The fifth meeting of the U.S.-China Economic Working Group, held in Beijing over two days, concluded on Friday, September 20th. During the meeting, U.S. officials emphasized China’s issue of overcapacity, while Chinese officials expressed concerns about U.S. tariffs and investment restrictions.
The meeting was co-chaired by U.S. Deputy Secretary of the Treasury Jay Shambaugh and Chinese Deputy Minister of Finance Liao Min.
The U.S. Treasury Department released a statement saying that officials from both countries engaged in a series of productive discussions. They exchanged views on policies to support domestic and global economic balanced growth; U.S. officials also continued discussions on concerns raised by Treasury Secretary Janet L. Yellen during her visit to China in April, including “signs of worsening overcapacity in certain sectors of the Chinese economy, non-market policies and practices of (Communist) China and their impact on American workers and businesses, and Chinese firms’ support for Russia in the war in Ukraine.”
The U.S. delegation also met with Chinese Vice Premier He Lifeng. The U.S.-China Economic Working Group is one of the two working groups established by U.S. Treasury Secretary Yellen and Vice Premier He last September.
According to the statement from the U.S. Treasury Department, the U.S.-China Economic Working Group also exchanged views on the domestic macroeconomic outlook during the meeting, as well as discussing debt issues and financing challenges of emerging and developing economies.
In response to the meeting, the Chinese Ministry of Finance issued a statement expressing strong concerns about the U.S. imposition of tariffs on China, investment restrictions on China, and sanctions related to Russia.
With the slowdown in China’s economic growth engine (real estate), the Chinese government has turned its focus towards supporting the manufacturing industry as an alternative means to drive economic growth. However, with weak domestic demand in China exacerbating the problem of overcapacity, it has led to issues of dumping goods overseas. This phenomenon has sparked resistance from multiple countries globally.
U.S. Treasury Secretary Yellen visited China in April and engaged in multiple rounds of talks with Vice Premier He. Her primary task was to persuade Chinese officials to address the overcapacity issues in sectors like electric vehicles (EVs), solar panels, and other clean energy technologies. The U.S. has repeatedly warned that China’s overcapacity will lead to an influx of cheap goods into the global market, thereby harming industries in the U.S. and other countries.
In May of this year, the U.S. announced higher tariffs on a range of Chinese-manufactured products, including imposing a 100% tariff on electric vehicles, a 50% tariff on solar panels, and a 25% tariff on steel, aluminum, and key minerals. These measures are set to take effect on September 27th.
On June 21st, the U.S. Treasury Department issued a proposed new rule further restricting American individuals and companies’ investments in China. This move aims to curb China’s access to U.S. funding for its development in areas such as semiconductors, quantum information, and artificial intelligence.
These actions by the U.S. have sparked discontent from China.