Janet Yellen in China: ‘difficult conversations’ and an overcapacity spat put hopes for common ground in question
- US Treasury secretary says Beijing needs to make policy changes, while warning that Washington and its allies fear ‘global spillovers’ from China’s trade actions
- After flagging the risks of overcapacity in December, Beijing is now pushing back against the West’s ‘groundless’ accusations
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US Treasury chief Janet Yellen leaves China after ‘difficult conversations’, overcapacity gripes
Against the backdrop of intensifying divisions over China’s overcapacity in green technology exports and “difficult conversations” on national security, US Secretary of the Treasury Janet Yellen wound down her China trip by flagging potential opportunities for cooperation during upcoming economic and financial working groups.
And before her planned departure on Tuesday, Yellen on Monday also highlighted an area in which the two economies were able to find common ground, via a new anti-money-laundering working platform that the US Treasury established with the People’s Bank of China (PBOC) during the trip.
But much of the attention during Yellen’s visit was on her insistence that China address its industrial overcapacity issues, particularly in regard to new-energy vehicles and solar modules, which she warned could be a repeat of what happened when China’s below-cost steel flooded into the global market a decade ago.
“I’ve made clear that President Biden and I will not accept that reality again,” she said during a news conference at the US ambassador’s residence on Monday afternoon in Beijing. However, she also made a point of reiterating Washington’s position that it was not looking to “decouple” from China.
“Some changes in policies on the Chinese side are necessary and appropriate,” she said, adding that America’s allies share similar concerns that the situation could lead to “global spillovers”.
But despite Beijing’s past warnings about the risks of overcapacity in some sectors and the potential drag it could have on the nation’s economic recovery, as leadership highlighted during a key economic conference in December, high-ranking officials pushed back against Yellen’s overcapacity allegations during her trip.
