Beijing Rebuffs Yellen's Manufacturing Concerns

"At the end of U.S. Treasury Secretary Janet Yellen's visit to Beijing, Chinese officials pushed back against her calls for China to scale back its industrial production to avoid flooding world markets.

Officials and state media defended China's industrial policies and dismissed Western complaints that China is exacerbating overcapacity as protectionism and a pretext to suppress China's rise.

"The so-called 'overcapacity' is the manifestation of the market mechanism that plays its role," Liao Min, deputy finance minister, said Monday at a news briefing to sum up the results of Yellen's visit. Imbalances between supply and demand can occur in any economy and have happened many times in Western countries including the U.S., Liao said.

During her visit, her second as Treasury chief, Yellen stepped up her rhetoric against Beijing's strategy to revive its slowing economy by ramping up manufacturing and exports, pressing her hosts to scale back industrial production and urging Beijing to instead boost China's consumer market.

One result of her trip was an agreement between Beijing and Washington for talks about "balanced economic growth." However, officials' concerted efforts to defend China's manufacturing policy suggest the chance of major policy shifts from Beijing is slim.

Liao said at the briefing that the sides will continue to discuss overcapacity and other issues, though he also warned that trade-protectionist measures won't help resolve overcapacity.

State media has recently run articles excoriating Western complaints about Chinese industrial overcapacity as overblown and hypocritical. In March, China filed a complaint with the World Trade Organization over U.S. subsidies for electric vehicles, saying provisions that exclude Chinese components are unfair.

The move came after the Biden administration said it would investigate foreign car technologies, citing potential national security risks from China. The European Union is conducting an antisubsidy probe into China's EV makers.

Chinese officials have turned to the clean-energy sector as a new driver of growth and a potential antidote to China's economic headwinds, as a prolonged downturn in the property market drags on growth. 

During the talks, Chinese officials pointed out that the U.S. is also providing generous subsidies to its clean-energy industry, a senior Treasury official said.

China's commerce minister, Wang Wentao, pushed back at suggestions that Chinese EV companies depend on subsidies, saying they rely on continuous technological innovation, a complete production and supply-chain system, and sufficient market competition to develop rapidly.

At Monday's briefing, Liao said current global EV production capacity is far from enough to meet market demand." [1]

What overcapacity? When I look out of my window I see mostly diesel cars. People are dying because of global warming as we speak. Show me your overcapacity for green stuff, Ms. Yellen. Show me Chinese overcapacity. You can't? Go home and wait for the upcoming elections. Giving a lot of money to your cronies in the USA doesn't mean taking care  of the environment. Inflation Reduction Act, anyone?

1. World News: Beijing Rebuffs Yellen's Manufacturing Concerns. Qi, Liyan.  Wall Street Journal, Eastern edition; New York, N.Y.. 10 Apr 2024: A.5.