stressed that its policy is not to provide such support and does not want the issue to become bilateral.
“Protectionist pretext”
Xinhua criticized Yellen’s position on Friday evening, saying that talk of “Chinese overcapacity” in the clean energy sector has created a pretext for protectionist policies to protect US companies.
In an editorial on Saturday, Xinhua said that suppressing China’s electric vehicle industries would not help the United States grow its own, adding that it hoped that further progress could be made during Yellen’s visit to break down barriers that stand in the way of mutually beneficial cooperation.
Although the Treasury does not expect a major change in China policy after Yellen’s visit, US officials believe it is important to explain the economic risks that overinvestment in some sectors and weak consumer demand present to both China and to its business partners.
Yellen said Friday that her trip was partly aimed at strengthening U.S.-China ties to “withstand shocks and difficult circumstances.”
Yellen will continue her discussions with Chinese officials on Monday in Beijing, where she will meet with officials including Premier Li Qiang, Finance Minister Lan Foan and People’s Bank of China Governor Pan Gongsheng.