‘Overcapacity’ claims Washington’s latest offensive in its misinformation campaign

US Treasury Secretary Janet Yellen’s claims about China’s “overcapacity” in her interview on the US economy with the media on Thursday should be seen as the US side’s latest stance on Beijing’s rebuttal of the unfounded allegations Yellen made in this regard during her visit to China early this month.

Yellen intentionally turned a deaf ear to Beijing’s reasonable and objective countering of her “overcapacity” blame game. Instead, she hyped up her baseless charge that China is dumping its electric vehicles, solar power panels and other clean energy goods in overseas markets.

The claim that China has an unfair competitive edge does not stand up to even cursory scrutiny. The allegations of “heavy state subsidies” fueling the growth of the sector have no basis in fact. The financial support provided to the EV sector in China is markedly lower than the subsidies provided in the United States and Europe.

China’s electric vehicle output was 9.59 million units last year, of which the domestic market accounted for about 90 percent. Due to Chinese EVs’ high performance in relation to the cost, Chinese-made EVs are highly valued in the world market. China actually lacks the capacity to produce enough EVs to meet the overseas demands.

Also, about 80 percent to 90 percent of China’s wind turbine production capacity goes to meet the needs of the domestic market. A similar situation is observed in other clean energy product sectors.

As it has ramped up its efforts to realize its ambitious dual carbon goals — peaking emissions by 2030 and achieving emissions neutrality by 2060 — China has had to increase its green product and energy supplies over the past few years to meet the domestic demand in the foreseeable future.

Smearing China’s contribution to global green transition as “China exporting its way to full employment” and as “threats” to other countries’ jobs and industry interests is done with malicious intent.

In saying that the Biden administration is not taking any options off the table to respond to China’s “overcapacity”, which is “a top concern” for the administration, Yellen is not only scapegoating China for the US’ lack of competitiveness in these sectors, but also highlighting that the US is broadening its attack on the Chinese economy.

It is simply disingenuous for Yellen to say, “We have no problem with China producing and selling globally and exporting, but the United States and Europe and other countries also want to have some involvement in the ability to produce clean energy products that are going to be of great importance”.

That clearly reveals the US’ concerns about its own competitiveness in the green economy, where, due to the previous administration’s climate skepticism, it lags behind, and its intention to try and drive a wedge between China and the European Union.

China does have some industrial “overcapacity” issues in the upstream and downstream industries of the real estate sector, which are mainly caused by the downturn of its housing industry. It is a shame that Yellen told the media that Chinese officials acknowledge a problem with industrial “overcapacity” during her visit without explaining that what the Chinese side acknowledged and what she tries to hype up refer to totally different sectors.

Yellen is in a better place than many others to know that it is the US that has tried to use subsidies and protectionist practices to boost domestic manufacturing. But those efforts have been offset by the country’s high production costs and lack of skilled workers, while a strong dollar has dampened US products’ competitiveness in the world market.

Despite Yellen claiming that it’s important that China recognize the concern about Chinese “overcapacity” and begin to act to address it, that charge is a politically motivated fabrication of the US side.

Western companies are not in a position to replace Chinese products, and China is not in a position to help reinvigorate US manufacturing from the woes of the US’ own making.

It would be remiss not to point out that it is a presidential election year and China is habitually a punching bag for the two US parties ahead of voting. It would also be remiss not to point out that by “securitizing” the economy and trade with scaremongering false narratives about China, ranging from “decoupling” and “de-risking” to “overcapacity”, the Biden administration is trying to distort the world’s view on China and make it a pariah.

By endorsing that kind of politicized misinformation campaign, the technocrats in the Biden administration, such as Yellen, are sacrificing their professionalism and expertise to downgrade themselves to being political puppets.

The administration’s puppetry is removing the scabs that have recently been forming over some wounds in Sino-US ties that had just been BandAided.