US Treasury Secretary Janet Yellen said China’s overproduction is putting pressure on other economies.
US officials raised concerns over China’s production overcapacity, adding that its growing exports are putting pressure on other economies. Treasury Secretary Janet Yellen talked to an audience of Chinese economic officials in Guangzhou, including representatives of the American Chamber of Commerce.
The time and place of Yellen’s speech were extremely significant. Guangzhou is one of China’s largest export hubs, and the conference took place a few days after the annual Boao Forum for Asia summit in Hainan.
“Overcapacity isn’t a new problem,” Yellen said, “but it has intensified, and we’re seeing emerging risks in new sectors”.
The remark comes after months of flak from US analysts on the way China is handling its post-Covid growth. In fact, China’s economic performance last year disappointed many observers, with rampant deflation, falling exports, and a countrywide real estate crisis.
However, trade experts see the beginning of a new phase of US restrictions on China trade in this criticism. The tariffs and restrictions put into place by the Trump administration continued well into Biden’s term. Sometimes, like in the case of the microchip industry, the Biden administration escalated the trade war against China.
In early 2024, China increased exports more than expected. At the “Two Sessions” conference, Chinese economic officials pledged an ambitious 5% GDP growth. They also said China’s economic shift would come from three new products: lithium-ion batteries, electric cars, and solar panels.
Cooperation between giants
After years of rising tensions, tones between the United States and China soothed in 2024. China’s President Xi Jinping skipped the Boao Forum for Asia to attend several meetings with American business leaders.
There, Xi reassured cooperation between the United States and China is fundamental for the world and should be strived for with every possible means.
In Guangzhou, Janet Yellen reassured Chinese business officials that the United States intends to cooperate with China. “We’ve held technical exchanges between our sides, including an exercise on how we would jointly deal with the failure of a large bank in the U.S. or in China,” she said.
However, her tone was much harsher than Xi’s. Chinese media harshly criticized Yellen for her words on overcapacity, calling them “double standards”.
The China Daily remarked that Western nations always exploited their production surpluses to the world. “When it comes to China, it becomes an ’overcapacity problem’ threatening the world,” the outlet wrote.
On the other hand, political backlash from the CCP was uncharacteristically mild. Chinese Ministry of Commerce Wang Shouwen simply raised concerns about US tariffs and said that trade between the two countries should be a “stabilizing force”.
