US Treasury Secretary Calls for 'Containment of China's Excess Industrial Capacity' in Beijing

On Monday, US Treasury Secretary Janet Yellen, at the end of her four-day working visit to Beijing, called for the 'containment of China's excess industrial capacity' and emphasized that Washington will not accept the destruction of new and emerging American industries due to imports of Chinese goods. According to Reuters, she stressed in a press conference that President Joe Biden is determined to prevent a repeat of the 'China shock' that led to the loss of about two million jobs in the US in the early 2000s due to increased imports from China. During her second visit to China in the past nine months, Yellen also complained about China's over-investment, which has resulted in increased factory capacity relative to domestic demand. However, she did not mention any new tariff threats or other trade actions if the Chinese government continues its extensive support for electric vehicles, batteries, solar panels, and other green energy goods. She also pointed to the formation of an association to discuss 'China's excess industrial capacity,' considering the rapid increase in exports of these goods as a threat to businesses in the US and other countries. Yellen told reporters, 'We have seen a similar scenario in the past. Over a decade ago, Chinese government support led to a flood of cheap Chinese steel in the global market, causing significant damage to industries worldwide, including in the United States.' Although Beijing claims that the recent focus of the US and Europe on the risks posed by China's excess capacity to other countries is misguided, the National People's Congress announced in March that the government would take measures to contain excess industrial capacity. Earlier, the Biden administration announced strict measures to limit the export of advanced semiconductor technology from the US to China, stating that this technology is used to modernize the Chinese military. The US Department of Commerce also issued restrictive rules prohibiting recipients of semiconductor manufacturing funding from investing in certain 'concerned' foreign countries such as China and Russia.