US Treasury Secretary Yellen has stated that China’s “overly concentrated supply chains” pose a threat to American employment and recent investments in developing the US green energy industry, while the trade policies pursued by the Chinese authorities could “seriously disrupt” efforts to establish a healthy economic relationship with the US.
Yellen addressed Wall Street and business executives at the New York Economic Club on Thursday afternoon, advocating for the Biden administration’s policies aimed at enhancing American economic competitiveness.
She emphasized that in strategic areas like green energy, when “foreign subsidies threaten the survival of domestic firms,” the US should respond. There is particular concern that China’s green energy products could undermine the significant climate-friendly investments made through the Democratic party’s Infrastructure Investment and Jobs Act (IRA), signed into law by President Biden in August 2022.
As Yellen gave her speech, former President Trump was at the “Business Roundtable” in Washington, consisting of over two hundred top CEOs, expressing his view that the economy would be better if he returned to the White House.
Both Biden and Trump are telling voters that they will take a tough stance against the Chinese Communist Party.
Last month, the US imposed new high tariffs on Chinese electric cars, advanced batteries, solar panels, steel, aluminum, and medical equipment.
The European Union also took action on Wednesday, imposing tariffs or import taxes on Chinese electric cars. Preliminary findings of an investigation into subsidies for Chinese electric cars showed that they benefited from “unfair subsidies,” harming the interests of EU competitors.
In her Thursday speech, Yellen pointed out issues in China such as high proportion of loss-making manufacturing companies, high savings rate compared to other OECD countries, and restrictive investment policies.
In April this year, during a visit to China, Yellen issued a strong warning to the Chinese Communist Party during a press conference, stating that overcapacity under the Chinese economic system harms the interests of foreign companies. She highlighted that the CCP’s subsidies and other economic support policies have led to overcapacity in industries such as solar panels and electric cars in China, far exceeding the capacity the domestic market can bear, posing a serious threat to American industry.
Furthermore, Yellen made it clear in her Thursday speech that the US does not support a comprehensive “decoupling” from China, as she believes it would bring more negative impact on the US economy. However, she stressed that only by ensuring fair competition, can the US benefit from the potential economic gains in the Chinese market.