by David Lawder
CANTON, China, April 5 (Reuters) – China’s industrial overcapacity poses new risks to the global economy, U.S. Treasury Secretary Janet Yellen said on Friday, as she begins a four-day visit to China.
The country is too large to create much growth through exports, and China would benefit from reducing its excess industrial capacity that is stifling other economies, Janet Yellen told around 40 representatives of the American Chamber of Commerce of Canton.
“Overcapacity is not a problem, but it has increased and we see new risks emerging,” she said, adding that she would discuss it during her planned meetings with Chinese officials this week. .
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The official must notably meet the Deputy Prime Minister, He Lifeng.
The U.S. administration is concerned about Chinese overproduction of electric vehicles, solar panels, semiconductors and other manufactured goods that are flooding global markets while domestic demand is flagging. Janet Yellen intends to argue that such a situation is not healthy for the Chinese economy and producers in third countries.
She met with the governor of Guangdong province, Wang Weizhong, on Friday and told him that American companies must “be able to play on a level playing field”, and that Washington and Beijing must maintain clear and direct communication on the issues of disagreement, including problems of overcapacity.
One of the objectives of the visit is also to establish “resistant channels of communication” between China and the United States, detailed Janet Yellen.
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Some experts believe that the increasingly critical U.S. stance toward Chinese exports will lead to higher tariffs to protect the U.S. green industry from low-cost Chinese goods.
Janet Yellen did not mention these taxes, but said she did not rule out taking certain measures to protect the electric vehicle, battery and solar panel sectors, among others, from Chinese competition.
The Treasury does not anticipate any change in policy towards China following the visit. American officials nevertheless believe it is important to highlight the risks posed by Chinese overinvestment in certain sectors and weak local demand.
Just before Janet Yellen’s visit, U.S. and Chinese trade officials met in Washington, with U.S. Deputy Commerce Secretary Marisa Lago expressing “strong concerns about China’s growing overcapacity in several industrial sectors.” .
Chinese Vice Minister of Commerce Wang Shouwen, for his part, expressed concern about taxes on Chinese imports, American sanctions and the “unfair” treatment of Chinese companies.
Although Sino-American tensions have increased, Janet Yellen nevertheless spoke of cooperation between the two countries.
A group made up of American and Chinese experts worked to limit the impacts that a bank failure would have in either economy.
The United States and China are also working together to combat money laundering and climate change, the secretary said. (Reporting David Lawder, with Chen Aizhu in Singapore, French version Corentin Chappron, edited by)
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