U.S. Treasury Secretary Janet Yellen concluded her trip to China, highlighting American concerns over Chinese overproduction, cautioning against support for Russia, and discussing fair competition and open cooperation and sparking discussions on Chinese social media about her travel style and chopstick skills.
During her four-day visit, Yellen engaged in extensive meetings with Chinese leaders, local officials, academics, students, and American executives in Guangzhou and Beijing. The visit, her second in nine months, aims to tackle escalating trade disputes and stabilize relations following a summit between U.S. President Joe Biden and Chinese leader Xi Jinping last November.
Janet Yellen visited the Chinese capital Beijing and southern city of Guangzhou — the capital of China’s export-heavy province of Guangdong and the manufacturing hub, which is home to telecom giant Huawei and China’s largest EV company BYD.
Who U.S. Treasury Secretary met in China?
U.S. Secretary Yellen’s visit included meetings with
- Chinese Vice Premier He Lifeng
- Premier Li Qiang
- Finance Minister Lan Fo’an
- Guangdong Governor Wang Weizhong
- Beijing mayor Yin Yong,
- People’s Bank of China (PBOC) Governor Pan Gongsheng
- Economic experts and AmCham China business representatives as well as leading Chinese economists and Peking University students and professors
Key Takeaways
Four days of high-level economic meetings between the United States and China ended without significant breakthroughs. However, the world’s two largest economies agreed to schedule further discussions to tackle escalating tensions concerning trade, investment, and national security.
Yellen’s primary agenda in China centered around addressing trade practices that disadvantage American companies and workers, particularly in the solar panel and electric vehicle (EV) sectors. While these policies have driven down prices, they pose a threat to American and European jobs by potentially flooding international markets with low-priced exports. Chinese officials argue that such developments are essential for combating climate change.
Yellen warned China that Washington will not accept new industries being decimated by Chinese import. “We’ve seen this story before. Over a decade ago, massive PRC government support led to below-cost Chinese steel that flooded the global market and decimated industries across the world and in the United States,” she told reporters. “I’ve made it clear that President Biden and I will not accept that reality again.”
However, the U.S. refrained from threatening new tariffs or trade actions against Beijing despite its significant state support for electric vehicles, batteries, solar panels, and other green energy goods.
Yellen mentioned three key progresses made during her visit:
- Balanced Growth – Intensive exchanges on balanced economic growth initiated between Yellen and Vice Premier He to advocate for American workers and businesses while understanding PRC macroeconomic policies.
- Anti-Money Laundering Cooperation – Expanded cooperation announced in combating illicit finance through the establishment of a Joint Treasury-PBOC Cooperation and Exchange on Anti-Money Laundering to prevent financing for criminal organizations.
- Broader Financial Cooperation with China – Continued financial technical exchanges between the United States and China to ensure effective communication between financial regulators, focusing on operational resilience and financial stability implications from climate risks in the insurance sector.
PBOC Governor Pan and I discussed our shared work to close off avenues through which criminals can funnel money toward illicit activities. The newly established Joint Treasury-PBOC Cooperation and Exchange on Anti-Money Laundering will strengthen our collaboration on this issue. pic.twitter.com/0ZzMYKTIqL
— Secretary Janet Yellen (@SecYellen) April 8, 2024
U.S. concerns about China’s overcapacity
The talks between U.S. and Chinese officials ranged from Chinese manufacturing overcapacity to the financial stability.
Yellen prioritized addressing China’s overcapacity problem, fueled by government subsidies and policies that have led to excessive investment in solar panel and EV factories. This overinvestment has created surplus production capacity beyond domestic demand. While this has lowered costs and promoted green technology adoption globally, Western governments worry about potential job losses due to low-priced exports flooding their markets.
Many American business executives have expressed the challenges of operating in China. I’ll also discuss with my Chinese counterparts the risks associated with overcapacity. These exchanges will help lead to building a healthy bilateral economic relationship.
— Secretary Janet Yellen (@SecYellen) April 5, 2024
In response, the Chinese officials said that the speedy rise of the country’s electric vehicle firms was due to innovations and not subsidies. The allegations about “overcapacity” by the U.S. and Europe are baseless, China’s Minister of Commerce Wang Wentao said, China’s Ministry of Commerce reported. Wang made the remarks during a roundtable discussion in Paris with representatives from more than 10 Chinese companies including EV makers Geely and BYD as well as EV battery manufacturer CATL.
During her visit to Guangzhou, Yellen engaged in extensive discussions, including hours of talks with Chinese Vice Premier He Lifeng. Following these discussions, both countries agreed to address the U.S. concern of “overcapacity” through talks on balanced growth under an established working group.
US Treasury Chief and Chinese Premier Li Qiang express hope for cooperation
The US Treasury Secretary Janet Yellen met with Chinese Premier Li Qiang in Beijing on April 7 to discuss mutual cooperation despite existing differences between the two nations.
Yellen’s main agenda was to address trade practices that allegedly disadvantage American companies and workers. “While we have more to do, I believe that, over the past year, we have put our bilateral relationship on more stable footing.”
“This has not meant ignoring our differences or avoiding tough conversations,” she told Li. “It has meant understanding that we can only make progress if we directly and openly communicate with one another,” Yellen said while speaking in the elaborate Fujian room of the Great Hall of the People, located just west of Tiananmen Square.
During meeting Yellen and Qiang expressed optimism for U.S.-China cooperation, highlighting the importance of direct and open dialogue despite facing challenging discussions.
Yellen stressed to Li that the U.S.-China relationship can progress only through transparent communication.
Premier Li said the significant media interest in Yellen’s visit “shows the high expectation they have… and also the expectation and hope to grow” the U.S.-China relationship.
“China hopes that the U.S. side will work with the Chinese side to adhere to the basic norms of market economy of fair competition and open cooperation, and refrain from politicizing and national-securitizing economic and trade issues,” Mr. Li was quoted as saying in an official summary of the meeting issued by the Chinese government.
Yellen calls for level playing field for US worker and firms
Speaking in the ornate Fujian room of the Great Hall of the People, Yellen emphasized the need for a balanced and stable bilateral relationship between the U.S. and China. “While there is more work to be done, I believe that over the past year, we have established a more stable foundation for our relationship,” Yellen said.
“The United States seeks a healthy economic relationship with China that benefits both sides,” she said ahead of a meeting with Chinese Vice Premier He Lifeng and other economic officials. “But a healthy relationship must provide a level playing field for firms and workers in both countries.”
Earlier, she said at an an event hosted by the American Chamber of Commerce in China that “Chinese practices … are tilting the playing field away from American workers and firms.”
Yellen warns of sanction against Chinese banks that aid Russia
U.S. Treasury Secretary Yellen wrapped up her China visit with a warning to the country’s banks and exporters: If you help bolster Russia’s military capacity, Washington will come after you. “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,” Yellen said on Monday in prepared remarks for a press conference at the US ambassador’s residence in Beijing,.
“Any banks that facilitate significant transactions that channel military or dual-use goods to Russia’s defence industrial base expose themselves to the risk of US sanctions,” she said.