(Bloomberg) – Treasury Secretary Janet Yellen begins a four-day visit to the country, denouncing China’s “unfair” treatment of U.S. and other foreign companies and saying Chinese factories could be easily absorbed by the world. He said there is a risk of producing in excess of quantity.
Most Read Articles on Bloomberg
Yellen said Friday in the southern Chinese city of Guangzhou that China is pursuing “unfair economic practices, including imposing barriers to access to foreign companies and coercive actions against U.S. companies.” He said there was. “I intend to raise these issues at this week’s meeting.”
Relations between the two largest economies have shown signs of improvement since President Joe Biden and President Xi Jinping met in San Francisco last November. But deep-rooted differences are being exacerbated by China's efforts to boost investment in manufacturing to offset the country's real estate downturn. The United States and its allies have criticized Beijing's recent policy changes, accusing China of trying to protect its less efficient industries.
For Xi's team, Yellen's visit is one of its last chances to shape U.S. policy ahead of November's presidential election, where both candidates will compete to take a tough stance on China. Former President Donald Trump has already threatened to impose 60% tariffs on Chinese goods if elected.
Vice Premier He Lifeng, who is in charge of China's economic policy, said before starting a series of talks with Yellen that China “hopes to create a favorable environment for businesses and benefit both countries and peoples.” ” he said. The two men, who also met at the Biden-Xi summit in November, were scheduled to attend a dinner on Friday before taking an evening boat tour on the Pearl River.
Yellen emphasized that former leader Deng Xiaoping's visit to Guangzhou, a manufacturing and export powerhouse, in 1992 was an important milestone in China's transformation towards a market economy, and emphasized that China's current leadership He urged the department to refocus on reforms.
Speaking at an event hosted by the American Chamber of Commerce in China, he found that one-third of U.S. companies in China report being treated unfairly compared to local competitors. He cited a recent survey by the Chamber of Commerce. International companies have long complained of discrimination in areas such as market access, government procurement and access to subsidies.
“We strongly believe that this will not only hurt these American companies; eliminating these unfair practices will benefit China by improving the business environment in China,” Yellen said. Stated. Many U.S. companies are concerned about “the impact of China's shift away from the market approach,” he added.
Xi has overseen a strengthening of the ruling Communist Party's role in China's economy in recent years, supporting state-led efforts to boost new industries such as electric vehicles and solar power technology.
Yellen reiterated her concerns about China's industrial overcapacity, fueled by government subsidies, which has emerged as the top message of her trip. He said the result was “capacity significantly above what China's domestic demand and global markets can sustain.”
The US is keen to position this as a global concern. When the Treasury secretary met with foreign business leaders early Friday, executives from Europe and Japan were among those invited. After those talks, Yellen said the United States was hearing similar concerns from developed countries as well as emerging countries.
At the meeting, Ms. Yellen asked for input on how to talk about excess capacity in a way acceptable to the Chinese side, according to a person familiar with the talks, who asked not to be identified because they were not authorized to speak publicly. The Treasury secretary is seen as one of the least hawkish members of the U.S. government when it comes to China.
“If there's anyone who can raise this issue in a way that the Chinese people will listen, it's Secretary Yellen,” said Sean Stein, president of the American Chamber of Commerce in China.
Yellen's message, which will be her second visit in nine months, including a stop in Beijing, is expected to receive a lot of backlash. China claims its companies are being unfairly excluded by developed countries that cannot compete on price. Last month, the Chinese government filed a complaint with the World Trade Organization over subsidies to the U.S. EV industry, accusing the U.S. of “classical protectionism” in trying to erect barriers to Chinese EVs.
Still, Yellen said China's own leadership cited “overcapacity in some industries” among a list of challenges facing the economy in a report released after its annual legislative session last month. It pointed out.
Jens Eskelund, president of China's European Union Chamber of Commerce, said: “No one in their right mind would ever expect that China would not continuously improve its industry and climb the value ladder.” said. “It becomes a problem when companies in Europe and elsewhere are at risk of survival.”
–With assistance from Christopher Anstey.
(Updates U.S. Chamber of Commerce Director's statement in paragraph 11.)
Most Read Articles on Bloomberg Businessweek
©2024 Bloomberg LP