During a recent trip to China, Janet Yellen confirmed that the U.S. would protect its own industry from a flood of Chinese imports.
Washington Says No to Manufacturing Flood
While visiting government officials in China on Monday, U.S. Treasury Secretary Janet Yellen told Beijing that the U.S. would not allow Chinese imports to decimate domestic jobs in new industries.
“We’ve Seen This Before”
“We’ve seen this story before,” Yellen declared, referring to the “China shock” that occurred in the early 2000s when cheaper Chinese steel flooded the global market.
Millions of U.S. Jobs Lost
The flood of Chinese steel was a point of action by Beijing and led to millions of job losses in the US steel manufacturing industry.
Decimating Industries Globally
“Over a decade ago, massive PRC government support led to below-cost Chinese steel that flooded the global market and decimated industries across the world and in the United States,” Yellen continued.
President Biden Won’t Accept It
“I’ve made clear that President Biden and I will not accept that reality again,” she said. The declaration came at the end of her four-day visit to the Chinese capital.
Applying Pressure on Beijing
The purpose of the conversations – the latest in a series of talks between the world’s leading economic superpowers – was to apply pressure on Beijing to limit its global industrial production.
Threatening Foreign Viability
Yellen argued that by allowing China’s cheaply produced exports into the global market unchecked, as well as continuing its overinvestment in manufacturing, Beijing would be threatening the “viability of American and other foreign firms” in global markets.
“Too Large for the Rest of the World”
“China is now simply too large for the rest of the world to absorb this enormous capacity,” she continued.
The Big Three
There was a particular focus on China’s massive advantage in three of the fastest-growing global industries: solar power, electric vehicles, and lithium-ion batteries.
China Should Boost Demand
She encouraged Beijing to remedy the situation by boosting demand, which would cause a “larger share of GDP accrue to households to bolster their income and/or to, for example, bolster retirement security, the ability to afford education for one’s children and so forth, which are motives for very high saving.”
No Threat of Tariffs
Despite these serious concerns, Yellen did not threaten to establish any new tariffs against China should the government fail to address these issues.
Confirmed by Vice Premier
The Treasury Secretary returned to Washington with the certainty that more discussions on these macroeconomic concerns would take place, as confirmed by Chinese Vice Premier He Lifeng.
Other Nations Agree
Washington is far from the only foreign power to express concern over China’s overcapacity in these industries. Yellen said that Japan, Mexico, the Philippines, and various Western-allied European nations had expressed similar concerns.
Vice Finance Minister Stands Up
China’s vice finance minister, Liao Min, took to Chinese media to address and push back against the concerns raised by Yellen.
Competitive Advantages
“Current competitive advantages are rooted in China’s large-scale market, complete industrial system, and abundant human resources,” he stated, claiming that Washington and other foreign powers overestimated Beijing’s influence on industrial growth.
No Anti-Chinese Sentiments
While some have raised concerns that the recent talks and the push from Yellen could be the result of ‘anti-China’ sentiments, Yellen stated that the “concern about overcapacity is not animated by anti-China sentiment or a desire to decouple.”
Other Subjects Arise
But industrial overcapacity was not the only issue raised during the Treasury Secretary’s talks with Premier Li Qiang and Finance Minister Lan Foan, among other high-ranking officials.
China Supporting Russian Military?
She also broached the topic of China’s potential support of Russia’s military via Chinese firms as Vladimir Putin and the Russian army continue the advancement into Ukraine.
“Determined to Do All That We Can”
“President Biden and I are determined to do all that we can to stem the flow of material that is supporting Russia’s defense industrial base and helping it to wage war against Ukraine,” she said.
Significant Consequences
She later told CNBC that while Washington would not protest against a friendship between China and Russia, state support for their military would incur “significant consequences.”
A spokesperson for China’s foreign ministry denied that Beijing had any interest in benefiting from the Russia-Ukraine War.
21 States Where Squatters Can Legally Claim Your Property
Discover how squatters’ rights, or adverse possession, are more than just legal jargon—they’re stories of unexpected twists in the world of real estate. From sunny California to the historical landscapes of Pennsylvania, here’s how these laws could turn the tables on homeowners and squatters alike. 21 States Where Squatters Can Legally Claim Your Property
14 Things That Are Banned in the U.S. but Totally Fine Elsewhere
Ever feel like America’s rulebook was written by someone with a dartboard? Across the pond or down under, things get even wackier. Let’s take a walk on the wild side of global “Do’s” that are definite “Don’ts” in the Land of the Free. 14 Things That Are Banned in the U.S. but Totally Fine Elsewhere
25 American States Nobody Wants to Visit Anymore
Across the United States, some states capture the hearts and itineraries of many, while others remain quietly on the sidelines, overshadowed or misunderstood. These 25 states, facing what you might call a popularity crisis, are brimming with hidden wonders, cultural riches, and natural beauty, awaiting those willing to look beyond the usual tourist trails. 25 American States Nobody Wants to Visit Anymore
20 Foods That Are Cheaper to Eat Out Than Making at Home
In a world where convenience often wins, certain culinary delights come with a lower price tag when enjoyed at a restaurant rather than crafted in your own kitchen. Here are twenty foods that might save you both time and money when indulged in at your favorite eatery. 20 Foods That Are Cheaper to Eat out Than Making at Home
17 Things You’re Paying For, but You Don’t Have To
In the land of the free, there’s a price tag on everything, but savvy Americans know better than to open their wallets for just anything. Here are 17 expenses you’ve been shelling out for without realizing there’s a cheaper or even free alternative. 17 Things You’re Paying For, but You Don’t Have To
The post Janet Yellen: U.S. Won’t Let “China Shock” Destroy Our Industry first appeared on From Frugal to Free.
Featured Image Credit: Shutterstock / Alexandros Michailidis.
The content of this article is for informational purposes only and does not constitute or replace professional financial advice.
