US Treasury Secretary Janet Yellen to press China on green energy spending, subsidies that distort global market
- ‘Excess capacity poses risks not only to American workers and firms and to the global economy, but also to productivity and growth in the Chinese economy,’ she says
- Yellen will issue the warning when she travels to Guangzhou and Beijing in the coming weeks
American concerns over China’s green energy spending binge is likely to dominate the high-level talks between the two global powers in Beijing early next month.
Citing excess capacity in industries like solar, electric vehicles and lithium-ion batteries because of huge Chinese government subsidies, the problem will be “a key issue” in discussions with senior Chinese officials during her second trip to China in a year, US Treasury Secretary Janet Yellen said in a speech on Wednesday.
“I will convey my belief that excess capacity poses risks not only to American workers and firms and to the global economy, but also to productivity and growth in the Chinese economy,” she said at a solar-cell factory in Norcross, Georgia.
She pledged to “press my Chinese counterparts to take necessary steps to address this issue” to create a “level playing field” for American companies and workers.
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Yellen spoke at a Suniva manufacturing facility which had been shut down in 2017, in part because of cheap imports into the US market.
But as a result of green investments under the Inflation Reduction Act, the factory is scheduled to reopen this spring.
Signed into law by US President Joe Biden in 2022, the legislation directs nearly US$400 billion in federal funding and tax credits to clean energy over the next decade.
Green vehicles with components from China, Russia or Iran are not eligible for the benefits.
China invested an estimated US$890 billion in clean-energy sectors in 2023, up 40 per cent year-on-year from 2022. It has also sought intervention from the World Trade Organization concerning what it calls Biden’s “discriminatory” electric vehicle subsidy policies.
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Amid growing tensions over competing industrial policies, efforts have been made to better communicate differences. Yellen’s visit to Beijing last July led to the formation of new economic and financial working groups for “frank and substantive discussions” on major flashpoints.
Several other senior Biden administration officials travelled to China after Yellen, ahead of Biden’s summit with President Xi Jinping in northern California in November.
In her first trip to China after Xi’s meeting with Biden, Yellen will travel to Guangzhou and Beijing. She is expected to hold a 45-minute question and answer session to hear about the issues facing US firms in China.
To woo back American investors amid a sluggish Chinese economy, Xi met with more than a dozen US chief executives and academics in Beijing on Wednesday.
Calling for the “better future” between the US and China, Xi said that both sides “should help boost each other’s developments”.
