Daily Management Review

US' Yellen Says China's Imports Are Destroying Nascent Businesses In The US


US' Yellen Says China's Imports Are Destroying Nascent Businesses In The US
Janet Yellen, the U.S. Treasury Secretary, concluded four days of discussions pushing Beijing to limit surplus industrial capacity on Monday. She cautioned China that Washington will not tolerate new industries being destroyed by Chinese imports.
At a press conference, Yellen declared that US President Joe Biden would not permit a recurrence of the early 2000s "China shock," in which an influx of Chinese goods resulted in the loss of roughly 2 million manufacturing jobs in the United States.
However, should Beijing continue its substantial state backing for EVs, batteries, solar panels, and other green energy commodities, she did not threaten further tariffs or other trade steps.
Yellen utilised her second visit to China in nine months to voice concerns about Beijing's excessive investment, which has increased manufacturing capacity well beyond domestic demand, endangering American and international enterprises.
She stated that finding answers to the excess capacity problem will take time in a recently established exchange forum.
Yellen compared it to the suffering endured by the American steel industry in the past.
"This is not a new story," she informed the reporters. "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."
Yellen added: "I've made it clear that President Biden and I will not accept that reality again."
According to her, "the viability of American and other foreign firms is put into question" when the world market is overrun with artificially inexpensive Chinese items.
Yellen stated that Washington's European allies, Japan, Mexico, the Philippines, and other emerging economies shared American concerns about excess industrial capacity, and that her discussions with Chinese officials had benefited American interests.
Liao Min, China's vice minister of finance, told Chinese media that Beijing "has fully responded" to US inquiries on overcapacity and expressed "grave concern" over trade and investment restrictions imposed by Washington.
Liao stated that China's "current competitive advantages are rooted in China's large-scale market, complete industrial system and abundant human resources," criticising the "escalation of green protectionist measures by some developed economies."
Liao stated, "China will not sit idly and ignore it," in comments that were posted on the ministry's webpage.
The National People's Congress, the legislature of China, declared in March that the government will act to reduce industrial overcapacity.
Beijing, however, claims that the recent emphasis by the US and Europe on the dangers posed by China's excess capacity is misplaced.
According to Chinese officials, the criticism overstates the role that state support plays in propelling the rise of Chinese companies while underplaying their creativity. According to them, trade restrictions such as tariffs will deny consumers worldwide access to green energy options that are essential for achieving global climate goals.
Trade restrictions on Chinese electric vehicles would be illegal under WTO regulations, the ministry of industry and information technology claimed in a statement that was reprinted by China Daily and CCTV, the country's official media.
The Chinese ministry went on to say that it was dedicated to promoting EV exports and would "accelerate the overseas development" of the sector, which would involve organising logistics and shipping as well as helping businesses innovate and adhere to international standards.
During a roundtable discussion with Chinese electric vehicle manufacturers in Paris, Chinese Commerce Minister Wang Wentao expressed more forceful concerns, claiming that European and American claims about China's excess EV capacity were unfounded.
Wang stated that during his trip to discuss an EU anti-subsidy inquiry, China's EV industries rely on excellent manufacturing and supply chain infrastructure, ongoing technological innovation, and complete market competition rather than subsidies.
Yellen proposed that China change its growth model away from supply-side investments and take action to support households and increase consumer demand as a potential short-term fix.
Yellen met with Finance Minister Lan Foan on Sunday and had a lengthy conversation about the matter with Premier Li Qiang. On Monday, she had a meeting with former vice premier Liu He and governor Pan Gongsheng of the People's Bank of China (PBOC).
Following the sessions, Yellen stated in an interview that changes in China's macroeconomic climate were more important to her than trade restrictions. She did, however, restate that tariffs would not be ruled out.