State subsidies for China’s industrial sector pose a risk to the global economy, US Treasury Secretary Janet Yellen says
US Treasury Secretary Janet Yellen at Baiyun International Conference Center, Guangzhou, China, April 5, 2024. © AFP / Pedro Pardo
US Treasury Secretary Janet Yellen has claimed that China’s industrial sector produces much more goods than its domestic market can absorb. Speaking on Friday to the American business community in the Chinese city of Guangzhou, she warned that Beijing’s state subsidies were creating a surplus of goods globally.
Industrial overcapacity and what the US considers to be unfair trade practices are undercutting American and other firms, according to Yellen, who has called for a level playing field for US companies and workers.
“Direct and indirect government support is currently leading to production capacity that significantly exceeds China’s domestic demand, as well as what the global market can bear,” the Treasury chief said as she visited major industrial and export hubs during her five-day visit to the Asian nation.
“Overcapacity” inevitably creates massive volumes of “exports at depressed prices,” Yellen said, explaining that this can lead to “overconcentration of supply chains, posing a risk to global economic resilience.”
The accusations are part of a long-running tit-for-tat trade row between Washington and Beijing, with the White House previously taking action against Chinese firms and restricting investment in the country. Chinese officials have repeatedly denounced US trade and tech policy.
Last month, Yellen said China was producing too many batteries, solar panels, and electric cars. She said this was harming American workers, and she once again accused Beijing of excessive support for domestic producers, which “maintained production and employment in China, but forced industry in the rest of the world to contract.”
China previously filed a World Trade Organization (WTO) complaint over what it called Washington’s “discriminatory” requirements for electric vehicle subsidies. Responding to the complaint, the US authorities said the subsidies were a “contribution to a clean energy future,” while China “continues to use unfair, non-market policies and practices to undermine fair competition.”
