Will Yellen arrive in Guangzhou to urge China to stop exporting excess production capacity?

Yellen arrived in Guangzhou, the industrial center of southern China, on the afternoon of April 4, local time. According to Reuters, Yellen's trip will send a stern message to Chinese officials: You produce too much, especially clean energy products, and the world can't absorb so much.

Yellen will focus on China's overcapacity to curb unfair competition

Earlier, Yellen told reporters during a stop in Alaska that the U.S. government was serious about supporting supply chains related to U.S. electric vehicles and batteries, solar panels and other key products, adding that it "does not rule out taking additional measures" to protect the U.S. economy. The U.S. clean energy industry is insulated from China’s excess investment and capacity. However, she declined to say whether she would raise the possibility of new tariffs in talks with China.

Li Hengqing, an economist living in the United States and director of the Washington Institute of Information and Strategy, told this station that the key to overcapacity is China’s government subsidies: “The key point is unfair competition, because the United States is a market economy. The relationship between supply and demand is due to high subsidies. It is broken. It is a market-distorting practice that will cause many problems for future market competition. In fact, it will ultimately harm consumers and the market."

Dumping "Three New Products" Experts: The Chinese government subsidizes heavily 

The dumping of China’s excess production capacity that the US refers to targets the “three new items” of foreign trade that Chinese officials are proud of recently: electric vehicles, lithium batteries and photovoltaics.

Patrick Mulloy, who served as the U.S. Assistant Secretary of Commerce under President Clinton, told this station that China formulated the "Made in China 2025" strategy about ten years ago and plans to develop products in key areas such as electric vehicles, semiconductors, and solar panels. Become a leader. He said: "They poured a lot of money into these industries to subsidize their development in China. Now, Secretary Yellen is going to China just because China has overproduction of electric cars, solar panels and other things in China, because they Subsidize these products.”

Yellen will warn China: The world will take trade countermeasures

According to Reuters, China is exporting large quantities of electric vehicles (EVs), batteries, solar panels, semiconductors and other manufactured goods to global markets, the result of years of massive government subsidies and weak domestic demand. Global prices for many commodities are falling, putting pressure on producers in other countries.

Molloy said that now not only the United States is worried about this, but also the European Union and other countries: "I think Minister Yellen will make it clear that this will be a huge problem and China should find another way to develop its economy. , rather than emphasizing only export-oriented manufacturing."

According to Reuters, Yellen will convey her view in a series of meetings with senior Chinese economic officials in the coming days that excess production capacity is bad for China and that the United States, Europe, Japan, Mexico and other major economies are There is growing concern about this. A senior U.S. Treasury official who spoke on condition of anonymity said Yellen would explain to China: "If there are trade actions happening around the world, it's not an 'anti-China' thing, it's a response to their policies."

Molloy, who served as a member of the U.S.-China Economic and Security Review Commission (USCC) for 10 years, said that he warned China many years ago that the economic relationship between the United States and China was unbalanced, leading to a large and persistent trade deficit. will damage the political relations between the two countries. "I think this has now damaged our political relationship," he said.

According to information released by the U.S. Department of the Treasury, Yellen will first go to Guangzhou to meet with Guangzhou Governor Wang Weizhong and Chinese Vice Premier He Lifeng, and then go to Beijing to meet with Chinese Prime Minister Li Qiang, Finance Minister Lan Fo'an, and Beijing Municipal Government Governor Yin Yong, former Vice Prime Minister Liu He, and Governor of the People’s Bank of China Pan Gongsheng met.

Li Hengqing pointed out that in addition to the issue of overcapacity, the United States and China will also discuss China's potential financial risks: "Because China now has a lot of debt, and the entire economy is slowing down, there are likely to be more and more large-scale financial explosions. Once a large-scale financial collapse occurs, it will inevitably affect some investments in the world and the United States."

Chinese state media defends its exports, seeks further cooperation

The Weibo account "Yuyuan Tantian" of China's state-run media CCTV News posted an article on April 4 titled "The US Treasury Secretary needs to think clearly about several issues when he comes to Guangzhou." It argued that the Biden administration relies on suppressing Chinese companies. We cannot allow those old industrial areas in the United States to "take back" jobs from China and revitalize the U.S. manufacturing industry. In addition, the article urges the United States to strengthen cooperation with China in the field of new energy.

American lawyer, author and television commentator Gordon Chang told this station that the Chinese authorities will never stop dumping excess production capacity: "China intends to solve these problems through exports. They really have no other way to solve their economic problems at the moment. This It won’t solve their problem, but it’s the method with the highest probability of success. They are determined not to stimulate consumption, and this is the only sustainable method in China. China’s technocrats also know this.”

Zhang Jiadun believes that the time for dialogue with China is over, because these issues have been discussed between the United States and China for more than three decades: "China is clearly moving in the wrong direction. It is time for China to pay a heavy price." "

Expert: Yellen's visit to China will not lead to breakthroughs, but it can reduce the possibility of conflict

Before the U.S. Treasury Department announced Yellen's visit to China, President Joe Biden and Chinese leader Xi Jinping held their first phone call since last year's San Francisco summit to stabilize bilateral relations.

U.S. Treasury Department officials also told the media when announcing Yellen's itinerary a few days ago that Yellen's trip to China will "continue the intensive diplomacy she has been conducting to responsibly manage U.S.-China economic relations."

Li Hengqing pointed out that there will be no breakthroughs in Yellen's trip. She won't even meet Xi Jinping. The best thing she can do is meet Prime Minister Li Qiang. He said: "Generally speaking, there will basically not be much substantive progress. Everyone will talk about their own words, or continue under the original framework of 'contact, cooperation and competition'."

However, Li Hengqing believes that it is meaningful for the United States and China to maintain high-level contacts, because through contact, they can understand each other's bottom line and see if there are new opportunities to alleviate conflicts: "This is also an important purpose of Yellen's visit, which is to reduce the risk of conflict. possibility."