Overcapacity debate casts shadow on Yellen’s visit
United States Treasury Secretary Janet Yellen is expected to consult American companies on China’s industrial overcapacity, particularly in solar power and electric vehicles (EVs), at a planned meeting during her trip to China next week – a discussion that is likely to inform the tone of subsequent talks with her counterparts in Beijing, as both sides have deployed heated rhetoric on the issue.
The town hall-style meeting will last for 11/2 hours in the early afternoon of April 5, according to information obtained by the Post, twice as long as the 45 minutes previously reported.
The gathering is tentatively set to take place in Guangzhou, at the Art Institute of the Orient on the city’s Shamian Island.
Yellen’s trip comes months ahead of November’s US presidential election, when bilateral tensions are on the rise.
Overcapacity appears to be a new battleground in the broader conflict – Washington has taken action to curb Chinese EV imports, and Beijing recently lodged a complaint to the World Trade Organization against what it termed “discriminatory” subsidies designed to exclude its manufacturers.
On Wednesday, Yellen addressed the issue at a solar cell factory in Norcross, Georgia. “I will convey my belief that excess capacity poses risks not only to American workers and firms and to the global economy, but also to productivity and growth in the Chinese economy,” she said.
She pledged to “press my Chinese counterparts to take necessary steps to address this issue” and create a “level playing field” for American companies and workers.
After her Guangzhou sojourn, Yellen will head to Beijing to meet high-ranking economic officials, most likely Vice-Premier He Lifeng, commerce minister Wang Wentao and central bank governor Pan Gongsheng.
Yellen, a former chair of the Federal Reserve, has many years of experience dealing with Chinese officials over her tenure in public office, including rounds of dialogue with former vicepremier Liu He on macroeconomic and financial issues.
Her April visit is presumed to be in conjunction with the fourth meeting of the bilateral economic and financial working group formed late last year, as no public reports have suggested the previous three meetings featured any major quarrels.
But with excess capacity already a sore subject for many in the foreign business community, that relative peace may not last.
“China’s overcapacity has already wrecked too many industries in America over the past two decades,” said Scott Paul, president of the Alliance for American Manufacturing, a nonprofit organisation jointly founded by American manufacturers and the United Steelworkers trade union in 2007.
“It’s critical that the [Joe Biden] administration and Congress proactively deploy existing trade tools and develop new ones to prevent job losses before it’s too late,” he said.
That process seems to have already begun, generating friction in the bilateral relationship while also dampening China’s prospects for another year of blockbuster growth buoyed by the global green energy transition.
In a late February statement, the White House had strong language on the topic, labelling a potential glut of Chinese EVs as a looming threat. “China’s policies could flood our market with its vehicles,” it said, “posing risks to our national security”.
Beijing has spoken out against what it considers the politicisation of trade, firing verbal warning shots ahead of Yellen’s trip.
In a long commentary piece published on Monday, state news agency Xinhua lambasted some Western institutions for spreading fears of overcapacity in three products seen as drivers of exports and economic growth – solar panels, EVs and lithium batteries.
“The US-led West is exploiting its hegemony to strangle China’s efforts to move up the value chain and maintain dominance in the global economic system,” it said.
China’s overcapacity has already wrecked too many industries in America SCOTT PAUL OF A NON-PROFIT GROUP