Source: AFP
US Treasury Chief Janet Yellen on Friday called for a “level playing field” between US and Chinese companies, telling officials during a visit to southern China that Beijing’s industrial subsidies threaten that balance.
Yellen arrived in the city of Guangzhou on Thursday for four days of talks with Chinese officials on her second visit to the world’s number two economy in less than a year.
Meeting Friday morning with the governor of Guangdong — a vast province emblematic of the reforms and development that have driven China’s meteoric rise — he said the US was committed to a “healthy economic relationship.”
But, he stressed, that required “a level playing field for American workers and businesses,” as well as “open and direct communication in areas where we disagree.”
“This includes the issue of China’s industrial overcapacity, which the United States and other countries are concerned could cause global spillovers,” he said.
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Yellen has warned that China’s massive subsidies for technology such as green energy, EVs and batteries risk creating a glut of goods that then flood global markets – undercutting American and other companies.
Beijing dismissed those concerns, last month denouncing an EU investigation into its EV subsidies as “protectionism” and part of a Western effort to politicize international trade.
Washington’s concerns about a flood of exports come as US President Joe Biden pushes to boost domestic production of clean energy — with policymakers warning that China’s overcapacity could hurt the growth of those industries.
The Biden administration is very sensitive to the U.S. auto industry’s concerns about China and electric vehicles, especially in an election year, said Paul Triolo, China partner at Albright Stonebridge Group.
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“It is likely that the government will take some steps to show that it is willing to act proactively to prevent future problems from China’s overcapacity in electric vehicles,” he told AFP.
But he warned that Beijing would likely “react badly” as the impact on US automakers remains to be seen.
Stabilizing ties
During her trip, Yellen plans to meet with Chinese Premier Li Qiang and Vice Premier He Lifeng, as well as central bank governor Pan Gongsheng and Finance Minister Lan Fo’an.
The talks with him will see the two delve deep into the economic conditions of both countries and examine more sensitive areas such as national security and Beijing’s alleged support for Russia’s defense industrial base.
Beijing and Washington have clashed in recent years over issues ranging from technology and trade to human rights, as well as over the self-ruled island of Taiwan and the South China Sea.
Relations have stabilized somewhat since Presidents Biden and Xi Jinping met in San Francisco in November for talks that both sides described as successful.
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Yellen’s visit in July 2023 helped restart the dialogue after a period of rising tensions, particularly over Taiwan, and culminated in the establishment of bilateral working groups on economic and financial policy.
US Secretary of State Antony Blinken is also expected to make another trip to China in the coming weeks, a sign that both sides are returning to more normal engagements.
Source: AFP