Source: AFP
The United States “will not accept” a situation where undervalued Chinese goods flood the world market, hitting industries elsewhere, US Treasury Secretary Janet Yellen said on Monday as she wrapped up high-level talks in China.
Yellen has repeatedly warned of the dangers of China’s overcapacity during four days of meetings with officials and businessmen in the southern city of Guangzhou and the capital Beijing.
Washington worries that Chinese government support is leading to more manufacturing capacity than global markets can absorb, boosting cheap exports in sectors such as solar and electric vehicles and stifling growth in those industries elsewhere.
Yellen said on Monday that the Chinese government’s massive support more than a decade ago led to lower steel costs flooding the global market, which “destabilized industries around the world and in the United States.”
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“I have made it clear that President Biden and I will not accept this reality again,” he told a news conference at the US ambassador’s residence, adding that America’s allies and partners share similar concerns.
He said some change in Chinese policy would be “necessary and appropriate” but did not commit to specific actions Washington might take otherwise, stressing that the United States did not “seek to disengage” from China.
After 11 hours of meetings with her counterpart Vice Premier He Lifeng, she also raised the issue with Premier Li Chiang — moves Washington hopes will bring concerns to the highest levels of Chinese politics.
Yellen said she was particularly concerned about China’s weak household consumption and business overinvestment, “imbalances” she said were “exacerbated by large-scale government support in certain industrial sectors.”
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But Beijing has pushed back, with China’s Commerce Minister Wang Wentao this week calling fears of overcapacity “baseless,” according to state media.
Stable ties
Yellen’s push for excess capacity comes even as bilateral ties have stabilized in other areas, with the two sides willing to work together on issues such as climate change, debt restructuring and money laundering.
“I don’t want to see the US economic relationship or the overall relationship with China deteriorate and deteriorate,” Yellen told reporters, adding that she believed China shared a similar desire for stable relations.
The two countries also agreed to open channels for further talks on excess capacity.
However, Li earlier told Yellen that Washington should look at the capacity issue “objectively” and from a “market-oriented” perspective, state news agency Xinhua reported.
Yellen noted that concerns about overcapacity won’t be addressed in a week or month, but stressed that doing so would be positive for China’s long-term productivity and growth.
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‘No surprises’
Yellen said she also had “difficult conversations about national security,” warning Chinese officials about the consequences of supporting Russia’s military procurement efforts and using economic tools to address national security concerns.
In particular, he said that Washington is committed to having “no surprises” in the use of such tools.
He said the United States has set its principles and policy-making process.
But he added: “We would welcome (China’s) transparency about its national security actions and greater clarity about where it sees the line between national security and economic issues.”
China has been accused in recent years of imposing import bans on certain products from countries, notably Australia, over political disputes.
Yellen also said she discussed the TikTok issue “briefly” with her Chinese counterparts, saying Washington has legitimate concerns about protecting sensitive personal data.
The United States Congress is threatening to ban the wildly popular video app unless it changes hands.
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He noted that China also shares data protection concerns, with many US social apps blocked from the country.
“We would like to find a way to move forward,” he said.
Yun Sun, a senior fellow at think tank the Stimson Center, said that overall, Yellen’s ability to meet with senior Chinese officials to convey US concerns and “scrutinize” China’s responses is a positive development.
But he warned that China is unlikely to abandon or change its current growth model and areas of focus because of the United States unless there are significant consequences, given that its economy is “not in the best shape.”
But both sides agreeing to cooperate in technical areas such as tackling money laundering would be helpful in boosting trust in their relationship, Sun said.
Among areas of cooperation, Yellen said she has seen progress in recent months on specific debt issues such as Zambia’s.
Source: AFP