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The US relationship with China is “on a stronger footing” than this time last year, Treasury secretary Janet Yellen said as she ended a six-day visit designed to ease tensions with the US’s main economic rival.
The US had taken “major steps” to stabilise relations with China, Yellen said at the conclusion of her second official Treasury visit to the country, adding that economic and financial officials on both sides would meet in working groups next week in an effort to resolve US concerns about Chinese industrial oversupply.
“It is undeniable that the US-China relationship is on a stronger footing today than this time last year,” Yellen said. “This was not preordained. It was the direct result of President Biden’s guidance to me and his cabinet to intensify our diplomacy with China and put a floor under the relationship.”
During her trip to Guangzhou and Beijing, Yellen met He Lifeng, a key economic official; Li Qiang, President Xi Jinping’s number two; and central bank governor Pan Gongsheng. US officials said talks ranged from Chinese manufacturing overcapacity to the financial stability of the world’s second-biggest economy.
Yellen said she did not want to see the US economic relationship with China “deteriorate and fray” because of trade tensions. “The Chinese are undertaking these consultations and ongoing exchanges because they share a similar desire to stabilise our relationship,” she said.
Despite the talks’ cordial tone, tensions remain between Washington and Beijing, with Biden expected to warn Xi about meddling in the South China Sea later this week.
The Treasury has called on China to stop over-subsidising its green-tech industry — a situation that US officials say risks flooding global markets with cheap solar panels, electric vehicles and lithium-ion batteries. “China is now simply too large for the rest of the world to absorb this enormous capacity,” Yellen said on Monday.
Drawing on the historical example of China flooding global steel markets, the US Treasury secretary said previous bouts of overcapacity had “decimated industries across the world and in the United States”.
“I’ve made clear that President Biden and I will not accept that reality again,” she said. “I know that these serious concerns are shared by our allies and partners, from advanced economies to emerging markets.
“When the global market is flooded by artificially cheap Chinese products, viability of American and other foreign firms is put into question,” Yellen said.
The Treasury secretary’s claims of an improving relationship came as Chinese officials released statements flatly rejecting the US charge of oversupply, illustrating the distance that remains between the two sides.
China’s commerce minister Wang Wentao said the country’s renewable energy and EV industries were not the product of subsidies but the outcome of innovation and market competition.
“The accusations of ‘overcapacity’ by the United States, Europe and others are baseless,” Wang said. “The Chinese government will actively support enterprises in safeguarding their legitimate rights and interests.”
The Ministry of Industry and Information Technology, meanwhile, said it would encourage EV makers to “accelerate overseas development”.
Source: Economy - ft.com
