US Treasury Secretary Janet Yellen warned China on Monday that Washington will not accept new industries being decimated by Chinese imports as she wrapped up four days of meetings to press her case for Beijing to rein in excess industrial capacity.
Yellen, making a second trip in nine months to further ease strained ties between the world's two largest economies, has voiced concern about China's fast-growing exports of electric vehicles, batteries, solar panels and other green-energy goods.
She has said China's state support has ramped up its production capacity far beyond what domestic demand can absorb.
Cheap Chinese exports threaten jobs in the US and elsewhere, she said, drawing parallels with the pain felt in the US steel sector in the past.
"We've seen this story before," Yellen told reporters, according to Reuters. "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."
She added, "I've made it clear that President Biden and I will not accept that reality again."
When the global market is flooded with artificially cheap Chinese products, she said, "The viability of American and other foreign firms is put into question."
Treasury officials have said Yellen did not threaten tariffs or other specific measures against Chinese imports.
Yellen added her exchanges with Chinese officials had advanced American interests and that US concerns over excess industrial capacity were shared by allies in Europe, Japan, Mexico, Philippines and other emerging markets.
She said a possible short-term solution was for China to bolster consumer demand and shift its growth model away from supply-side investment.
Yellen spoke about the issue at length with Premier Li Qiang and also met Finance Minister Lan Foan on Sunday. She met People's Bank of China (PBOC) governor Pan Gongsheng and former vice premier Liu He on Monday.
Treasury officials said the US and China were deepening co-operation on financial stability issues, with two more simulations of financial shocks scheduled after a recent exercise on dealing with the failure of a large bank.
The exercises have been developed by a US-China financial working group formed last year when Yellen first visited China to try to rebuild economic ties. Led by representatives of the US Treasury and the PBOC, it last met in Beijing in January.
