Yellen to return to China, press counterparts on excess factory capacity threat (updated)
02/04/2024 20:32
(Adds details on Biden-Xi call, paragraphs 3-6)
By David Lawder
WASHINGTON, April 2 (Reuters) - U.S. Treasury Secretary
Janet Yellen will return to China this week to continue her
economic dialogue with top Chinese officials amid a new emphasis
on the threat to global economies from the Asian superpower's
growing excess industrial capacity, the Treasury Department said
on Tuesday.
The April 3-9 trip, which will be Yellen's second in-person
visit to China as Treasury Secretary, will include a stop in the
southern factory and export hub of Guangzhou before Beijing. She
visited Beijing in July 2023 to re-establish ties after years of
frosty relations.
Her trip was announced as U.S. President Joe Biden and
Chinese President Xi Jinping on Tuesday held their first direct
talks since November in which Taiwan tensions and U.S. national
security curbs on the sale of high-technology goods to China
took center stage.
Xi warned Biden that the U.S. was "creating risks" by
suppressing China's trade and technology development, Xinhua
news agency quoted the Chinese leader as saying.
Yellen's dialogues with top Chinese officials have been
partly aimed at trying to ease tensions over China-related
security restrictions, with explanations that they are narrowly
targeted and not aimed at de-coupling the world's two largest
economies.
In Guangzhou, Yellen will meet with her main
counterpart, Chinese Vice Premier He Lifeng, Guangdong Province
Governor Wang Weizhong and executives of U.S. companies in
China, the Treasury Department said. She will hear first-hand
about business climate challenges that are prompting U.S. firms
to limit their investment in China.
Yellen last met with He in November 2023, ahead of the
Asia-Pacific Economic Cooperation Summit in San Francisco, where
Biden also met with Xi.
Since Yellen's first visit to Beijing last July, she and He
have launched economic and financial working groups that meet
virtually. Discussions so far have largely focused on economic
issues facing each country and their policy responses, such as
China's property market troubles that have undermined consumer
confidence, or failures of two major U.S. regional banks last
year.
CAPACITY CHALLENGE
The increased U.S. emphasis on Chinese excess capacity
represents a shift in the discussions. China's exports have been
growing at a time of weak domestic demand. Xi has pledged to
unleash "new productive forces" in China by investing in
developing technology industries including electric vehicles
(EVs), new materials, commercial spaceflight and life sciences.
Yellen said last week at a Suniva solar module factory near
Atlanta that Chinese government support has led to "substantial
overinvestment" in steel, aluminum and other industries, paving
the way for cheap exports that have forced manufacturing to
contract in other market-driven countries.
"Now, we see excess capacity building in 'new' industries
like solar, EVs, and lithium-ion batteries," Yellen said during
her trip last week, adding this was distorting prices and
production patterns and hurting workers in the U.S., European
Union and other economies.
Asked if she would raise the threat of new trade barriers on
her next China visit, Yellen said she did not want to "get into
retaliation," adding: "We want to see what we can do that's
constructive."
The EU is investigating whether China's EV industry is
benefiting from unfair subsidies, a probe that could lead to
tariffs to protect European carmakers. The U.S. Commerce
Department has opened a probe into whether Chinese vehicles pose
national security threats due to the data they transmit, and
U.S. lawmakers have urged Biden to hike tariffs on Chinese EVs.
A U.S. Treasury official told reporters that Yellen during
her upcoming China trip would "make clear the global economic
consequences of Chinese industrial overcapacity undercutting
manufacturers in the U.S. and firms around the world."
The official, speaking on condition of anonymity, said U.S.
and Chinese officials would likely discuss currency matters as a
routine part of their economic talks, but declined to comment on
recent weakness in China's yuan currency.
The official added that Yellen would seek further
cooperation in areas mutually beneficial to both countries,
including fighting climate change, combating illicit financing
and narcotics trafficking and providing relief to
debt-distressed developing countries.
(Reporting by David Lawder; Editing by Paul Simao and David
Gregorio)
((David.Lawder@tr.com; +1 202 843 6288;))