Yellen chides China over ‘coercive’ moves against U.S. firms

Treasury Secretary Janet Yellen chided China for “unfair” treatment of American and other foreign companies and said its factories risk producing more than the world can easily absorb, as she began a four-day visit to the country.

China has pursued “unfair economic practices, including imposing barriers to access for foreign firms and taking coercive actions against American companies,” Yellen said Friday in the southern city of Guangzhou. “I intend to raise these issues in meetings this week.”

Ties between the two biggest economies have shown signs of improving since Presidents Joe Biden and Xi Jinping met in San Francisco last November. But lingering deep differences have been exacerbated by China’s drive to boost manufacturing investment in a bid to offset the country’s real estate slump. The US and allies have criticized Beijing’s latest policy shift, while China accuses them of trying to protect their own less-efficient industries.

For Xi’s team, the Yellen visit marks one of the final chances to shape American policy before November’s US election, in which both candidates are vying to look tough on China. Former President Donald Trump has already threatened a 60% tariff on Chinese goods if elected.

China wants to “create a favorable environment for businesses and will deliver benefits to our two countries and our two peoples,” Vice Premier He Lifeng, China’s economic policy czar, said before kicking off a series of meetings with Yellen. The pair, who also held talks during November’s Biden-Xi summit, were scheduled to attend a dinner on Friday followed by an evening boat excursion on the Pearl River.

Yellen highlighted former leader Deng Xiaoping’s 1992 visit to Guangzhou — a manufacturing and export powerhouse — as an important milestone in China’s transformation toward becoming a market economy, and urged a renewed focus on reforms from China’s current leadership.

Speaking at an event hosted by the American Chamber of Commerce in China, she cited a recent survey by the organization that found one-third of American firms in China report unfair treatment compared to local competitors. International businesses have long complained of discrimination in areas including market access, government procurement and access to subsidies.

“I strongly believe that this doesn’t only hurt these American firms: ending these unfair practices would benefit China by improving the business climate here,” Yellen said. Many US businesses are concerned about “the impacts of China’s shift away from a market approach,” she added.

President Xi in recent years has overseen a strengthening of the role of the ruling Communist Party in China’s economy, and championed stateled efforts to strengthen new industries such as electric vehicles and solar technology.

Yellen again flagged concerns about industrial overcapacity in China fueled by government subsidies, which is emerging as her No. 1 message for the trip. She said it’s resulting in “production capacity that significantly exceeds China’s domestic demand, as well as what the global market can bear.”

Tesla Inc. shares pared a steep drop in intraday trading after Chief Executive Officer Elon Musk denied a report saying the carmaker had canceled plans for a less-expensive vehicle.

The stock fell as much as 6.2% on Friday after Reuters said Tesla was abandoning the project, citing anonymous sources and company messages it had reviewed. Shares were down 3.2% as of 11:54 a.m. Friday in New York.

“Reuters is lying,” Musk wrote on X, his social media service.

Musk first teased a $25,000 model during an event the company staged in September 2020. The

CEO said at that time that a series of innovations Tesla was working on gave him confidence the company could make an electric vehicle at that price point within about three years.

The lack of a lower-price model in Tesla’s lineup more than three years later is proving costly. China’s BYD Co., which offers several much cheaper EVs, outsold the Austin-based company in the fourth quarter of last year. This week, Tesla reported its first drop in quarterly vehicle deliveries since the early days of the global pandemic.

During Tesla’s most recent earnings call in January, Musk said Tesla was “very far along” in making a cheaper car, which has been slated to start production toward the end of next year.

Apple is laying off more than 600 workers in California, marking the company’s first big wave of post-pandemic job cuts amid a broader wave of tech industry consolidation.

The iPhone maker notified 614 workers in multiple offices on March 28 that they were losing their jobs, with the layoffs becoming effective on May 27, according to reports to regional authorities.

The workers were cut from eight offices in Santa Clara, according to the filings under the state’s Worker Adjustment and Retraining Notification Act, also known as WARN. But it’s not clear which departments or projects the employees were involved in.

Apple did not immediately respond to a request for comment early Friday.

The Cupertino, California, company had been a notable exception as other tech companies slashed their workforces over the past two years. There was a massive surge in hiring during the COVID-19 pandemic, when people spent more time and money online, and big tech companies are still larger than they were before the pandemic. Still, as growth slows, companies are focusing on cutting costs.

In a recent regulatory filing, Apple said it had about 161,000 full-time equivalent employees.