Treasury Secretary Janet Yellen declared Monday that the United States will not allow Chinese imports to decimate new industries. Her remarks came as she concluded a 4-day meeting to urge Beijing to reduce excess industrial capacity.
Biden Administration to avoid cheap Chinese EV imports from disrupting the US industry
US Treasury Secretary Yellen recently told a press conference that President Joe Biden refuses to go through the “China shock” of the early 2000s again, Reuters reported. During this time, Chinese imports disrupted approximately 2 million American manufacturing jobs.
However, she did not mention any new tariffs or trade measures should Beijing persist in its enormous state support for EVs, batteries, solar panels, and other green energy products.
Secretary Yellen used her second visit to China in nine months to highlight Beijing’s establishment of factory capacity far surpassing local demand. Meanwhile, fast-growing exports of these products threaten companies in the country and beyond.
“We’ve seen this story before. Over a decade ago, massive PRC (People’s Republic of China) government support led to below-cost Chinese steel that flooded the global market and decimated industries across the world and in the United States. I’ve made it clear that President Biden and I will not accept that reality again.”
US Treasury Secretary Janet Yellen
Industrial “imbalance” in China
Secretary Yellen substantially addressed China’s industrial imbalance, which can potentially adversely affect not only US companies but also globally.
Presented below are several of the US Treasury Secretary’s remarks from the Department of Treasury:
| “I expressed concern to senior Chinese officials that there are features of the Chinese economy that have growing negative spillovers on the U.S. and the globe. I am particularly worried about how China’s enduring macroeconomic imbalances—namely its weak household consumption and business overinvestment, aggravated by large-scale government support in specific industrial sectors—will lead to significant risk to workers and businesses in the United States and the rest of the world. China has long had excess savings, but investment in the real estate sector and government-funded infrastructure had absorbed much of it. Now, we are seeing an increase in business investment in a number of “new” industries targeted by the PRC’s industrial policy. That includes electric vehicles, lithium-ion batteries, and solar. China is now simply too large for the rest of the world to absorb this enormous capacity. Actions taken by the PRC today can shift world prices. And when the global market is flooded by artificially cheap Chinese products, the viability of American and other foreign firms is put into question.” |
China’s rebuttal
China’s Vice Finance Minister Liao Min told Chinese media that the government “has fully responded” to the US concerns about overcapacity. He also conveyed “grave concern” about the restrictions the US government imposes on trade and investment.
Liao explained that China’s “current competitive advantages are rooted in China’s large-scale market, complete industrial system and abundant human resources.” He also criticizes the “escalation of green protectionist measures by some developed economies.”
“China will not sit idly and ignore it.”
Liao Min, China’s Vice Finance Minister
Chinese Commerce Minister Wang Wentao also contended during a roundtable meeting with Chinese electric automakers in Paris that its automotive industry depends on continuous technological innovation, not subsidies. The Minister further emphasized that the country has strong production and supply chain systems, enabling its local players to compete in the global market.
