May
Treasury Secretary Janet Yellen has underscored the urgent need for the United States and Europe to present a cohesive front in addressing the issue of Chinese industrial overcapacity. This call comes amidst growing concerns about the global consequences of Beijing’s macroeconomic imbalances.
Yellen’s Warning
In remarks preceding a meeting of Group of Seven finance ministers and central bank governors in Stresa, Italy, Yellen reiterated the United States’ apprehensions. She specifically addressed concerns regarding China’s export-oriented industrial policies. She emphasized that other advanced economies, including Germany and the European Union, have echoed similar concerns. These concerns have surfaced in recent engagements with Chinese leadership.
Global Ramifications
Yellen stressed that the problem extends beyond bilateral relations between the US and China. According to The New York Times report, she highlighted that excess capacity poses a threat to firms worldwide, including those in emerging markets. This acknowledgment underscores the gravity of the issue and the need for a coordinated international response.
Biden Administration’s Actions
Yellen’s remarks come on the heels of the Biden administration’s announcement of tariff hikes on various Chinese imports, including semiconductors, batteries, and electric vehicles. These measures are projected to affect approximately $18 billion in annual imports. They are aimed at safeguarding critical sectors of the US economy. They also aim to strengthen supply chains.
European Concerns
European leaders, including European Commission President Ursula von der Leyen and German Chancellor Olaf Scholz, have also expressed apprehensions. They have voiced concerns about China’s industrial overcapacity. Von der Leyen has warned of the threat posed to the European market. Meanwhile, Scholz has called for fair competition from China.
International Coordination
Following a meeting with Chinese President Xi Jinping in Paris, von der Leyen emphasized the European Union’s commitment. She highlighted the EU’s dedication to coordinating closely with G-7 partners and emerging economies affected by China’s exports. This collaborative approach underscores the importance of multilateral cooperation in addressing shared challenges.
EU Investigation and China’s Response
The European Union is currently conducting an anti-subsidies investigation into Chinese electric vehicles. Preliminary tariffs are expected to be announced next month. In response to criticism, China has rejected allegations of overcapacity and hinted at retaliatory measures against both the US and the EU. Yellen’s call for unified action underscores the need for international cooperation. It addresses the complex issue of Chinese industrial overcapacity, which has far-reaching implications for global trade and economic stability.
Obtain a 24-month subscription to The Wall Street Journal Print Edition, featuring daily delivery on six days a week. As a bonus, this acquisition grants you entry to The WSJ Digital edition, compatible with iPhone, Android, and PC. This subscription guarantees your connectivity to the most recent advancements in finance, politics, medicine, and global news. Take advantage of expert commentaries and reliable analyses.
