Apr 7, 2024 - Economy

The China pushback uniting major world powers

Yellen meets with China counterpart

U.S. Treasury Secretary Janet Yellen with Chinese Vice Premier He Lifeng in Guangzhou, China. Photo: Ken Ishii/Pool via Getty Images

BEIJING, China — Treasury Secretary Janet Yellen has a growing set of allies working to slow the flow of cheap Chinese-made clean-tech products that they say are warping global prices.

Why it matters: There's rising worldwide backlash against China's massively subsidized factory sector, which is producing more electric vehicles, solar panels and other products than its economy can absorb.

  • Major economic powers — from Europe to Brazil — have already embraced policies to prevent what they fear will be disastrous consequences for their domestic industries if a flood of China's products hit their shores.
  • The big unknown is how Beijing might retaliate against these more protectionist policies.

That pile-on risks growing further: Yellen warned this week that U.S. officials "won't rule out" taking steps to guard the clean energy sector that the U.S. government has poured billions into nurturing.

State of play: Unless you're a close follower of global trade policy, you might have missed a stunning trend of several nations weighing punitive measures against China-manufactured green technology.

  • Europe launched an anti-subsidy investigation into electric vehicles from China at the end of last year — with possible tariffs to follow. A top official warned of a "race to the bottom" in EV prices.
  • The U.K last month warned about China-made EVs, acknowledging the possibility of trade sanctions on imports. The nation is also considering measures to halt alleged dumping of electric bikes by China.
  • Officials in Brazil, Latin America's largest economy, also allege dumping tactics, with recent probes into the flow of low-price imports of industrial materials.

The intrigue: En route this week to the southern city of Guangzhou — a major hub for foreign trade — Yellen addressed global worries about China's cheap exports of goods.

  • "I think it's not just the United States, but quite a few countries, including Mexico, Europe and Japan that are feeling the pressure from massive investment in these industries in China," Yellen told reporters last week.
  • After two days of meetings with her Chinese counterpart, Vice Premiere He Lifeng, Yellen said on Saturday that China understood the concerns around its manufacturing overcapacity and the "potential to flood our markets with exports that make it difficult for American firms to compete."
  • The Treasury Department announced that the two sides would launch new talks about the issue and other economic fears, with no mention of whether the U.S. would take punitive action against China.

Context: Yellen's trip to China — her second as Treasury Secretary — is the latest attempt to mend relations between the two nations.

  • But it's a careful balance: Yellen is raising deeply-held concerns about China's economic situation, but understands the importance of keeping U.S.-China ties stable.
  • "If there are trade actions from around the world, that's not an anti-China thing—that's a response to their policies," a senior Treasury official said.

The other side: For its part, China last month formally complained to the World Trade Organization over U.S. tax credits for electric vehicles, alleging discrimination "against goods of Chinese origin."

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