Sarah Travers
U.S. Treasury Secretary Janet Yellen has sounded the alarm on China’s burgeoning overcapacity in manufacturing, highlighting potential risks to the global economy. During her recent visit to China, Yellen’s remarks underscored growing concerns about the economic fallout from China’s excessive production capabilities.
Yellen emphasized that China’s overcapacity could result in a flood of exports at reduced prices, which could harm businesses worldwide, including those in the United States, India, and Mexico. She pointed out that this situation could also lead to an over-reliance on certain supply chains, posing a threat to global economic resilience.
The European Union’s investigation into subsidies for Chinese electric vehicle exports to Europe was cited by Yellen as evidence of the mounting concern over China’s overcapacity. She noted that many countries view China’s overcapacity as a significant threat, particularly in sectors such as electric vehicles, batteries, and solar energy.
In addition to the economic risks posed by overcapacity, Yellen criticized China for its alleged unfair treatment of American and other foreign companies. She highlighted barriers to market access and coercive actions against American firms as examples of China’s unfair practices.
Yellen’s visit also highlighted concerns about China’s shift away from pro-market policies. She noted that American businesses are worried about the impact of China’s departure from market-oriented approaches on the U.S. and global economies.
Yellen’s remarks come amid escalating tensions between the United States and China over trade and economic policies. The U.S. Chamber of Commerce recently reported that one-third of American firms in China feel they have been treated unfairly compared to local competitors.
Overall, Yellen’s visit to China has underscored the growing unease about the economic implications of China’s overcapacity and its impact on global trade and economic stability. It remains to be seen how China will respond to these concerns and whether it will take steps to address the issue of overcapacity in its manufacturing sector. The international community is closely watching China’s next moves, as they could have significant implications for the global economy and trade relations. Addressing overcapacity could be a key step for China in fostering a more balanced and sustainable economic environment both domestically and internationally.
