On July 27, 2024, US Treasury Secretary Janet Yellen stated on Friday that many emerging economies, including some G20 countries, share concerns with the United States regarding China’s overcapacity in factories.
Yellen, in an interview with Reuters, mentioned that beyond the wealthy G7 nations, many countries are worried about China’s excessive investment in manufacturing, leading to a flood of cheap goods worldwide.
She also noted that the host of the upcoming G20 Finance Ministers and Central Bank Governors Meeting, Brazil, has raised tariffs on Chinese steel and electric cars.
Yellen pointed out that the Chinese authorities have not followed the suggestions of other countries and the International Monetary Fund (IMF) to boost the economy through increased consumer spending and service demands. Instead, China has pumped excess funds into advanced manufacturing, saturating the world with cheap Chinese products.
She added that China’s economy has grown too large to sustain growth using this model.
Yellen expressed concerns that China’s ambition to be the “world’s factory” could lead to the closure of domestic manufacturing industries in many countries, which is not welcomed by all nations.
“This is the fundamental reason for us to unite; this is the message we should convey,” Yellen said.
Yellen’s week-long visit is seen as an opportunity for the US to strengthen relations with Latin American countries and counter China’s influence in the region. In recent years, China’s influence in Latin America has been on the rise, raising high alerts in the US.
Last month, Michael McCaul, Chairman of the House Foreign Affairs Committee, highlighted in a hearing on US policy in the Western Hemisphere, “Our hemisphere is increasingly aligning with our adversaries.”
Last week, US Secretary of State Antony Blinken met with foreign ministers from 11 Latin American countries in Washington, announcing the launch of the “Western Hemisphere Semiconductor Initiative” to promote economic development in the region and reduce reliance on China in areas such as clean energy and semiconductor manufacturing.
On Friday, Yellen signed an agreement with Brazil to establish a climate partnership, jointly develop policy tools, attract private sector investment, build clean energy supply chains, and provide funding for renewable energy production, low-carbon hydrogen, and biofuels.
The influx of cheap Chinese goods in the market has intensified the tensions between China and Latin American countries.
On July 18, Brazil’s Foreign Trade Commission Management Executive Committee (GECEX) announced anti-dumping measures against a brass product originating from China, imposing a five-year anti-dumping duty on the product. This is the latest case in the ongoing tensions.
Unfair trade policies, overcapacity, and the US-China trade dispute are increasingly prompting countries in the region to push back. At the industry’s request, the Brazilian Ministry of Industry has launched at least six investigations into Chinese products such as metal sheets, chemicals, and tires since the second half of last year.
Argentina, another major economy in Latin America and a G20 member, issued two anti-dumping rulings in July against Chinese-made elevators and knitted fabrics of synthetic fibers, finding evidence of dumping.
Following the US announcement in April to triple import tariffs on Chinese steel, disputes between China and Latin American countries over these products have erupted. Whenever the US increases tariffs on Chinese goods, it prompts China to redirect these products to other countries, including those in Latin America.