US Treasury Secretary Janet Yellen (L) shakes palms with China’s Vice Premier He Lifeng within the southern Chinese language metropolis of Guangzhou, on April 5, 2024.
Pedro Pardo | Afp | Getty Pictures
U.S. Treasury Secretary Janet Yellen mentioned on Saturday that she and Chinese language Vice Premier He Lifeng agreed to launch exchanges on “balanced” financial development, an effort to deal with U.S. issues about China’s extra manufacturing capability.
After two days of financial talks in China’s southern export hub of Guangzhou, Yellen mentioned she and He additionally agreed to begin a discussion board to cooperate on anti-money laundering efforts of their respective monetary programs.
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,” Yellen mentioned in a press release launched on the conclusion of the talks.
She characterised 4 and a half hours of discussions with He on Saturday as productive and frank.
Coming into her four-day go to to China, her prime precedence was to influence Chinese language officers to rein in extra manufacturing capability for electrical autos (EVs), photo voltaic panels and different clear power expertise that threaten competing companies within the U.S. and different nations.
The Biden administration is dealing with rising calls from U.S. lawmakers to extend tariffs on Chinese language EVs to guard U.S. producers.
Chinese language state media pushed again on her extra capability arguments, calling them a “pretext” for protectionist U.S. insurance policies and “fear-mongering.”
No tariff risk
Yellen didn’t threaten to lift tariffs or impose different commerce limitations if China didn’t curb state assist that has expanded manufacturing of EVs, photo voltaic panels and different clear power merchandise far past home demand, a senior U.S. Treasury official mentioned.
“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 mentioned. “And then other countries have the same concern.”
She mentioned the discussion board would offer a “structured” technique to talk about an advanced problem however that it could take a while to resolve.
“It’s going to be critical to our bilateral relationship going forward and to China’s relationship with other countries that are important,” she added.
She added Chinese language officers had been “more confident” concerning the world’s second-biggest economic system after setting up insurance policies to deal with points within the property sector and on native authorities debt.
China’s Xinhua information company mentioned in a press release that the discussions between He and Yellen had been “candid, pragmatic and constructive”, confirming each events had agreed to additional talk about balanced development and monetary stability.
Beijing additionally expressed critical issues about U.S. financial and commerce restrictions on China and made a full response to the manufacturing capability problem in the course of the talks, the assertion mentioned.
The U.S. Treasury official, who spoke on situation of anonymity, mentioned the balanced development discussion board was first proposed in February throughout an financial working group assembly.
Wendy Cutler, a former U.S. commerce negotiator, mentioned the discussion board targeted on overcapacity was a constructive growth, however there was a hazard that it might “turn into a stalling tactic” by Beijing to keep away from wanted actions to deliver provide and demand again into steadiness.
Yellen additionally mentioned she had warned Chinese language companies confronted “significant consequences” in the event that they supplied materials assist to Russia’s invasion of Ukraine. The Chinese language aspect emphasised that their coverage was to not present such assist and didn’t need this to be a bilateral problem.
‘Protectionist pretext’
Xinhua criticized Yellen’s stance late on Friday, saying that speaking up “Chinese overcapacity” within the clear power sector created a pretext for protectionist insurance policies to protect U.S. firms.
In an editorial on Saturday, Xinhua mentioned suppressing China’s EV-related industries wouldn’t assist the U.S. develop its personal, including that it hoped extra headway may very well be made throughout Yellen’s go to to interrupt down limitations hindering mutually helpful cooperation.
Whereas Treasury doesn’t anticipate a significant shift in Chinese language coverage after Yellen’s go to, U.S. officers imagine it was essential to elucidate the financial dangers that overinvestment in some sectors and weak shopper demand current to each China and its buying and selling companions.
Yellen mentioned on Friday her journey was partly geared toward cementing U.S.-China ties to “withstand shocks and challenging circumstances.”
Yellen will proceed her discussions with Chinese language officers on Monday in Beijing, the place she is to fulfill officers together with Premier Li Qiang, Finance Minister Lan Foan and Individuals’s Financial institution of China Governor Pan Gongsheng.
