Guangzhou: Treasury Secretary Janet Yellen announced Saturday that the United States and China have agreed to engage in discussions addressing a key American concern regarding China’s economic practices. Yellen made the statement during her official visit to China, which entered its second day.
Following extended meetings between Yellen and Chinese Vice Premier He Lifeng over two days in Guangzhou, a U.S. statement revealed plans for “intensive exchanges” focusing on achieving more balanced economic growth. Additionally, the two nations agreed to initiate discussions on combating money laundering.
Yellen highlighted the importance of addressing American apprehensions regarding manufacturing overcapacity in China, stating, “I think the Chinese realize how concerned we are about the implications of their industrial strategy for the United States, for the potential to flood our markets with exports that make it difficult for American firms to compete.”
China’s official Xinhua News Agency reported that the discussions would encompass a broad spectrum of topics, including balanced growth of the U.S., China, and the global economy, financial stability, sustainable finance, and cooperation in countering money laundering.
While China acknowledged concerns regarding production capacity, specific details were not provided. The nation also expressed grave concerns over American trade and economic measures that restrict China.
The issue of overcapacity, particularly in industries like solar panels and electric vehicles (EVs), has been a focal point of contention. Chinese government subsidies have spurred significant investments in factories, resulting in surplus production capacity. This surplus has led to price wars, benefiting consumers but raising concerns in Western countries about the potential flooding of their markets with low-priced exports.
Yellen emphasized the importance of finding a collaborative solution to avoid conflict, stating, “It’s going to be critical to our bilateral relationship going forward and to China’s relationship with other countries.”
The discussions on balanced growth and money laundering will take place within existing economic and financial working groups established after Yellen’s previous meeting with He in July.
Yellen also noted positive progress on joint efforts to address U.S. concerns about Chinese companies selling goods to Russia following its invasion of Ukraine.
Amid ongoing discussions, Yellen’s trip has sparked speculation about potential tariffs as a response to China’s subsidized manufacturing practices. While the U.S. has taken legislative and executive actions to bolster domestic manufacturing capabilities, concerns remain regarding national security implications.
Yellen is scheduled to hold further meetings in Beijing with senior officials and economists on Sunday and Monday.
