FLASHPOINTS IN YELLEN’S TRIP
US and China averted heightened tensions but economic, rivalry issues remain
SINCE United States Treasury Secretary Janet Yellen visited Beijing last year, the world’s two biggest economies have resumed regular talks and averted major escalations in tensions.
But the countries still trade barbs on economic issues as they battle for superiority in advanced technologies and work to secure critical supply chains.
As Yellen arrives in China today, what issues does she face?
Washington is wary that cheap Chinese exports could flood global markets, citing green energy sectors like solar and electric vehicles (EVs).
The US is working to build its own supply chains in these areas.
Chinese banks have facilitated major new borrowing for the country’s manufacturing sectors, extending it nearly US$700 billion in new loans in the third quarter of 2023, from the prior year, said the Atlantic Council. It added that this was often at below-market interest rates.
With new factories making products from EVs to batteries, there are fears Beijing could lean on the global market to absorb production that domestic demand cannot absorb.
“That’s going to have an impact not only on advanced countries like the US and (in) Europe, but also on many developing countries,” said Asia Society Policy Institute vice-president Wendy Cutler.
China has acknowledged risks from overcapacity, but it is unclear if Beijing will take concrete steps to address this.
“Beijing and Washington are unlikely to see eye-to-eye on the issues of overcapacity,” added Yun Sun, senior fellow at the Stimson Centre.
China will see the focus on overcapacity in clean energy as a new US strategy to choke Chinese exports, she added.
A third of companies report being treated less favourably by Chinese authorities compared with local competitors, said a business survey released in February by the American Chamber of Commerce in China.
It is a longstanding problem, with firms flagging unfair treatment
in market access and regulatory enforcement.
While Yellen has said the world is big enough for both countries to thrive, Chinese Premier Li Qiang slammed efforts to “derisk” the economies as a “false proposition”.
China’s new climate chief Liu Zhenmin recently took aim at
measures made in the name of “de-risking”, calling them an obstacle to the green transition.
China has hit back as the Biden administration stepped up efforts to restrict Chinese firms’ access to advanced semiconductors, saying such moves aim to maintain US supremacy in the field.