China’s ‘unfair trade practices’ hamper Sino-US economic relations: Yellen

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At an event in New York on Thursday, US Treasury Secretary Janet Yellen said China’s alleged “unfair trade practices” were hampering efforts to build strong Sino-US economic relations.

In a speech to the New York Economic Club, the Treasury official said China’s practices – ranging from restrictive investment policies to alleged economic coercion – violated fair competition, warning: “If China continues on This path, I fear that his policies could significantly interfere with our efforts to build a healthy economic relationship.

Beijing’s “persistent macroeconomic imbalances” are of particular concern, she said.

Yellen said China stood out globally for its exceptionally high savings rate, ranging from 45 to 50 percent of its gross domestic product over about two decades. This rate is double that of the average economy within the 38 members of the Organization for Economic Co-operation and Development (OECD), which includes some of the world’s most dynamic economies.

This high savings indicates a lack of adequate domestic consumption demand and poses the risk of increasing China’s external surplus. This surplus is channeled into the manufacturing sector, leading to overcapacity in specific sectors with unusually high investment rates.

Read more: US to raise tariffs on $18 billion in Chinese imports, including chips

Yellen noted that this problem extends beyond China and has global implications, particularly affecting the United States.

China’s rapid growth cannot happen without causing global displacement, the secretary noted.

Therefore, China cannot expect the United States and other countries to absorb large amounts of excess production without harming those countries’ domestic industries, Yelen said.

“This overcapacity threatens American businesses and workers, as well as those around the world. We have seen in the past how overcapacity can decimate businesses here at home,” the Treasury secretary said. “We now see this likely to happen again, in key sectors important to our long-term growth, such as electric vehicles, lithium-ion batteries and solar power, but also across a range of manufacturing industries .”

Yellen highlighted the difficulty of accurately quantifying the scale of China’s subsidies and industrial policies due to an alleged lack of transparency. “But even conservative estimates suggest they far exceed those in other countries, which is why we see economies ranging from advanced to emerging markets launching trade investigations,” she said.

Yellen warned that China’s overcapacity presents a risk of artificial concentration of U.S. supply chains, which could lead to additional security and economic concerns. “I have heard these concerns from American and foreign companies,” she added.

Yellen affirmed her commitment to consistently address her concerns to leaders in Beijing and outlined the U.S. strategy of “friendshoring,” which involves strengthening ties with diverse trusted partners and allies in an effort to diversify supply chains. and promote long-term growth of the economy. American private sector.

China files complaint at WTO

Earlier today, the Associated Press reported that China has filed a complaint with the World Trade Organization against the United States over discriminatory electric vehicle subsidy requirements.

The United States implemented a new rule on January 1 that excludes electric car buyers from benefiting from tax credits if the essential minerals or battery components come from Chinese, Russian, North Korean or Iranians.

These tax credits are part of Joe Biden’s climate legislation, known as the 2022 Inflation Reduction Act.

China’s Commerce Ministry has criticized the United States for formulating discriminatory subsidy policies under the law, which it says exclude Chinese products, distort fair competition and disrupt the global supply chain of vehicles to new energies.

Read more: China warns of WTO lawsuit amid EU restrictions on electric car imports