US Treasury Secretary Yellen raises concerns over China’s trade practices
China is back on the Western radar with several high-profile visits to and from the Asian country. This week US Treasury Secretary Janet Yellen, rounded up her second trip to China, in less than a year, where she was firm and polite with Chinese government officials regarding the deep concerns the US has with the nation on several trade issues. One of the biggest concerns highlighted by Yellen is the disruptive trade practices of China, harming US interests and impacting the productivity of its factories, especially in electric vehicles, solar power equipment and lithium-ion batteries to name a few. Speaking at a press conference in Beijing, Janet Yellen said “There are features of the Chinese economy that have growing negative spillovers on the U.S. and the globe. I am particularly worried about how China’s enduring macroeconomic imbalances, namely its weak household consumption and business overinvestment, aggravated by large-scale government support in specific industrial sectors-will lead to significant risk to workers and businesses in the United States and the rest of the world.”
What she intended to highlight was the huge supply glut created by the gigantic manufacturing complexes in China. She said that huge quantities of cheap Chinese products flooding the global markets were threatening domestic manufacturing not just in the US but all around the world. Chinese government’s industrial policy push was unduly influencing the prices of several items around the world. She mentioned that nearly a decade ago the PRC government support led to cheap steel prices, which decimated several industries in the US and the world and a repeat of the same would not be tolerated.
The tricky issue of national security also came during Janet Yellen’s China visit. She carefully worded the US’s concerns regarding Chinese support to Russia and said “We also had difficult conversations about national security. President Biden and I are determined to do all that we can to stem the flow of material that is supporting Russia’s defence industrial base and helping it to wage war against Ukraine. We continue to be concerned about the role that any firms, including those in the PRC, are playing in Russia’s military procurement. I stressed that companies, including those in the PRC, must not provide material support for Russia’s war and that they will face significant consequences if they do.”
Even as Janet Yellen was winding up her China tour, the Chinese commerce minister had reached Europe, to convince European lawmakers that the excess electric vehicle capacity/supply was a myth and was merely, the result of efficient factories in China. Wang Betao, Chinese commerce minister during an interaction in Paris, issued a statement later that stated “China’s electric vehicle companies rely on continuous technological innovation, perfect production and supply chain system and full market competition for rapid development, not relying on subsidies to gain competitive advantage,” India is scaling up its electric vehicle production rapidly although it faces several supply-side constraints, primarily on components whose major exporter is China. India will have nearly a decade of catch-up to match Chinese electric vehicle capacity and would need huge investments from US and European companies to shift to a greener fuel. The next Indian government is likely to tweak the existing electric vehicle policy in its first 100-day agenda. The pending Europe India Technology and Trade Council meeting is not likely to be scheduled before the end of the year. Similarly, any significant US-India trade policy forum conversations would have to wait for early next year. However, a clear policy outlook and out-of-the-box thinking by the Indian government could still win the day for India for cleaner vehicle fuel.
(The writer is a policy analyst; views are personal)
