US Treasury Secretary Janet Yellen said on Monday that future discussions between the United States and China will focus on the need for Beijing to change its policy on industry and the economy, at the end of the fourth and final full day of her trip to China on April 8, 2024. .
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BEIJING – US Treasury Secretary Janet Yellen said Monday that future discussions between the United States and China will focus on the need for Beijing to change its policy on industry and the economy.
“We intend to emphasize the need for policy change during these talks – building on the more than two hours I spent on this topic with the Deputy Prime Minister last week,” she said in prepared remarks for a news conference on Monday. She concluded the fourth and final full day of her trip to China.
She arrived in Guangzhou on Thursday and is scheduled to leave Beijing on Tuesday.
Yellen said her conversations with Chinese officials during the trip discussed Beijing's plans for its economy, but did not provide details. Yellen also declined to reveal what tools the United States might use to prevent China's industrial policy from leading to American job losses.
She noted that US talks with the Chinese will continue later this month at the spring meetings of the International Monetary Fund and the World Bank Group in Washington, DC.
China's industrial excess capacity – or the overproduction of goods that undercut global competitors on price – has increasingly become a point of international concern. Other countries claim that this production is often heavily subsidized.
China's commerce minister said during a trip to Europe that accusations of “excess capacity” were “unfounded” and that innovation, not subsidies, had driven China's electric car industry.
In contrast to other countries' focus on the impact of Chinese spare capacity on global trade, Beijing's concerns about oversupply tend to focus on deflationary aspects, damage to the health of the banking sector and fiscal pressures for local governments, said Yu Su, chief China economist at the Washington Institute for Research. . Economists Unit.
“We expect further anti-subsidy and anti-dumping investigations into Chinese manufacturing during the remainder of the year, especially as inflation becomes less of a concern for many advanced economies,” Su said. “These investigations may extend to Chinese factories abroad, including those in ASEAN countries.”
A call to boost local demand
When asked about potential solutions, Yellen pointed to how China could boost domestic demand relative to supply by adding support for retirement or children's education.
High costs of living, including housing and health care, have encouraged many Chinese to save rather than spend.
Yellen acknowledged that efforts to reduce excess industrial capacity or increase domestic demand will not be resolved quickly.
“This is an issue we have discussed for more than a decade in China,” she told reporters.
Consumer demand in China has not rebounded from the epidemic as quickly as many analysts expected. In contrast to the US and Hong Kong governments, Beijing has not issued stimulus checks, focusing instead on reducing taxes and trade fees.
National security talks
China has also sought to bolster its technological capabilities in the face of increasing US restrictions on how Chinese companies can access that technology.
Both Washington and Beijing have increasingly cited national security as a reason for new measures.
Yellen said on Monday that the two sides have exchanged information on the use of economic tools in national security, and should continue to do so. “We are committed to no surprises,” she said.
During her trip, Yellen met with senior Chinese officials including Premier Li Qiang in Beijing and Vice Premier He Lifeng in Guangzhou.
“Over the past year, we have put our bilateral relationship on a more stable footing,” Yellen said in prepared remarks for her meeting with Lee on Sunday.
“This does not mean ignoring our differences or avoiding difficult conversations,” she added. “This means understanding that we can only make progress if we communicate directly and openly with each other.”
Reading from China, Li said Beijing hopes the United States will adhere to market economy standards and avoid politicizing trade issues. He said that the development of China's new energy industry will make important contributions to global efforts at carbon neutrality.
The United States and China agreed to “intensive exchanges on balanced growth in the domestic and global economies,” according to a Treasury Department statement after Yellen's meetings with Vice Premier He.
The two countries also agreed to “initiate cooperation and joint exchange between the Treasury and the People's Bank of China on anti-money laundering to expand cooperation against illicit financing and financial crimes,” the statement said.
The Chinese side did not explicitly mention such agreements, but said that the two sides intend to maintain communication. Beijing also expressed “serious concerns” about US trade restrictions.
The Chinese reading described the talks as “constructive” and referred to talks on “balanced economic growth,” “financial stability,” and “fighting money laundering.” This is according to a CNBC translation.
The US Treasury Secretary also met with Finance Minister Lan Fuan, the mayors of Beijing and Guangzhou, representatives of US companies, and professors and students at Peking University during the visit.
