U.S Treasury Secretary, Janet Yellen has disclosed U.S. and China’s agreement to hold talks that will address a key American complaint about China’s economic model.
Saturday, April 6, 2024, marked the second day of Yellen’s official visit to China.
According to a U.S. statement issued after Yellen and Chinese Vice Premier, He Lifeng held extended meetings in the southern city of Guangzhou, the two sides will hold “intensive exchanges” on more balanced economic growth.
The statement added that they also agreed to start exchanges on combating money laundering.
Yellen said that the exchange on balanced growth would create a structure to hear each other’s views and try to address American concerns about manufacturing overcapacity in China.
“I think the Chinese realize how concerned we are about the implications of their industrial strategy for the United States, for the potential to flood our markets with exports that make it difficult for American firms to compete,” Yellen told reporters after the announcement.
She noted, “It’s not going to be solved in an afternoon or a month, but I think they have heard that this is an important issue to us.”
Yellen asserted that the exchanges “will facilitate a discussion around macroeconomic imbalances, including their connection to overcapacity, and I intend to use the opportunity to advocate for a level playing field for American workers and firms.”
“It’s going to be critical to our bilateral relationship going forward and to China’s relationship with other countries that are important, and this provides a structured way in which we can continue to listen to one another and see if we can find a way forward that will avoid conflict.”
Janet Yellen
China’s official news agency disclosed that the two sides had agreed to discuss a range of issues including balanced growth of the United States, China and the global economy as well as financial stability and sustainable finance.
It added in an initial dispatch that China had responded fully on the issue of production capacity, but did not provide details. China also expressed grave concern over American trade and economic measures that restrict China.
Chinese government subsidies and other policy support have encouraged solar panel and EV makers in China to invest in factories, building far more production capacity than the domestic market can absorb.
The massive scale of production has driven down costs and ignited price wars for green technologies, a boon for consumers and efforts to reduce global dependence on fossil fuels.
However, Western governments fear that that capacity will flood their markets with low-priced exports, threatening American and European jobs.
On Friday, April 5, 2024, Yellen warned that China is too large to try to export its way to rapid growth and would benefit by reducing excess industrial capacity that is pressuring other economies.
Yellen said that she understands that Beijing’s direct and indirect government support for manufacturing is linked to domestic development objectives.
However, she told an American Chamber of Commerce in China-hosted gathering in Guangzhou that state subsidies were “leading to production capacity that significantly exceeds China’s domestic demand, as well as what the global market can bear.”
Yellen To Visit Beijing
The U.S Treasury Secretary is due to travel to Beijing later on Saturday, where she is scheduled to meet officials including Premier Li Qiang, Finance Minister Lan Foan and People’s Bank of China Governor Pan Gongsheng.
Yellen will hold meetings in Beijing with more senior officials and economists on Sunday, April 7, 2024 and Monday, April 8, 2024.
Her visit concludes on Monday.
US Secretary of State, Antony Blinken is also expected to soon visit China again in a sign that the two sides are striving to return to more settled relations.
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