US Treasury chief Janet Yellen warned during a visit to China on Friday that Beijing’s subsidies for industry could pose a risk to global economic resilience.
Yellen arrived in the southern city of Guangzhou on Thursday for several days of talks with Chinese officials on her second visit to the world’s second-largest economy in less than a year.
She expressed concerns about China’s “overcapacity” undercutting American and other countries’ companies.
Such overcapacity is seen as a result of huge Chinese subsidies to industries, such as solar, electric vehicles and batteries, that risk creating a surplus of cheap goods that threatens those sectors elsewhere.
“Direct and indirect government support is currently leading to production capacity that significantly exceeds China’s domestic demand, as well as what the global market can bear,” she told a gathering of the US business community in Guangzhou on Friday.
“Overcapacity can lead to large volumes of exports at depressed prices,” she said.
“And it can lead to overconcentration of supply chains, posing a risk to global economic resilience.”
Such fears are not part of an “anti-China policy”, she said during a question-and-answer session after the speech, but are intended to mitigate risks from “inevitable global economic dislocation that will result” from no change in Chinese policies.
Yellen also told the gathering, organised by the US Chamber of Commerce in China, that she would seek to raise with Chinese officials the “challenges” faced by US businesses operating in the country.
That included Beijing “imposing barriers to access for foreign firms and taking coercive actions against American companies”, she said.
“This doesn’t only hurt these American firms: ending these unfair practices would benefit China by improving the business climate here,” Yellen said.
