WASHINGTON (AP) – Treasury Secretary Janet Yellen asserts that Chinese “overly concentrated supply chains” pose a threat to U.S. jobs and recent investments aimed at building the U.S. green energy sector, and the Asian superpower’s pursuit of its trade policies “could significantly interfere with our efforts to build a healthy economic relationship.”
In a prepared speech for Wall Street and business executives at the Economic Club of New York on Thursday afternoon, Yellen promoted Biden administration policies aimed at boosting U.S. economic competitiveness.
She said the US should respond “when foreign subsidies threaten the viability of domestic companies” in strategic sectors like green energy. There is particular concern that China’s green energy products could undermine the huge climate-friendly investments made through the Democrats’ Inflation Reduction Act, which President Joe Biden signed into law in August 2022.
Yellen’s speech appears old President Donald Trump presents his case before the Business Roundtable in Washington, an association of more than 200 CEOs, about why the economy would be better if he returned to the Oval Office.
Both Biden and his presumptive Republican opponent, Trump, told voters they will be tough on China.
The US last month imposed important new tariffs in Chinese electric vehicles, advanced batteries, solar cells, steel, aluminum and medical equipment. And the European Union also moved on Wednesday to increase tariffs, or import taxes, on Electric vehicles made in China following preliminary results from an ongoing study investigation into Chinese subsidies for electric vehicles show that the country’s battery electric vehicle “value chain” benefits from “unfair subsidies” that harm EU rivals.
Chinese companies can sell EVs for just $12,000. China’s solar cell factories and steel and aluminum plants have enough capacity to satisfy much of the world’s demand, with Chinese authorities arguing that their production keeps prices low and would help the transition to a green economy.
During her Thursday speech, Yellen highlighted the percentage of Chinese industrial companies that lose money, high savings rates compared to other OECD countries and restrictive investment policies, among other issues.
Yellen cited the manufacturing of Electric vehicles and its batteries, as well as solar energy equipment — sectors that the US administration is trying to promote domestically — as areas where Chinese government subsidies have driven the rapid expansion of production.
“President Biden and I reject the notion that “decoupling” would be in any way beneficial to the American economy,” she said. “At the same time, we will only be able to realize the potential benefits of our economic relationship if there is a level playing field.”
She traveled to Guangzhou and Beijing earlier this year, and the focus of his trip was industrial policy and what the US and Europe describe as excess production capacity in China.
