The US Treasury Secretary Janet Yellen arrives in Beijing on Saturday for a high-level visit. She began her trip on Thursday in Guangzhou, to meet with Vice Premier Hu Chunhua, who is also the key Chinese official responsible for economic and trade affairs between China and the United States.
Yellen’s visit aims to discuss balanced growth for the United States and China, financial stability, sustainable financing, and the issue of the so-called “excessive capacity of the Chinese green energy sector.”
US Treasury Secretary Janet Yellen arrives in Beijing for serious meetings
Prior to her trip to China, US Treasury Secretary Janet Yellen warned that her country would not allow the heavy Chinese production to eliminate American green technology manufacturing companies.
It is expected that Yellen will accuse China of flooding global markets with cheap green technology during her talks with officials, including the Minister of Finance, the Deputy Prime Minister, and the Central Bank Governor.
Yellen’s trip comes after a wave of high-level communications between the two countries in recent weeks, as both nations seek to stabilize their relations.
These talks include a phone call between US President Joe Biden and his Chinese counterpart Xi Jinping this week, as well as a trip by American CEOs to Beijing last week to meet with the Chinese leader.
Beijing is expected to respond to Yellen’s accusations that the United States is using the abundance of Chinese supply as an excuse to impose protectionist policies aimed at separating the world’s two largest economies.
China also accuses the United States of trying to curb its development by restricting exports of high-tech products such as semiconductors.
The official Xinhua News Agency said that these accusations are a new variation on the theory of the “Chinese threat,” which is nothing more than an excuse for some Western countries to poison the local development environment in China and international cooperation and to take more protective measures.
Economic experts and foreign governments say that China’s policy of selecting leading companies in the green technology sector, along with weak consumer spending, high investment, and the current economic downturn, has led to a significant increase in export surpluses and price reductions to levels that prevent competing foreign companies from continuing.
A US Treasury official during the trip said, “The level of government support far exceeds what we see in the economies of the Organization for Economic Cooperation and Development,” noting that the excess production capacity has “global implications.”
Some Chinese officials also acknowledge that there is more production capacity than necessary, leaving factories idle.
Imbalance between production
Scott Kennedy of the Center for Strategic and International Studies said, “There is widespread recognition in China that there is an imbalance between production and domestic demand did not keep pace.”
He added, “However, Chinese officials could also argue that the surplus was useful in addressing global inflation.”
Exports benefit developing countries
Beijing is expected to criticize US policies on national security, and officials are likely to raise issues such as attempts by Congress to force Chinese company ByteDance to sell the social media platform TikTok.
China says its exports benefit developing countries around the world, and the West feels threatened by its efforts to transition to more advanced industries.
The Chinese state news agency Xinhua said, “While it is an economic truism that surplus products naturally seek markets elsewhere once local demand is met, Western countries have been doing this for centuries, but when it comes to China, it becomes a problem of surplus production that threatens the world.”
The US has Serious concerns over China
The US has Serious concerns over China and the European Union is increasingly concerned about China’s growing dominance in green technology.
Days ago, the European Commission said it had launched a deep investigation into two Chinese solar panel manufacturers.
It is unlikely that the United States will resort to tariffs or conduct official investigations at this stage, as a senior official at the Treasury Department indicated that “there is no quick solution to this issue.”
However, Yellen said during her stop in Alaska that the products flowing into the global market are due to “the massive investment in China that created some of this excess production capacity.”
Referring to American companies, she said, “We provide tax breaks to some of these sectors, and I don’t want to rule out other potential ways to protect them.”
The United States provides aid through the $369 billion Inflation Reduction Act, Biden’s flagship program to make the US economy greener.
Yellen said that Mexico, Europe, and Japan are also “feeling the pressure” due to China’s huge investment capabilities in green technology.
