Yellen says China’s trade policy could ‘significantly disrupt’ US bilateral relationship – KSNF/KODE

FATIMA HUSSEIN, Associated Press

8 hours ago

Treasury Secretary Janet Yellen speaks at the Economic Club of New York luncheon in New York, Thursday, June 13, 2024. Yellen said the United States should respond “when foreign subsidies threaten the viability of domestic companies” in strategic sectors such as green energy. (AP Photo/Richard Drew)

WASHINGTON (AP) – Treasury Secretary Janet Yellen says China’s “overconcentrated supply chains” pose a threat to U.S. jobs and recent investments to expand the U.S. green energy sector, and that the Asian superpower’s pursuit of its trade policies “could significantly disrupt our efforts to build healthy economic relations.”

In a prepared speech to Wall Street and business executives at the Economic Club of New York on Thursday afternoon, Yellen promoted the Biden administration’s policies aimed at boosting the competitiveness of the U.S. economy.

She said the United States should respond “when foreign subsidies threaten the viability of domestic companies” in strategic sectors such as green energy. There are particular concerns that Chinese green energy products will undermine the massive, climate-friendly investments made under the Democratic Inflation Reduction Act that President Joe Biden signed into law in August 2022.

Yellen’s speech comes as former President Donald Trump makes his case before the Washington Business Round Table, an association of more than 200 CEOs, asking why the economy would be better if he returned to the Oval Office.

Both Biden and his presumptive Republican challenger Trump have told voters they will be tough on China.

Last month, the United States imposed large new tariffs on Chinese electric vehicles, advanced batteries, solar cells, steel, aluminum and medical equipment. The European Union also decided on Wednesday to increase tariffs, or import taxes, on electric vehicles produced in China after preliminary results from an ongoing investigation into China’s electric vehicle subsidies show that the country’s “value chain” for battery-powered electric vehicles benefits from “unfair subsidies”. this harms European rivals.

Chinese companies can sell electric vehicles for as little as $12,000. China’s solar cell factories and steel and aluminum smelters have enough capacity to meet most of the world’s demand, and Chinese officials argue that their production keeps prices low and would help the transition to a green economy.

During Thursday’s speech, Yellen noted, among other things, to the percentage of Chinese manufacturing companies losing money, high savings rates compared to other OECD countries and restrictive investment policies.

Yellen cited the production of electric vehicles and their batteries, as well as solar energy equipment – sectors that the US administration is trying to promote in the domestic market – as areas where Chinese government subsidies have resulted in rapid production expansion.

“President Biden and I reject the notion that ‘decoupling’ would in any way benefit the U.S. economy,” she said. “At the same time, we can only benefit from the potential benefits of our economic relations if a level playing field is ensured.”

Earlier this year, she traveled to Guangzhou and Beijing, targeting industrial policy and what the United States and Europe describe as overcapacity in China.