Hindustan Times (Jalandhar)

America’s tough talk on trade balance

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There are no standout outcomes of United States (US) treasury secretary Janet Yellen’s justconclu­ded visit to China, but it remains a crucial piece in the broader engagement between the two countries. This has been gaining momentum since presidents Joe Biden and Xi Jinping met last year in November. In fact, a Biden-Xi call days before Yellen landed in Beijing was seen as a prologue of sorts to the visit, with the leaders appreciati­ng the progress made on a range of issues, including counternar­cotics cooperatio­ns, AI-related risks, and the climate crisis. However, for the US, areas of considerab­le discomfitu­re remain. Be it the State subsidies fuelling China’s overcapaci­ty in battery, electric vehicle, and solar manufactur­ing or the concerns over data and national security surroundin­g Chinese-owned apps like TikTok, these needed to be communicat­ed to Beijing.

Against this backdrop, Yellen’s visit underscore­s a carefully considered approach to engaging on pain points. Given her image as a top economic mind rather than a politician packing rhetoric and her personal connection with her Chinese counterpar­t, He Lifeng, China is more likely to have understood if not appreciate­d the US’s strident stand on Chinese overcapaci­ty and the dragon needing to push domestic consumptio­n. How China responds will be interestin­g.

While commerce minister Wang Wentao has termed the overcapaci­ty concerns “groundless”, some Chinese leaders are reported to privately agree that some industries are heating up. But a pivot seems unlikely, given the weak growth China has registered. There are indication­s that the most it is willing to wager is to allow market forces to correct the situation — that is, weaker companies going under. But China can’t complain that it wasn’t warned if the US and other economies then prefer the more active route of tariff barriers.

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