Biden will not allow a repeat of the “China shock” of the early 2000s – Yellen

Photo: Janet Yellen

Treasury Secretary Janet Yellen warned Beijing on Monday, April 8: Washington will not accept new industries being harmed by imports from China.

At the end of her four-day visit to China, Yellen said at a press conference that President Joe Biden will not allow a repeat of the “China shock.” the early 2000s, when a flood of imports from China led to the loss of approximately 2 million American manufacturing jobs, reports Reuters.

Meanwhile, Beijing continues to provide large-scale government support for the production of electric vehicles (EVs), batteries, solar panels and other green energy products.

On her second trip to China in nine months, Yellen noted that Beijing's overinvestment has led to to create production capacity far in excess of domestic demand, while rapidly growing exports of these goods threaten companies in the United States and other countries.

As the head of the Treasury explained, the newly created forum for the exchange of experience to discuss the problem of excess capacity will take time to develop solutions.

Yellen said that the exchange of views with representatives of China helped advance American interests and that US concerns about excess industrial capacity is shared by Washington's European allies, Japan, Mexico, the Philippines and other countries.

In March, China's National People's Congress said the government would take steps to limit excess industrial capacity. Beijing has said U.S. and European concerns about excess capacity in China are unfounded.

As a possible short-term solution, Yellen suggested China should take steps to boost consumer demand through household support and make changes to investment policy.

Yellen discussed this issue in detail with Chinese Premier Li Qian. On Sunday she met with Chinese Finance Minister Lan Foan, and on Monday – with People's Bank of China (PBOC) Governor Pan Gongsheng and former Vice Premier Liu He.

In an interview with CNBC following those meetings, Yellen said she was not thinking so much about trade restrictions with China, how much about changes in the macroeconomic environment of this country. At the same time, she reiterated that she does not rule out the introduction of tariffs.

Prepared by: Sergey Daga