WASHINGTON – Treasury Secretary Janet Yellen says Chinese “overconcentrated supply chains” pose a threat to U.S. jobs and recent investments meant to build up the U.S. green energy sector, and the Asian superpower's pursuit of its trade policies "may interfere significantly with our efforts to build a healthy economic relationship.”
In a prepared speech to Wall Street and business executives at the Economic Club of New York Thursday afternoon, Yellen promoted Biden administration policies designed to spur U.S. economic competitiveness.
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She said the U.S. ought to respond “when foreign subsidies threaten the viability of domestic firms" in strategic sectors like green energy. There is particular concern that China’s green energy products will undermine massive climate-friendly investments made through the Democrats’ Inflation Reduction Act that President Joe Biden signed into law in August 2022.
Yellen's speech comes as former President Donald Trump presents his case before the Business Roundtable in Washington, an association of more than 200 CEOs, for why the economy would be better if he returned to the Oval Office.
Both Biden and his presumptive Republican challenger, Trump, have told voters that they’ll be tough on China.
The U.S. last month slapped major new tariffs on Chinese electric vehicles, advanced batteries, solar cells, steel, aluminum and medical equipment. And the European Union also moved Wednesday to hike tariffs, or import taxes, on electric vehicles made in China after the preliminary results of an ongoing investigation into Chinese EV subsidies show that the country’s battery electric vehicle “value chain” benefits from “unfair subsidization” that hurts EU rivals.
Chinese firms can sell EVs for as little as $12,000. China’s solar cell plants and steel and aluminum mills have enough capacity to meet much of the world’s demand, with Chinese officials arguing their production keeps prices low and would aid a transition to the green economy.
During her Thursday speech, Yellen pointed to the share of Chinese manufacturing firms losing money, high savings rates in comparison to other OECD countries and restrictive investment policies, among other issues.
Yellen cited the manufacturing of electric vehicles and their batteries as well as solar energy equipment — sectors that the U.S. administration is trying to promote domestically — as areas where Chinese government subsidies have driven rapid expansion of production.
“President Biden and I reject the notion that “decoupling” would be in any way beneficial for the American economy,” she said. “At the same time, we can only realize the potential benefits of our economic relationship if there is a level playing field.”
She traveled to Guangzhou and Beijing earlier this year, and the focus of her trip was industrial policy and what the U.S. and Europe describe as manufacturing overcapacity in China.